A routine stop at a car wash turned into a life-changing moment for an Illinois father of five, who walked away with a $1 million Powerball prize. And while his wife's initial reaction was certainly justified, his plans for their winnings are a bit more financially savvy.
"When I checked the numbers, it sank in immediately that I had won," the man, who wished to remain anonymous, told the Illinois Lottery.
His luck began simply, with someplace new to get his car cleaned and a spur-of-the-moment decision to buy a Powerball ticket because he "wanted to play for the most money."
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That ticket proved golden, matching all five main numbers in the Aug. 9 drawing, netting $1 million plus a $4 bonus for matching the Powerball.
When the man told his wife, she thought he was lying, but then her reaction was, "We're going to Disney World!"
The Magic Kingdom is on the itinerary, the man told the Illinois Lottery, as he laughed, but the real financial destination is investing in the education of his five children.
Considering the soaring costs of college, that may be his smartest financial move.
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The average sticker price of one year's tuition and fees at a four-year, public, in-state university is about $11,610 and $43,350 at a private nonprofit school, according to data from the College Board. That doesn't account for room and board.
Given that education costs historically rise faster than inflation, the future is even more daunting. Financial services company Northwestern Mutual estimates that four years of college for a single student enrolling 15 years from now could cost more than $256,000 at a public in-state university or more than $600,000 at a private school.
The man can make the most of his plan to fund his children's education with the most powerful tool available, a 529 college savings plan. The state-sponsored plans are considered the gold standard for education savings because they offer significant advantages:
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- Tax-free growth: Investments in 529 plans grow tax-deferred, and all earnings are 100% tax-free when withdrawn, as long as the money is used for qualified education expenses like tuition, fees, books and room and board.
- State tax benefits: While contributions are not federally tax-deductible, many states, including the winner's residence in Illinois, offer a state income tax deduction or credit for contributions.
- Financial aid protection: Assets held in a parent-owned 529 plan have a minimal impact on a child's eligibility for need-based federal financial aid compared to other types of savings accounts.
By immediately funding multiple 529 accounts with the lion's share of that $1 million, the Illinois father ensures that his family will enjoy Disney World today, while guaranteeing the academic security of all five kids.
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