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What is the Mega million cash payout?

The Mega Millions is a popular multi-state lottery game in the United States with jackpots that can grow to be hundreds of millions of dollars. The game is coordinated by the Multi-State Lottery Association and drawings are held every Tuesday and Friday evening. Players must match 5 numbers from 1-70 plus the Mega Ball number from 1-25 to win the jackpot prize. There are also several smaller prizes available for matching some or none of the numbers. One of the biggest questions for lottery players is what the cash payout option is for the large Mega Millions jackpot and how it compares to the annuity payment schedule. This article will provide an overview of the Mega Millions payout options and analysis of the cash value versus the annuity.

Mega Millions Jackpot Prize Options

The Mega Millions game offers two jackpot prize payment options for winners:

– Annunity Payment – The total jackpot amount is paid out over 30 graduated annual payments. Each payment amount increases by 5% each year.

– Lump Sum Cash Option – A one-time, lump sum payment equal to the cash in the jackpot prize pool. The cash value is estimated as the amount of money needed to be in an investment today to fund the full annuity prize schedule.

When a player wins the jackpot, they must choose within 60 days whether to take the annuity payments or the cash value option. Once selected, the payment choice is final.

How the Cash Value is Calculated

The upfront cash value is determined by multiple factors but most importantly the annuity rate. The annuity rate is set by the Multi-State Lottery Association for each jackpot based on current market interest rates. The higher the interest rates, the greater the return expected on investment so the cash value percentage will be higher. Recently annuity rates have been between 4.5-5.5% for Mega Millions jackpots.

To calculate the cash value, the total annuity prize amount is discounted by the annuity rate over the 30 year payout schedule. For example, if the jackpot annuity is $1 billion and the annuity rate is 5%, the upfront cash value would be approximately $565 million (or 56.5% of the total prize).

Cash vs. Annuity Comparison

| Payment Option | Total Payout | Paid Out Over | Payment Schedule |
| Annuity | $1 billion | 30 years |

  • Year 1: $33.3 million
  • Year 2: $35 million (5% increase)
  • Year 3: $36.75 million (5% increase)
  • Year 30: $93.9 million (5% increase)

| Lump Sum Cash | $565 million | Single payment | Paid out immediately at time of claim |

Looking at the overview, we can see some key things to consider when choosing between the cash and annuity options:

– The total annuity prize amount is much larger, but it is paid out over 3 decades. The cash value provides more money upfront but less overall.
– The annuity payments increase by 5% each year to help offset inflation over the long term payout schedule. The cash option does not provide any inflation adjustment.
– With the cash payout, winners take on full control and responsibility for investing the money to make it last. The annuity guarantees income for life.
– Lottery winners may have different financial priorities that make one option preferable over the other. Younger winners may favor investing the cash while older winners may choose the reliable income.
– Taxes are withheld upfront on both options, but annuity earnings each year are taxed at ordinary income rates versus capital gains rates for invested cash earnings.

Rea Life Example: $1.5 Billion Mega Millions Jackpot

On October 23, 2018, a single ticket sold in South Carolina matched all 5 numbers and the Mega Ball to win the Mega Millions jackpot prize of $1.5 billion. This makes it the largest lottery jackpot ever won on a single ticket. At the time, the Mega Millions annuity rate was 5.53% which resulted in a cash value of the prize totaling $877,784,124.

The two Mega Millions jackpot prize options for this $1.5 billion jackpot were:

  • Annuity: $1.5 billion paid annually over 30 years increasing by 5% per year. Total payout with increases would be $2.96 billion.
  • Lump Sum Cash: $877,784,124 paid out immediately at time of claim. This is equal to 58.1% of the total annuity prize.

The winner of the ticket chose to take the lump sum cash option. After required tax withholding, the winner reportedly received approximately $878 million in a single payment following confirmation of the win.

This real jackpot example illustrates that while the cash value is substantially lower than the total annuity amount, it still provides a life-changing amount of money paid out immediately. However, foregoing the long-term annuity payments requires disciplined investing to ensure the money provides for the winner’s needs and desires over the rest of their lifetime.

Cash vs. Annuity Factors

When deciding between the Mega Millions cash and annuity options, there are several key factors winners should consider:


Both prize options have taxes withheld upfront, but differ in how earnings are taxed.

– Annuity – Each payment is taxed as ordinary income. Currently the top tax rate is 37%.

– Cash – Earnings from investing the lump sum are taxed at capital gains rates, currently 15% for long-term holdings. Paying a lower tax rate allows more compounded growth over time.

Interest Rates

Higher market interest rates result in a larger cash value percentage. With today’s low rates, the cash value is likely around 50% of the annuity prize.

Investment Returns

The lump sum cash gives flexibility for winners to invest based on their own strategy and risk tolerance. Higher investment returns can significantly increase the earnings potential versus the fixed annuity payments. However, poor investing also creates risk of running out of money.

Life Expectancy

Younger winners have longer time horizons so the cash option allows funds to be invested for potential growth over decades. Older winners may prefer the annuity income they are unlikely to outlive.

Spending Habits

Winners who wish to spend lavishly immediately may favor the lump sum cash, while more conservative spenders may opt for the annuity to maintain a stable lifestyle. The annuity protects against overspending too quickly and running out of money.

By evaluating all these factors, Mega Millions winners can determine the best payment option aligned with their financial priorities and outcomes. Though the lump sum is lower, the additional control and growth opportunities will be preferred by many jackpot winners.

