cash vs. annuity

Reply #267

CASH Only — Fri, 05 Aug 2005 19:20:00 GMT

I wouldn't mind seeing even longer (eg 40 payments) annuities, with a balloon at the end, as long as there's a cash option.

Reply #266

LOTTOMIKE — Tue, 02 Aug 2005 11:17:08 GMT

you could be right....

Reply #265

lchoro — Sat, 30 Jul 2005 17:26:21 GMT

Longer annuity terms are also a ploy to inflate the value of the jackpot.

Reply #264

CASH Only — Sat, 30 Jul 2005 16:59:51 GMT

When will lotteries go to 40-year annuities

Reply #263

CASH Only — Thu, 28 Jul 2005 00:18:24 GMT

Especially the new PB annuity.

Reply #262

lchoro — Tue, 26 Jul 2005 15:17:27 GMT

Lottery players tend to be older than the general population. As such, they're not going to take a 25- or 30-year annuity payment if they're in their late 30s or older.

Reply #261

LOTTOMIKE — Tue, 26 Jul 2005 13:19:39 GMT

a lot of people would although you do have the occasional person who chooses annuity.....

Reply #260

Just6ntlc — Sat, 23 Jul 2005 00:35:32 GMT

I rather take lump sum [Cash Value

Reply #259

lchoro — Fri, 22 Jul 2005 18:03:25 GMT

You left out out of the comparison the fact that there'll be money left over from the annuity each year to invest in marketable securities, funds, or real assets. It then becomes a comparison of two investment approaches: dollar-cost averaging versus lump-sum investing. Studies have shown dollar-cost averaging to do at least as well as lump-sum investing since the latter tends to pick hot periods to get into the markets. The annual payments from the annuity and the investment income (regardl... [ More ]

Reply #258

Kommisar — Fri, 22 Jul 2005 10:16:36 GMT

So, here's a few quick calculations which should (hopefully) prove the value of cash value over annuity:The California State Lottery's SuperLotto Plus minimum jackpot is 7 million, and these numbers are using that figure (and the lump sum figure provided on the lottery web page here) as a basis. I will, for the sake or argument, assume that the state lottery program faithfully pays out on schedule for the duration of the annuity and that the bonds actually earn the estimated interest over that... [ More ]

Reply #257

emilyg — Fri, 22 Jul 2005 04:32:49 GMT

nothing evil - whatever suits a person best

Reply #256

LOTTOMIKE — Fri, 22 Jul 2005 04:29:39 GMT

what is so evil about annuity

Reply #255

lchoro — Wed, 13 Jul 2005 14:02:36 GMT

Fidelity found that the average investor earned an annual return 5 percentage points below their funds. When the funds were returning 10 percent per year in the 80s and 90s, the average return was 5 percent, about the same as the money market in those days. It probably becomes a wider disparity when they apply the income tax to the frequent trading in and out by the average fundholder. Ultimately, there was a wide gap between what people said they were able to accomplish (ego) and the realit... [ More ]

Reply #254

ssweeps — Wed, 13 Jul 2005 05:00:31 GMT

The only problem we have with picking the annuity is that the annuity company works for the state of CA--if CA ever has budget problems, then they issue an IOU warrant which can't be cashed at a bank...it is worthless...what happens if you need the money?Also, the overhead for the state is very high...about 17%...I can invest better than the state can. They buy zero coupon bonds which pay a low amount of interest...

Reply #253

LOTTOMIKE — Sat, 09 Jul 2005 06:34:46 GMT

,you got that right.

Reply #252

CASH Only — Wed, 06 Jul 2005 15:14:04 GMT

It better be cash.

Reply #251

LOTTOMIKE — Wed, 06 Jul 2005 11:57:09 GMT

i wonder if the latest powerball winner will choose cash or annuity.....

Reply #250

LOTTOMIKE — Sat, 25 Jun 2005 03:28:27 GMT

thats a good point,i agree...

Reply #249

sagan — Fri, 24 Jun 2005 23:51:49 GMT

with inflation the annuity may lose a lot of it's value.taking all cash should allow your invested cash to keep pace with inflation.

