It’s the biggest lottery jackpot ever! Wednesday’s Powerball drawing will be worth a cool $1.4 billion! It should be a dream come true, but many lotto winners find themselves living in a nightmare – broke after a few years.

We all love to dream about what we would do if we struck it rich, so the following is some advice for the hopefuls and the lucky winner.

The lines for tickets will be long… do we really have a shot at hitting the jackpot?

  • The odds of winning are 1 in 292 million, so your chances are not good. You have a better chance of dating a supermodel, being attacked by a shark or getting hit by lightning. (source if you choose to use stat: New York Post)
  • Many offices are setting up pools to buy tickets together, but really the odds of winning are so small that adding 50 or even 100 chances doesn’t make much of a difference.

Why do so many lotto winners go broke after a few years?

  • 70% of people who land a big windfall, lose it within several years, (source if you choose to use stat: the National Endowment for Financial Education.)
  • That includes lottery winners as well as people getting a big inheritance.
  • Many are not prepared for a change in lifestyle and they don’t set a budget, but even millionaires should have a budget.
  • Set aside a fixed amount for splurges, but you still want to track how much you’re spending.

What is the first thing someone should do if they realize they hit the jackpot?

  • After you catch your breath, you’ll want to start planning right away. And that starts with assembling a team of professionals you can trust.
  • One of the first decisions you’ll have to make is whether you’re taking the lump sum, or getting it paid out over 29 years in the form of an annuity. You have 60 days from the time you claim your prize to make the decision. There’s a big difference in how you’re taxed, so you should consult a tax pro right away.
  • Of course, you’ll also want to see a trusted financial professional to help you decide how to manage your new-found millions.

Probably a lot of people’s first instinct would be to quit their jobs. How much money is enough to call it quits?

  • It depends on what you want your lifestyle to be! I think it’s important for a lottery winner not to make any drastic decisions for 6 months, like quitting their job, buying a mansion, or moving to Europe.
  • You will want to start a savings plan right away. I tell my clients who don’t win the lottery that 10% to 15% of their income should go into savings. Obviously, if you have a bigger pool, you can save more. I would tell a lottery winner to put away as much as they can!
  • One way to restrain yourself would be to only spend income- not principal. Plan for your necessities, set aside a budget for splurges, probably some to charity, and the rest should go to savings to protect you and your family down the road.

Winning the lottery is so exciting, but the jackpot winner could see a downside, right?

  • Here in ((state)), you are required to provide your name, city, and the amount of money you won. The lottery will release that information.
  • You’ll be making a lot of friends, and possibly a lot of enemies. You’ll want to take steps to protect your winnings.
  • The best defense is to set up a series of roadblocks, or asset protection strategies*, to make it harder for creditors to get at your money. These strategies can be anything from relying on state-law exemptions to using trusts and family limited partnerships or limited liability companies.

Any other advice for a lottery winner?

  • Yes- the first thing I would recommend to do is pay off any debts. Whether it’s credit card debt or a mortgage- your rate of return equals the interest rate on the loan.
  • This is one of the best pieces of advice for anyone who comes into a pool of money- either by winning the lottery, or another way like an inheritance, or a bonus at work.