Personal Finance

Here's how much the $1.537 billion Mega Millions winner will get to save and spend

Key Points
  • The $1.537 billion Mega Millions jackpot win marks the largest in the game's history and the second-largest lottery prize ever.
  • The lump-sum option is $877.8 million. Even after federal taxation of 37 percent and South Carolina's 7 percent tax, the total take would be roughly $491.7 million.
  • Applying the so-called 4 percent rule — considered a safe yearly withdrawal rate — would mean about $19.6 million could be tapped each year without the winner worrying about depleting their haul.

It finally happened.

After three months of no Mega Millions jackpot winners, a single ticket sold in South Carolina beat the 1-in-302.6-million chance of matching all six numbers in Tuesday night's drawing.

The final jackpot amount came in at just under $1.54 billion, marking the largest amount in Mega Millions history and the second-largest lottery jackpot ever. Leading up to the drawing, lottery officials estimated that 75 percent of possible number combinations had been sold.

A clerk counts out the $300 worth Mega Millions Lotto tickets purchased by a customer. 
Leonard Ortiz | Orange County Register | Getty Images

South Carolina lottery officials are encouraging the winner to sign the back of the ticket and put it in a safe place — and then take a deep breath.

And while all eyes might be on the Palmetto State for more information about the newest member of the one-percenters club, there's a pretty good chance that the world will never find out who won.

South Carolina is one of a handful of states that allow winners to receive their prize anonymously. For the person (or group of people) laying claim to the massive Mega Millions jackpot, that's good news.

"Last night's winner should definitely take advantage of that anonymity," said Jason Kurland, a partner at Rivkin Radler, a law firm in Uniondale, New York. "The luxury of going through this process without having to worry about cameras and reporters is invaluable."

He added, though, that it might be harder to keep the secret closer to home.

"This jackpot captured the imagination of the entire nation, so I'm sure residents of South Carolina are eager to find out who the winner is," said Kurland, who helps lottery winners navigate their sudden windfall. "If someone all of a sudden quits their job and starts spending money, people will be talking, I'm sure."

It's also important to tell as few people as possible about your win. Past lottery winners have discovered the hard way that long-lost friends and family — not to mention complete strangers — can come calling, looking for loans or outright handouts.

Top 10 lottery jackpots

RankAmountDate wonGameWinner locations
1$1.586 billionJan. 13, 2016PowerballCA, FL, TN
2$1.54 billionOct. 23, 2018Mega Millions SC
3$758.7 million Aug. 23, 2017 Powerball MA
4$656 million Mar. 30, 2012 Mega Millions KS, IL, MD
5$648 million Dec. 17, 2013 Mega Millions CA, GA
6$620 million???Powerball???
7$590.5 million 18-May-13Powerball FL
8$587.5 million Nov. 28, 2012 Powerball AZ, MO
9$564.1 million Feb. 11, 2015 Powerball NC, PR, TX
10$559.7 million Jan. 6, 2018 Powerball NH

And given the sheer size of this jackpot, the stakes are pretty high. Regardless of whether the winner chooses to take the haul as an annuity spread out over three decades or as an immediate lump sum, the amount will be life-changing.

The lump-sum option — which most lottery winners choose — is $877.8 million. Even after federal tax totaling 37 percent and South Carolina's 7 percent income tax, the total take would be roughly $491.7 million.

Many financial advisors recommend taking the lump sum. If the windfall is managed and invested properly, you could end up with more over time than the annuity option would deliver.

This is what you do if you win the lottery
This is what you do if you win the lottery

And while investing and saving might not seem as exciting as spending, there would be no shortage of money available for that, as well.

Experts say it's OK to splurge on yourself upfront, whether it's for a new car, new house, overseas vacation or something else you've been coveting. The important thing is to set boundaries right away, even when the amount of the win seems unlimited.

"It's important to set up a preliminary plan and budget right from the start," Kurland said. "Emotionally, having an initial structure in place is extremely helpful for winners, because this is such an overwhelming experience."

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One common way to help ensure the money lasts is the so-called 4 percent rule. That is, if you withdraw no more than 4 percent of your money each year, it should last decades as long as it's properly invested in a diversified portfolio, said certified financial planner Jim Shagawat, president of Windfall Wealth Advisors in Paramus, New Jersey.

Applying that withdrawal rate to the after-tax estimate of $491.7 million would mean about $19.6 million could be tapped each year without depleting your wealth.

Additionally, lottery winners in South Carolina get six months to claim their prize. During that time, the winner should assemble a team of experienced professionals to help determine how to handle their new wealth, including an attorney, financial advisor and tax advisor.

"I'm sure the winner is extremely anxious and overwhelmed," Kurland said. "Like most of my clients, they probably don't want to wait too long to claim, but they should at least take a few weeks to get their ducks in a row, establish a financial plan and take care of estate planning so that once the funds hit their account, they can hit the ground running."

Meanwhile, the Powerball jackpot stands at $620 million for Wednesday night's drawing. The chances of hitting it are slightly better: 1 in 292 million.