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Lottery win you’d need to quit your job forever as Powerball jackpot hits $200m

Powerball's jackpot has hit $200m but would a $1 million lottery win be enough to set you up for life?

A financial expert has revealed just how much money you’d actually need to win in the lottery to be able to quit your job, with just hours for punters to buy a ticket in tonight's Powerball.

The jackpot has hit a historic $200 million and many Australians will be thinking about what they’d do with the money, and potentially how they would tell their boss they were never coming in again.

There are probably people out there who would win $1 million and decide to throw in the towel at work, but financial planner James Wrigley said you should put a bit more thought into it if you want to be able to live off your winnings. So, how much do you need to win to live fancy-free?

Lottery ticket for Powerball being held in a hand.
A lottery win could change your life, but would you need to win the whole Powerball jackpot to never work again?(Source: The Lott)

Have you unexpectedly come into money? Contact belinda.grantgeary@yahooinc.com

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“The rough rule of thumb to use is to multiply your living expenses by 20,” Wrigley told Yahoo Finance.

For this to work you’d need to own your own home.

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“Assuming you won enough money to clear your mortgage, and you’re not having to pay rent, times your annual living expenses by 20 and that would roughly put you in the range of being able to afford to not work again and maintain your lifestyle for the remainder of your years, regardless of how old you are.”

These expenses could include food, bills, transport, health care, utilities like energy and water, plus your taxes.

A single person’s estimated cost of living per month is $4,544, while a family of four is $8,049, according to the latest data from collaborative index Expatistan.

So, for a single person, that’s $1,090,560. But it’s likely you wouldn’t want to be just getting by. The average Australian said they’d need to be earning $345,819 to “feel rich”, according to a Finder study. That’s almost five times greater than the average personal income of $72,753, according to the Australian Bureau of Statistics.

By that calculation, to “feel rich” and live off your winnings, you’d need to win closer to $7 million ($6,916,380 to be exact).

What should I spend my money on if I win the lottery?

By Wrigley’s calculation, you don’t need the whole $200 million from this week’s Powerball to live a pretty comfortable life.

But say that you do, the finance expert has several other tips for how you should allocate your cash to make it go the furthest, and what not to do if you find yourself an instant multi-millionaire.

“The thing that catches out a lot of lotto winners, elite sports people and all the rest, is that they go spending the capital," he said. "You do not want to go falling into the trap of spending the capital on cars and luxury goods … you want to push that money into a trust.”

You can read his tips about how to best gift money to your family, set up a trust, and maximise your tax breaks in our explainer here.

How does Powerball work and can I improve my chances of winning?

If last week is anything to go by, there will be a last-minute rush of people buying tickets today before the draw closes at 7.30pm AEST.

The peak of sales for the $150m Powerball draw was at 6.15pm last Thursday, when 7445 tickets were sold in a single minute.

Almost half of all Australian adults are expected to buy a ticket to get a slice of the $200 million, The Lott told Yahoo Finance.

According to The Lott's estimations, this means the draw will bring in at least $57.2 million from roughly 10.6 million people - based on the cost of the minimum requirement of four games to participate.

If, on average, there were 20 games per person - the equivalent number of tickets in a PowerHit entry - Thursday's draw would turn over $285,569,840. The Lott has previously remained tight-lipped on the exact number of tickets it sells.

The chance of winning the division one prize in Powerball, based on one standard game, is one in 134,490,400. You’re more likely to be killed in an asteroid impact, struck by lightning, or bitten by a shark.

Powerball can be particularly difficult to win because there are two different draws, one that pulls seven balls from a set numbered from 1 to 35 and a second “Powerball draw” from a separate 20-ball set.

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