Reply #248

Thomas Covenant — Fri, 24 Jun 2005 22:02:24 GMT

The annuity invests the cash pre-tax. You would be hard pressed making up the difference if you took the lump sum.

Reply #247

LOTTOMIKE — Wed, 22 Jun 2005 10:42:23 GMT

we don't need anymore jack whittakers thats for sure....

Reply #246

JimmySand9 — Tue, 21 Jun 2005 23:21:46 GMT

They better be responsible.

Reply #245

emilyg — Tue, 21 Jun 2005 22:58:41 GMT

Reply #244

LOTTOMIKE — Tue, 21 Jun 2005 20:43:33 GMT

almost 3 out of every 4 people polled here chose cash.....

Reply #243

CASH Only — Mon, 20 Jun 2005 13:33:21 GMT

It better be cash.

Reply #242

LOTTOMIKE — Sun, 19 Jun 2005 22:06:11 GMT

when a record jackpot is won and breaks the whittaker mark i wonder if that person will choose cash or annuity

Reply #241

LOTTOMIKE — Thu, 16 Jun 2005 10:38:19 GMT

thats a very good option to have.

Reply #240

lchoro — Wed, 15 Jun 2005 23:23:05 GMT

looks like in Virginia you can convert your future annuity payments to cash at anytime.. there's no need for winner's remorse if you change your mind. http://vawinners.com/index.html

Reply #239

LOTTOMIKE — Wed, 15 Jun 2005 20:07:10 GMT

after reading all these observations it seems to me that lump sum is the wiser choice unless you really having spending problems then you might want to choose annuity.....

Reply #238

danisiri — Wed, 15 Jun 2005 16:41:35 GMT

A friend of a friend won $54 million in the CA lottery. They took the annuity option. They were always broke, because they spent every last penny. They always had the mentality that another dispersement was coming next year, so they did not manage their money wisely.I would want the lump sum, because it forces me to manage a finite amount that could likely grow to be more than the annuity sum even with me spending some of it. Plus, if you invest the lump sum, you can live off the interest ear... [ More ]

Reply #237

KyMystikal — Wed, 15 Jun 2005 15:31:14 GMT

Oh also me getting the payments would also have to deal with how big of a jackpot it is. 100 mil or more I'm taking a lump sum.

Reply #236

KyMystikal — Wed, 15 Jun 2005 15:27:42 GMT

Same for me. Plus I've heard a lot of stories about people winning jackpots and being broke in a couple of years. I can't go broke on payments.

Reply #235

CASH Only — Wed, 15 Jun 2005 15:24:00 GMT

I would like to see Jack win again.

Reply #234

danisiri — Tue, 14 Jun 2005 01:15:10 GMT

If Jack wins again, maybe it would be a wakeup call to him and he would straighten out. Though I would rather the record breaker be someone who would better use the money for good.

Reply #233

LOTTOMIKE — Mon, 13 Jun 2005 20:29:16 GMT

also it would be something if jack whittaker won twice,lol

Reply #232

LOTTOMIKE — Sun, 12 Jun 2005 13:45:00 GMT

it would be something if someone breaks the jack whitaker record jackpot THEN turns around and chooses annuity.....

Reply #231

LOTTOMIKE — Sat, 11 Jun 2005 14:37:05 GMT

Reply #230

danisiri — Fri, 10 Jun 2005 21:41:23 GMT

Totally a lump sum on a $400 million JP, though I take lump sum no matter the amount. The larger the JP, the more I can make it grow faster than what the annuity would deliver.

Reply #229

CASH Only — Fri, 10 Jun 2005 20:14:32 GMT

Annuity never.

Reply #228

LOTTOMIKE — Fri, 10 Jun 2005 20:04:43 GMT

if you won a 400 million dollar jackpot would you choose lump sum or annuity

Reply #227

LOTTOMIKE — Thu, 09 Jun 2005 19:26:49 GMT

if i won powerball or mega millions i'd just take the lump sum and figure it out from there.....

