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Planning your financial future

Financial advice on lottery winnings and other big financial decisions

Winning the lottery can be bittersweet. On one hand, you have money, but on the other it’s easy to deviate from your financial plan.

Ever daydream about winning the lottery? It's easy to suppose that if you win the lottery, your money troubles are over. But anyone who follows the news knows that's just not the case. To navigate the potentially disastrous aftermath of winning the lottery, you'll need a solid financial plan, guided by expert financial advice. If you ever win the lottery, consider following the steps below. Interestingly, they may help guide some less glamorous financial decisions as well.

Get financial advice early

Upon hearing the good news, it's a good idea to seek financial advice from a qualified financial professional. You may want to do this before you're required to make any significant decisions, such as whether to collect your winnings right away in a lump sum, or over time in an annuity.

For example, if you win the Powerball, you can opt to get the whole $500 million at once, or divide it into 30 installments spread over 29 years. That may sound like a simple choice, but the ramifications are complex.

  • If you opt for the lump sum, you'll have to pay tax on the entire amount immediately. You'll also be forced to manage money on a scale you've probably never had to do before. On the other hand, with a solid financial plan and the discipline to follow your budget, you could be in very good shape. You may even be able to enhance your winnings by investing them.
  • If you go with the annuity option, you'll pay taxes incrementally, and you won't face the task of managing an incomprehensible sum of money with no prior experience to guide you. On the other hand, if you die before the annuity period is up, your family may have to pay estate tax on their inheritance - an amount they probably don't have on hand. Bear in mind, this choice can also make a major impact on the total amount you bring home — and the math will be complicated. That's another reason financial advice is so important.

Choose your financial professional carefully

Not all experts bring the same credentials, areas of knowledge or years of experience. CNBC put it this way: “Anyone seeking a planner needs to be armed with the correct questions to ensure that the professional chosen is working in your interest and capable of addressing all your specific financial needs.”

Indeed, this is one situation where you shouldn't rely on personal connections or word of mouth to guide you (unless you happen to know a lot of millionaires). To find someone who's qualified to advise you, visit the CFP Board's website.

Build your financial plan

Once you've found a financial professional and you've made your first big decisions — such as how to receive your winnings — it's time to learn how to budget. Don't assume these are only for people who need to stretch their funds from month to month. As Business Insider said, “It seems counterintuitive, but the uber-wealthy have just as much to gain from a personal budget as the rest of us — especially if their wealth has come on suddenly.” Making a budget will help you steer clear of the most common post-lottery pitfall — accidentally squandering your wealth — and empower you to protect the future for yourself and your loved ones. Good luck!



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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective or its subsidiaries.

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