Getting a lottery jackpot is a dream come true for many people. Millions of Americans play state lotteries, Mega Millions and other games for the hope of winning big prizes.

The lottery has always been popular with the wealthy and blue-collar workers alike, but over the past decade it has gotten much more expensive.

As interest rates have soared, so too have ticket prices. Despite that, the odds of winning a major jackpot have remained relatively low. Nonetheless, if you win the Mega Millions or Powerball you can choose to take your prize in either of two ways: a lump sum or an annuity payout.

Choosing an Annuity:

The annuity option is structured as period-certain fixed immediate annuities backed by the U.S. government, based on a set number of payments over a specific period. The payments begin with an immediate payment and gradually increase by 5% each year to account for inflation.

When the jackpot is over $1 billion, it usually attracts a lot of last-minute buyers. It’s a good time to purchase tickets, but you should be careful when making your purchases.

Buying more than one ticket for each possible combination is the only way to ensure that you’ll win the jackpot, but it can be expensive. If you’re on a budget, you should also consider playing the game for fun and entertainment.

Paying Federal and State Taxes:

As with any type of income, taxes are taken out of your prize before you can receive it. To help you keep your money, the lottery will withhold federal and state taxes at current levels, but it’s wise to consult an accountant or tax attorney for ways to minimize your tax liability.