Reply #226

LOTTOMIKE — Mon, 06 Jun 2005 10:37:03 GMT

it looks like three out of every four people so far would rather have cash lump sum than annuity.....

Reply #225

lchoro — Mon, 06 Jun 2005 00:44:41 GMT

One aspect that argues in your favor is that interest rates for money and dividends for bonds are extremely low at present. That means you'll get a large lump sum relative to the annuity value which I think uses the treasury bond rates. If shorter-term interest rates keep rising and longer rates fall, you might do better to gradually invest that lump sum as rates rise than the annuity that's stuck with long-term t-bond rates of around 4 percent.

Reply #224

Todd — Sun, 05 Jun 2005 17:58:25 GMT

This shows how little you know. The point of the annuity is that YOU, the winner, gets the interest, which is how they arrive at such a high jackpot amount. Not the lottery.You have a lot to learn, young one.

Reply #223

danisiri — Sun, 05 Jun 2005 17:34:00 GMT

I did some more research into this and I think you are correct. I find it kind of ridiculous that they would only take out 25% if they know you are going to be taxed at 35% for jackpot winners. Well, I can still hope that the federal income tax will be eliminated before I win

Reply #222

lchoro — Sun, 05 Jun 2005 01:05:57 GMT

[quote]When you take the lump sum, federal tax witholding is only 25%. Depending on what state you live in, the state income tax could range from 0% to 9%. Added together, that is still less than the 42% income tax rate you are quoting. DC does not charge state income tax on lottery winnings, so you would only incur the 25% federal witholding.[/quote]Withholding is what the tax authorities keep from your lottery receipt as mandated by law. What you pay in tax on the lottery winnings will be dete... [ More ]

Reply #221

danisiri — Sun, 05 Jun 2005 00:36:10 GMT

I think that perhaps your are overcalculating your taxes. When you take the lump sum, federal tax witholding is only 25%. Depending on what state you live in, the state income tax could range from 0% to 9%. Added together, that is still less than the 42% income tax rate you are quoting. DC does not charge state income tax on lottery winnings, so you would only incur the 25% federal witholding.Now, if you invest your remaining winnings into treasury bonds, you would only pay federal income ta... [ More ]

Reply #220

lchoro — Sat, 04 Jun 2005 23:25:58 GMT

[quote]Good points. It makes sense that annuity in short winnings can go farther if you're smart. At what point (winnings wise) would you say annuity would produce less benefit? Personally I wouldn't even think of taking annuity for anything over $20 million jackpot.[/quote]I think I probably wouldn't take an annuity if the prize was well over $ 200 K per year. It becomes harder to shield from taxes in my circumstances and my area's cost of living (DC). Since I'm in my early 40's and my mom is... [ More ]

Reply #219

delS — Sat, 04 Jun 2005 14:21:33 GMT

I'd take the lump sum payment and make my money work for me. Have you ever thought about why money is called currency? It is electric, it is active, you have to tell/direct money where, what and how to do

Reply #218

swaa — Sat, 04 Jun 2005 10:44:42 GMT

Good points. It makes sense that annuity in short winnings can go farther if you're smart. At what point (winnings wise) would you say annuity would produce less benefit? Personally I wouldn't even think of taking annuity for anything over $20 million jackpot.

Reply #217

LOTTOMIKE — Sat, 04 Jun 2005 02:05:21 GMT

these kinds of decisions are more harder than i originally thought.there are so many different ways of looking at this...

Reply #216

atlasshrugged — Fri, 03 Jun 2005 16:26:17 GMT

Goodness, you have put some thought into this. This is the reason that I would get in touch with a financial planner before I even cash in my ticket. You have 180 days to cash it in (about 6 mos) I think I could figure out the best way to go within 6 mos. -Bonnie

Reply #215

lchoro — Fri, 03 Jun 2005 15:43:32 GMT

If I won the Lotto South annuity of $ 5 million and purchased a regular house ($ 600 K) in my area, I would keep far more of my money than if I took the winnings in a lump-sum. It would cost me about $50 K in the first year to finance the purchase and pay the real estate taxes, all of which are deductible. Add on the deductions for health insurance, medical savings accounts, property taxes, etc., and I would have about a third of lottery income sheltered from the federal and state income taxes w... [ More ]

