So, You Won the Lottery – Now What?
- 4 days ago
- 7 min read
Cartier Wealth | Calvin Combs | 5/28/2026
The decisions made in the first hours after a windfall shape everything that follows — and the same is true of retirement.
A Note from Chad Cartier
Spring has a way of making us feel like anything is possible — which makes it a fine season to explore a thought experiment. What if, today, everything changed at once? What if you came into more money than you ever expected, all at once, with no instruction manual? Calvin Combs on our team has spent real time thinking through exactly that question, and what he found is surprisingly practical — and surprisingly close to home.
Something caught my eye at Kroger yesterday. I was waiting at the customer service desk (hot sauce spill on aisle three – huge mess, I won’t get into it) and a bright neon sign sucked me in. You couldn’t miss it; the Powerball lottery is currently worth $179 million. Now I know that’s not the biggest jackpot ever (someone in Arkansas won $1.8 billion in December) but still, $179 million is a lot of money. That’s 105 times the median US lifetime earnings.
But after dreaming about all the things I would do with a prize like that, I wondered, what should I do if I won? Not morally or existentially, but practically. If you won the lottery today, what are your immediate tax, legal and financial action steps?
Maybe your brain is weird like mine. If it is, rest assured, I’ve looked into it.
Executive Summary
Winning the lottery requires immediate planning to protect your privacy, reduce taxes, and make smart financial decisions. The right team and payout strategy can preserve and grow your wealth, but the best choice ultimately depends on your behavior, goals, and long-term discipline.
Protect your privacy and avoid public exposure if possible.
Assemble trusted legal, tax, and financial professionals before claiming the prize.
Factor in both taxes and investment growth with the payout decision and be sure to prioritize your relationship with money.
You won't win the Lottery
Let’s get this out of the way. You won’t win the lottery. The odds aren’t just stacked against you, they’re astronomically bad. In 1987 your chances of winning the Powerball were 1 in 19 million. Today it’s 1 in 292.2 million.
Numbers that big defy our comprehension so let’s bring it down to earth. Here are some things that are more likely than winning the Powerball:
Being struck by lightning three times (1 in 90 million)
Flipping heads on a coin 28 times in a row (1 in 268 million)
Correctly guessing a stranger’s phone number (1 in 10 million)
But dreaming is fun, and someone has to win, right? What if it was you? (it won’t be)
Stay Anonymous
It’s important that you keep your cool and don’t spread the news around. Coming into a large sum of money makes you the target of all kinds of scammers, charities and long-lost relatives. Unfortunately, this kind of wealth can instantly change your relationship with friends and family too.
You should celebrate though; you’ve just won the lottery after all! But do it incognito if you can. Tell your spouse and have a nice meal out and then start planning.
Eventually you may need to come out into the open. Some states will allow you to claim the prize anonymously or in trust, but not many. If they do let you, claim your prize anonymously.
Gather Your Team
Normally you have time before you have to claim your prize. This gives you a chance to loop in key professionals. One of the first people on your list should be an estate lawyer. They’ll be able to definitively explain your claiming options and give you advice on trusts and creditor protection plans. You’ll also want to get in touch with a CPA and a Certified Financial PlannerTM.
These professionals can give you advice about saving money on taxes, mapping out your investment plan and determining your goals for the money. One often overlooked hire is a security and privacy consultant. If the prize is big (and especially if it’s public) this hire could be well worth the money. A security consultant may do things like increase your home security or scrub your online presence.
Annuity or Lump Sum?
Remember that team of professionals? One of the main things they’ll be working on is maximizing your payout and limiting your taxes. These two things are a big deal. Claiming your prize in a lump sum and paying the taxes all at once could cut your $179 million prize down to just $45.1 million.
The first thing on the agenda will be choosing between a lump sum payout and the annuity option. With the annuity option, the full amount of the jackpot is paid out in annual installments over 30 years, increasing by 5% per year. The sneaky part is that the advertised jackpot is the total of the annuity payments, not the lump sum. Unfortunately, a dollar in 30 years from now isn’t worth a dollar today (just ask your grandparents what they bought their house for if you don’t believe me).