Probability of Winning Mega Millions Jackpot

The chances of winning the Mega Millions jackpot are extremely small at only 1 in 302,575,350. This means any single ticket has about a 0.000000331% chance of matching all 5 numbers plus the Mega Ball.

To put that in perspective, a person is about:

  • 300x more likely to be struck by lightning in their lifetime (1 in 1,222,000 chance)
  • 292x more likely to be killed by fireworks (1 in 1,000,000 chance)
  • 207x more likely to win an Olympic gold medal (1 in 662,000 chance)

The odds are so astronomically low because the possible number combinations in Mega Millions are immense. With players choosing 5 numbers from a pool of 70 white balls plus the Mega Ball from a separate pool of 25 numbers, there are over 302 million possible combinations each drawing. However, your chances improve slightly if multiple tickets are purchased for the same drawing.

While winning the jackpot is exceedingly rare, there are other secondary prizes with better odds:

  • Match 5 numbers only – 1 in 12,607,306 chance
  • Match 4 numbers plus Mega Ball – 1 in 931,001 chance
  • Match 4 numbers only – 1 in 38,792 chance
  • Match 3 numbers plus Mega Ball – 1 in 14,547 chance
  • Match 3 numbers only – 1 in 606 chance
  • Match 2 numbers plus Mega Ball – 1 in 693 chance
  • Match 1 number plus Mega Ball – 1 in 89 chance
  • Match Mega Ball only – 1 in 37 chance

With these long odds, the appeal of the Mega Millions is the opportunity to win a jackpot prize so large it is a life-changing amount of money. Even with just a infinitesimally small probability, playing the game provides a chance to dream big and cash in on a fortune.

Biggest Mega Millions Jackpots

Here are the top 10 largest Mega Millions jackpot prizes to date:

Jackpot Amount Date Won Winning Numbers State Sold
$1.537 billion 10/23/2018 5, 28, 62, 65, 70 + 5 South Carolina
$1.050 billion 1/22/2021 10, 19, 26, 28, 50 + 16 Michigan
$656 million 3/30/2012 46, 23, 38, 4, 2 + 23 Illinois, Kansas, Maryland
$648 million 12/17/2013 8, 14, 17, 20, 39 + 7 California, Georgia
$543 million 7/24/2018 1, 29, 37, 60, 66 + 21 California
$536 million 7/8/2016 8, 19, 26, 4, 5 + 5 Indiana
$533 million 3/30/2018 11, 28, 31, 46, 59 + 10 New Jersey
$522 million 6/7/2019 24, 25, 27, 38, 52 + 24 California
$451 million 1/5/2018 28, 30, 39, 59, 70 + 10 Florida
$437 million 1/1/2019 34, 44, 57, 62, 70 + 4 New York

As shown above, the top two largest jackpots both occurred recently in 2018 and 2021. The biggest Mega Millions jackpot ever was $1.537 billion shared by one winner in South Carolina on October 23, 2018. That winning ticket was the only one to match all 6 numbers drawn.

There is no guarantee a jackpot will grow to record-breaking amounts, but lottery fever takes hold when the prize rolls over drawing after drawing without a winner. The Mega Millions can quickly amass huge jackpots in the hundreds of millions and even billions of dollars. This creates intense interest in the game and ticket sales soar as more players want a chance at winning fortunes.

Notable Mega Millions Winners

Here are some interesting anecdotes of past Mega Millions jackpot winners:

  • In March 2019, Mike Weirsky of New Jersey won a $273 million Mega Millions jackpot after buying tickets with money he found while walking down the street. The winning ticket was initially purchased by another customer who accidentally left it behind on the store counter.
  • A Mega Millions syndicate of 16 co-workers at the California Department of Education shared a July 2018 jackpot of $543 million. Each member of the office pool contributed a few dollars each week leading up to the win.
  • Richard Wahl of New Jersey won a $533 million Mega Millions jackpot in March 2018 after being the only ticket holder to match all six numbers. When asked what he planned to do with the money, Wahl said the first purchases would be a new pickup truck and a lawyer.
  • In January 2021, a single ticket sold in Michigan matched all 5 white balls plus the Mega Ball to win that drawing’s $1.05 billion jackpot. The winners chose to remain anonymous when claiming the prize, which was the second largest Mega Millions payout ever.
  • Tonda Dickerson, a single mother working three jobs in West Virginia, was the sole winner of a $314 million Mega Millions jackpot in December 2014. She vowed to spend the money helping out her large extended family while providing for her daughter.

These stories help illustrate that Mega Millions jackpot winners can come from all walks of life. The lucky ticket may be purchased on a whim by a casual player or by someone who plays the same numbers devotedly every drawing. The life-changing jackpots give hope that even against immense odds, a single ticket is all it takes to win a fortune.


In summary, the Mega Millions lottery game offers multi-million dollar jackpots that players have the choice of receiving as an annuity paid annually over three decades or as a reduced lump sum cash option. Though the annuity provides the highest total payout, the instant cash value upfront is financially substantial at around 50% of the full jackpot amount. When evaluating their payment options, winners must consider factors like taxes, investment returns, interest rates, and personal priorities. Though the odds of matching all six numbers are incredibly low, the opportunity for enormous lottery winnings continues to drive strong interest and ticket sales for the popular Mega Millions game. Even a tiny chance for life-changing riches is enough to motivate millions of people to play.