Reply #214

LOTTOMIKE — Fri, 03 Jun 2005 04:48:02 GMT

i'd still rather take the lump sum instead of having to deal with the lottery corporation every year on annuity for 30 years,what would happen if the lottery suddenly ran into problems 10 years down the road

Reply #213

swaa — Fri, 03 Jun 2005 04:21:46 GMT

Todd yes they do make interest off the money. The cash isn't stored in a safe, it's in a bank in an interest bearing account. You take annuity they get interest of that which they haven't paid out to you. Why do you think they payout over 20-30years instead of 48 months or 5 years? That is a fact.

Reply #212

MMGuy — Thu, 02 Jun 2005 17:24:30 GMT

I don't know if someone said this before, but Eric Kyle took the annuity and the Hubbard's took cash.

Reply #211

atlasshrugged — Thu, 02 Jun 2005 13:13:38 GMT

Here's my take on the annuity vs lump sum thing. For me it would depend on the jackpot. If I won a small jackpot like the Lottosouth for like 5 mill. I'd take the lump sum. It would end up being about 2.5 mill and then when taxes are taken out it would end up being a check for about 1.65 mill give or take a few hundred thousand. I would then take that money and hand the vast majority of it over to a financial planner to try and be sure that it would last my entire life. Now if I won one of those... [ More ]

Reply #210

Todd — Thu, 02 Jun 2005 12:18:35 GMT

As with your comments on computerized drawings, your comment shows limited knowledge about how things work.No, the lotteries don't make any more money when a winner selects annuity. If anything, a bank would benefit from the use of the invested lottery prize money. The lottery itself does not gain any interest or other benefit when the prize money is invested. If anything, it gives them more overhead costs, because they have to cut checks to the winner every year, and maintain long-term recor... [ More ]

Reply #209

swaa — Thu, 02 Jun 2005 07:28:14 GMT

If you take the annuity, the lottery will actually end up making more money off of your winnings over time...heh. Sad but try. They do indeed invest it and gain interest off that money. That's why you should take the lump sum up front. What you get is an entire jumble of money making interest...how much interest? Well that depends on the bank, but at a standard 8percent compounding interest on just 10million...you will be making a little under 1 million per year in interest after 5 years...see h... [ More ]

Reply #208

LOTTOMIKE — Wed, 01 Jun 2005 19:44:02 GMT

we will have to wait and see whether or not the idaho winner chooses cash or annuity...

Reply #207

LOTTOMIKE — Mon, 30 May 2005 19:36:08 GMT

the winner was from idaho in the saturday powerball drawing.i think the last winner from idaho a few months back got annuity....

Reply #206

MMGuy — Mon, 30 May 2005 00:11:21 GMT

Good Decision! Cash is the only way to go in my opinion.

Reply #205

Fwup — Sun, 29 May 2005 01:19:49 GMT

I'm going to choose cash.

Reply #204

LOTTOMIKE — Sat, 28 May 2005 23:20:42 GMT

i wonder if the next powerball winner will choose cash or annuity....

Reply #203

LOTTOMIKE — Fri, 27 May 2005 19:09:32 GMT

those scratch games should be fair and offer a lump sum too.....

Reply #202

CASH Only — Thu, 26 May 2005 22:30:30 GMT

NY has annuity-only scratch games, including three versions of Lose for Life.

Reply #201

LOTTOMIKE — Wed, 25 May 2005 19:25:53 GMT

thanks for the information i wasn't sure....

Reply #200

JimmySand9 — Wed, 25 May 2005 15:54:36 GMT

You have to make your final decision when you buy tickets, but there is a cash option.

Reply #199

LOTTOMIKE — Wed, 25 May 2005 10:41:53 GMT

is new york annuity only

Reply #198

CASH Only — Tue, 24 May 2005 20:36:26 GMT

I've heard of half-n-half only once, I believe in MO.