So, the other option is the lump sum. You can claim one amount all at once, but it’s going to be just under half of the advertised jackpot amount. [For any finance nerds out there, the actual payout varies with current interest rates]. But even with a big discount like that, any investment manager will tell you that the lump sum can grow to be worth more than the annuity over time, if you invest it. And they’re right. Based solely on the numbers, that’s often true (but it’s not the whole story).
Taxes, Taxes, Taxes
You have to think about taxes. Taxes are going to take a big bite out of your prize money. Right now the top federal tax bracket is 37%. When you add state taxes on top of that, Uncle Sam might claim about half of your lump sum.
There are some options though. If you’re charitably inclined, you have a big “get of jail free” card. Immediately donating some of your prize to a charity, a donor advised fund or your own private foundation will help dodge some taxes. This won’t shelter everything though since only 60% of your income is eligible for a charitable tax deduction. For state taxes, the limit is even lower.
Another way to limit your taxes is to leverage the annuity payout option. Spreading your payout over 30 years gives you some options. The biggest benefit is the ability to eliminate state taxes entirely.
The top tax bracket in the State of Connecticut is 6.99%.
On an $83.4 million lump sum payout you’ll get a $5.8 million state tax bill.
Picking the annuity option lets you change your residence to one of the nine states with no income taxes (AK, FL, NV, NH, SD, TN, TX, WA, WY).
If you invested your tax savings, you could have an extra $58.6MM in 30 years.
There are also federal tax benefits with the annuity option.
The US has a progressive tax bracket system, which means that your first $751k of income is taxed at a lower rate than the rest of your income.
If you pick the lump sum, you only benefit from the lower rates once. With the annuity payout, you can benefit every year.
This benefit saves you $202,155 per year. If you invested these savings, you could have another $30.9MM after 30 years.
Let’s add it all up:
Taking the annuity option would save you $11.9 million in taxes over 30 years.
After investing, that could be worth an extra $89.5 million. The annuity option isn’t looking quite as bad now, is it?
But to be honest, the lump sum would still be worth more over time. These tax benefits narrow the gap significantly but they don’t overcome the lump sum compounding interest. The problem is, we’re not dispassionate finance robots operating in a lab…well you’re not anyways (the jury’s out on me).
In all our lottery calculus we’ve left out the most important variable of all --> you!
Charitable Giving as a Tax Tool
If you're charitably inclined, a windfall creates a powerful opportunity. Donating directly to a charity, donor-advised fund, or private foundation in the year of receipt can offset up to 60% of your income for federal tax purposes — meaningfully reducing the tax bite on your prize.
Know Yourself
When talking about personal finance you need to consider the person. In fact, I’d say that by far, you are the most important factor in personal finance decisions.
Money is a fascinating window into the soul. It tells us all about how we think, what we want, and where our values are.
How would a windfall impact your lifestyle, relationships and view on the world?
Are you more of a risk taker, or coast into the sunset kind of person?
Are you easily content, or do you tend towards overspending?
These are the kind of questions that you should be asking yourself. Let your own personality and relationship with money have the final vote in your decision.
Beware of the lump sum risks. With a lump sum, the risk of fraud, extravagant spending and overgiving skyrockets. There’s a reason that you hear about lottery winners who wind up poorer than before they won the game.
Choosing an annuity payout option is a good way to hedge against these risks. With the annuity, you know that no matter what, you have 30 years of inflation protected income locked up. That’s a peace of mind that’s hard to put a price on.
Your retirement is its own kind of windfall.
Decades of disciplined saving have built something remarkable. Let's make sure every decision from here reflects the care that went into building it.
Schedule a Conversation: www.cartier-wealth.com/contact
With warmth and precision,
Calvin Combs & the Cartier Wealth Team
Cheshire, Connecticut
