Welcome Guest
Log In | Register )
The time is now 4:41 am
You last visited July 29, 2014, 4:39 am
All times shown are
Eastern Time (GMT-5:00)

Question about the "Cash" or "Annuity" Option

Topic closed. 7 replies. Last post 3 years ago by guesser.

Page 1 of 1
PrintE-mailLink
karinda's avatar - WINGS
New Jersey
United States
Member #108449
March 25, 2011
2855 Posts
Offline
Posted: July 5, 2011, 12:51 am - IP Logged

I noticed on the redesigned New Jersey lottery web-site that they are no longer posting the amount for the Cash option and the Annuity for the Pick-6 lotto, Megamillions or Powerball. They are only posting the Annuity amounts. I hope they decide to put the information back once they are finished with the web-site. But anyway, that's kind of an aside from my question...

Is it true that if you select "Annuity" on a bet slip for Powerball and Megamillions, that you can change your mind if you win and take the Cash; but if you select "Cash" on the bet slips, that you no longer have the option to take the annuity? Does anyone know if I have this right or am I spreading rumours? ;) If it is correct do these rules also apply to the Pick-6 lotto in NJ? Does it vary from state to state?

Thanks very much.

Karinda

    Avatar
    Kentucky
    United States
    Member #32652
    February 14, 2006
    5284 Posts
    Offline
    Posted: July 5, 2011, 8:34 am - IP Logged

    I noticed on the redesigned New Jersey lottery web-site that they are no longer posting the amount for the Cash option and the Annuity for the Pick-6 lotto, Megamillions or Powerball. They are only posting the Annuity amounts. I hope they decide to put the information back once they are finished with the web-site. But anyway, that's kind of an aside from my question...

    Is it true that if you select "Annuity" on a bet slip for Powerball and Megamillions, that you can change your mind if you win and take the Cash; but if you select "Cash" on the bet slips, that you no longer have the option to take the annuity? Does anyone know if I have this right or am I spreading rumours? ;) If it is correct do these rules also apply to the Pick-6 lotto in NJ? Does it vary from state to state?

    Thanks very much.

    Karinda

    Most lotteries did away with making the choice between "cash" or "annuity" before the drawing many years ago and now the winners make that choice when they validate their ticket. I believe in Ohio if they are still undecided, they have 60 days to make up their mind.

    I'm not a financial adviser but it may be possible to purchase a larger interest baring annuity with the lump sum payoff before taxes are taken out. The down side with taking the annuity option is you're locked in for 25 or more years. If things change in the next 10, you'll be calling J. G. Wentworth. Don't know the percentage they'll keep, but the total will be probably much lower than the original cash option minus whatever annuity payments were received.

      Avatar
      DFW, Texas
      United States
      Member #78628
      August 18, 2009
      134 Posts
      Offline
      Posted: July 5, 2011, 11:28 pm - IP Logged

      I love searching for information.  This is what I found:

      http://www.state.nj.us/lottery/about/faq-finance.htm#finance7

      Can I change my mind about annuity and cash when I win a prize?

      Should you hold a winning Pick-6 Lotto, Powerball or Mega Millions ticket and it has been purchased as an annuity ticket, the New Jersey Lottery will immediately purchase the annuity at the rate available.  You do have the option of requesting that the New Jersey Lottery sell that annuity on your behalf within 60 days. However, the sale will be governed by the market rates at the time of sale—therefore, you could possibly lose money or increase your winnings based on the rates at the time of sale.

      However, if you have a cash ticket, you cannot switch it to an annuity ticket—precisely because the bonds to fund that annuity would have needed to be purchased as soon as it was determined a winning ticket had been sold in New Jersey . If the person is taking cash—because bond rates fluctuate—the annuity they might receive could be very different from the original annuity which had been advertised.

        guesser's avatar - Lottery-017.jpg

        United States
        Member #41383
        June 16, 2006
        1969 Posts
        Offline
        Posted: July 6, 2011, 12:30 pm - IP Logged

        If you take cash, you generally end up with about 45% of the jackpot, depending on the state you live in. The bigger the jackpot, the less you get. Eight folks split a 380 million dollar jackpot, they each ended up with a bit under 17 million each, do the math.

