(WBIR - KNOXVILLE) Regardless of whether you play the lottery, it's been hard to ignore the climbing Powerball jackpot, which on Tuesday hit $1.5 billion.
If a winning ticket is identified after Wednesday night's drawing, the first big decision jackpot winners will face is whether to take their share in a lump sum or in long-term installments called an annuity payment, which is spread over 30 years.
Paul Fain, certified financial planner and president of Asset Planning Corporation said there are pros and cons to each approach.
"You're going to pay the taxes either way, so I would take the lump sum and invest," Fain said.
It's important to note the fine print, however.
The $1.5 billion is the amount a jackpot winner will receive before taxes -- with the annuity payment.
"It's an increasing amount that builds over time, paid in annual installments, and that's what they're talking about when they talk about the annuity payment," he said.
If, however, a winner wants the lump sum now, his or her pre-tax total will be just $930 million.
"These are such large amounts of money," Fain said. "Right now the maximum income tax bracket is 39.6 percent, so let's call it 40 percent. So whether you take a lump sum or the annuity payment, you're giving 40 percent back to Uncle Sam."
That still leaves any jackpot winner with a bunch of dough - and a fair warning from Fain.
"I've worked with one lottery winner over these 30 years, and they flew through the money," he said. "It's a common story...Whether it's $100 or $1,000 or $100 million, it just kind of opens up this behavioral phenomenon of free spending...You're helping family, you're helping friends, you're buying a new house, new car, new yacht. As hard as it is to believe, you can spend it all."
He recommends big winners gather a team of tax attorneys and financial advisors.
"I think you'd want to diversify and, you know, be a good steward of the wealth so it'll last not just decades but maybe even generations," Fain said.
There are some 292.2 million different combinations of Powerball numbers. Only one can be the jackpot winner.
"The odds put this in the ballpark of having fun, to me," Fain said, adding he has not yet bought a ticket for Wednesday night's drawing - but probably will.
If he wins, Fain, said, he'll take the lump sum and invest it.
"Generally speaking, if you were to invest and earn 5, 6, 7 percent on a lump sum, you can come out maybe better in the long run," he said. "You've also got to take into consideration that we know what taxes are today, but we don't know what they're going to be over the next 20 or 30 years, so taxes could take a much bigger bite in latter years, sending you back over toward the lump sum (option vs. the annuity payment)."
The Powerball drawing can be seen live as it happens Wednesday night on WBIR, right before the WBIR 10News Nightbeat.