Feb 5, 2025
If you’re the sort of hard-nosed realist who thinks that fortune-telling, horoscopes and the like will never help you in the real world, you might want to think again.
A grandmother in Maryland recently cashed in when she decided to trust the “lucky numbers” in her fortune cookie. That approach paid off in the Jan. 8 Powerball drawing, when the retired medical worker matched four out of five numbers and the “Powerball” to claim a third-tier prize of $50,000.
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This wasn’t her first win, either: She’d previously matched three numbers and the Powerball for winnings of $100.
“The next step is to get all five numbers with the Powerball and win the jackpot,” she said to The Sun.
She looks for signs
The Baltimore County resident told The Sun that she looks for “signs” before buying lottery tickets.
As a horoscopes reader, she’s used astrology to decide when to try her luck. When her daily reading would contain the word “numbers,” she told The Sun, she would take it as a sign to play the lottery.
But this time she decided to “try something different.”
When visiting one of her regular dining spots, she received a fortune cookie, which contained the “lucky numbers” that she later played when she bought a Powerball at a convenience store in Parkville. She said she plans to do it again and use fortune cookie numbers for other lottery games.
What she hasn’t decided, yet, is how to use her winnings. However, she may give it to her family.
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“It will probably go to my children and grandchildren," she said.
Another decision she will need to make is whether to take her winnings as a lump sum or an annuity (i.e., series of annual payments over 30 years).
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Lump sum or annuity?
No matter which option a lottery winner chooses, the prize will be subjected to income tax.
A 24% withholding levy is deducted from every jackpot over $5,000, but the winner could owe more depending on what state they live in and their income tax bracket.
Keep in mind that a lump sum payment will almost definitely push the winner into a higher tax bracket for the year in which the winnings are claimed.
Depending on the size of the jackpot, the tax-bracket leap might not happen to a winner who opts to receive an annual payment for 30 years, which is the specified length of annuity term for Powerball winners. Certainly, the amount they’ll claim in any given year will be less than a full lump sum would have been.
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Here are some other factors to consider in deciding which way to claim a lotto windfall.
Age. For older adults, like this Powerball-winning grandmother, age and health may influence payout choice. If you’re concerned you won’t reap enough benefit from an annuity payday for the next three decades, the lump sum may be the best option.
Current need. Depending on how much you win, the annuity may not be sufficient to cover your expenses. If you're struggling financially, paying off debts, or making a big financial decision, like buying a house, you may prefer to have more cash on hand.
Interest vs. inflation. You want your rate of interest rates to outpace inflation. Mega Millions states each of their annuity payments are 5% greater than the last to protect against inflation. Powerball does the same.
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If you take the lump sum, your investment interest should match that growth but ideally be higher. Winners who are inexperienced with large investment amounts should consider enlisting the assistance of a financial planner.
Spending habits. Knowing your spending habits may push you one direction or another. For instance, if you’re concerned you may accidentally rapidly spend your winnings without saving for the future, you may want to choose the annuity option. Receiving your payout in smaller allotments may keep you from living beyond your means.
Inheritance. If you’re planning to pass down your winnings to your children or grandchildren, like this lucky grandmother, a lump sum could make more sense. You’ll know exactly how much money you have to divvy up after taxes and can give it out all at once as a gift while you’re alive. Be mindful of any gift taxes you may owe, though.
Alternatively, set the next generations up for future success by establishing a trust. Secure your lump sum in this vehicle, and it will earn interest and pass down according to your specifications.
The lump sum may offer more direct control over how you gift your winnings.
But you don’t have to worry about your family getting stiffed if you pass away before your annuity pays out: Both Mega Millions and Powerball state that jackpot winners’ annual installments will be paid to their estates under those circumstances.
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Anna Haas is a writer who has worked to break down complicated personal finance topics for readers since 2019 and is also passionate about covering culture. They center actionable choices in their stories to empower readers to make informed decisions. Find them on social media at @TeacupAnna.