        While the annuity pays more, I'd still take the cash option and buy myself an annuity with a portion of it, probably 50%, and quite frankly I'd blow the rest of it. Yeah, I would endow some charities as well, but I'd be having some fun also.

          karinda's avatar - WINGS
          New Jersey
          United States
          Member #108449
          March 25, 2011
          2855 Posts
          Offline
          Posted: July 8, 2011, 10:49 am - IP Logged

          I noticed on the redesigned New Jersey lottery web-site that they are no longer posting the amount for the Cash option and the Annuity for the Pick-6 lotto, Megamillions or Powerball. They are only posting the Annuity amounts. I hope they decide to put the information back once they are finished with the web-site. But anyway, that's kind of an aside from my question...

          Is it true that if you select "Annuity" on a bet slip for Powerball and Megamillions, that you can change your mind if you win and take the Cash; but if you select "Cash" on the bet slips, that you no longer have the option to take the annuity? Does anyone know if I have this right or am I spreading rumours? ;) If it is correct do these rules also apply to the Pick-6 lotto in NJ? Does it vary from state to state?

          Thanks very much.

          Karinda

          Thank you all very much. I appreciate you taking the time to respond to my question. The answers are very helpful.  In NJ, players are still required to select Cash or Annuity at the time they purchase their tickets. If I am fortunate enough to win, I like having the option to decide later, rather than making the decision about more money than I've ever had in my lifetime standing in the middle of a convenience store. :) 

          I have mixed feelings about both options for the same reasons that were mentioned. There are no guarantees with an annuity payout, so much can change in 25 or 26 years (or however long the payout is). There's something to be said for taking the money and running. lol ;) On the other hand, there's something appealing about getting the money over time too. Not only because the payout is higher, but it could also serve as a safety net.  Winning 100 million paid out over 25 or 26 years versus winning 10 million paid out over 25 or 26 years are very different scenarios. 

          Thanks again for sharing your perspectives on the subject. I learned a lot from them and wish you all the best for prosperity, health, and happiness.

          Blessings,
          Karinda

            dallascowboyfan's avatar - tiana the-princess-and-the-frog.jpg
            Oklahoma
            United States
            Member #82391
            November 12, 2009
            5223 Posts
            Offline
            Posted: July 10, 2011, 9:37 am - IP Logged

            "The down side with taking the annuity option is you're locked in for 25 or more years. If things change in the next 10, you'll be calling J. G. Wentworth. Don't know the percentage they'll keep, but the total will be probably much lower than the original cash option minus whatever annuity payments were received."I Agree! with Stack47

              Avatar
              Kentucky
              United States
              Member #32652
              February 14, 2006
              5284 Posts
              Offline
              Posted: July 10, 2011, 12:03 pm - IP Logged

              If you take cash, you generally end up with about 45% of the jackpot, depending on the state you live in. The bigger the jackpot, the less you get. Eight folks split a 380 million dollar jackpot, they each ended up with a bit under 17 million each, do the math.

              While the annuity pays more, I'd still take the cash option and buy myself an annuity with a portion of it, probably 50%, and quite frankly I'd blow the rest of it. Yeah, I would endow some charities as well, but I'd be having some fun also.

              Almost 35% Federal tax plus whatever state tax is deducted right off the top so there is a huge difference between the cash prize and the annuity. The current PB jackpot of $48 million would net the winner less than $15 million but you have to compare that to the approximate $944,000* after tax yearly payments.

              "I'd still take the cash option and buy myself an annuity with a portion of it, probably 50%"

              At a 7% annual interest rate, you'll get over $500,000 a year and 29 years later, you'll still have $7.5 million. You can buy lots of stuff with $5 million and the interest from investing the rest could actually exceed the annuity payments.

              *from a tax base of 35% Federal and 6% state. (your milage may vary)

                guesser's avatar - Lottery-017.jpg

                United States
                Member #41383
                June 16, 2006
                1969 Posts
                Offline
                Posted: July 11, 2011, 12:45 am - IP Logged

                Point being if I buy myself an annuity: I'd be less likely to blow it ALL, make lousy investments, have the market crash (again), get scammed by someone, and I would still have an annual (or monthly) income check on top of my 'blow it' money. A golden parachute if you will.