Reply #197

LOTTOMIKE — Tue, 24 May 2005 19:17:48 GMT

i was wondering can you actually do this in some states

Reply #196

LOTTOMIKE — Sun, 22 May 2005 21:38:45 GMT

half lump sum and half annuity seems like a good idea just in case spending habits get out of control...

Reply #195

Thomas Covenant — Sun, 22 May 2005 16:25:17 GMT

I think I read somewhere that someone did do this. But an annuity isn't just for people who can't handle money. A pre-tax investment is hard to beat. Which would you rather invest?$102,200,000 or $69,496,000

Reply #194

four4me — Sun, 22 May 2005 16:07:31 GMT

You know they should have that option as well. i think many people would go that route. Tax wise it might not be a great idea. but for people whom have a problems handling their money it might be a good thing.

Reply #193

Thomas Covenant — Sun, 22 May 2005 15:52:35 GMT

What about half lump sum and half annuity

Reply #192

LOTTOMIKE — Sat, 21 May 2005 07:42:55 GMT

they don't ask us that before we buy the powerball tickets here in tennessee.........

Reply #191

LOTTOMIKE — Thu, 19 May 2005 11:14:08 GMT

it would have been a tragedy indeed......

Reply #190

CASH Only — Wed, 18 May 2005 21:21:24 GMT

ap:The cashier was right in selling you a CASH ticket.

Reply #189

Annual Payments — Wed, 18 May 2005 21:20:37 GMT

I remember playing super lotto plus in CA and the cashiers never gave me the option of annual payments or cash. I'm not sure i would have been so happy if i would have won cash and couldn't take an annuity because of the cashier.

Reply #188

CASH Only — Wed, 18 May 2005 20:38:25 GMT

Reply #187

LOTTOMIKE — Sun, 15 May 2005 21:23:52 GMT

thats a very smart thing to do.....

Reply #186

CASH Only — Sun, 15 May 2005 17:07:33 GMT

I read the fine print BEFORE I play.

Reply #185

LOTTOMIKE — Sat, 14 May 2005 20:53:15 GMT

cash only what would you do if they told you that you must take an annuity,lol,what would you do

Reply #184

CASH Only — Sat, 14 May 2005 14:39:32 GMT

lump sum

Reply #183

LOTTOMIKE — Sat, 14 May 2005 07:57:38 GMT

truthfully i think i would just take a lump sum and get it over with.......no hassles down the line.....

Reply #182

LOTTOMIKE — Fri, 13 May 2005 00:48:46 GMT

he stalled too long,time ran out.......deadline

Reply #181

MMGuy — Fri, 13 May 2005 00:09:12 GMT

I think he would take his money as a lumpsum.

Reply #180

LOTTOMIKE — Fri, 13 May 2005 00:06:01 GMT

i think eric got annuity.

Reply #179

Annual Payments — Thu, 12 May 2005 18:13:45 GMT

So what did Eric kyle do? did he collect anything

Reply #178

LOTTOMIKE — Wed, 11 May 2005 20:34:27 GMT

yeah i agree we will be fine as long as they don't run her off,i wonder if the tennessee powerball winners chose cash or annuity....does anyone know

Reply #177

CASH Only — Tue, 10 May 2005 23:18:03 GMT

I doubt it. You have Ms Paul.

Reply #176

LOTTOMIKE — Tue, 10 May 2005 17:32:06 GMT

hope tennessee never gets that bad.....

Reply #175

CASH Only — Mon, 09 May 2005 20:38:57 GMT

Because the NY Lottery is beaurocratic (sic?) as well as corrupt.

Reply #174

LOTTOMIKE — Mon, 09 May 2005 10:34:17 GMT

why is it in certain states you have to tell them annuity or lump sum up front before you buy the ticket but in other states you don't

Reply #173

LOTTOMIKE — Sun, 08 May 2005 21:23:01 GMT

cash only what if you won a jackpot and was told it was annuity only lol

Reply #172

CASH Only — Sun, 08 May 2005 17:18:19 GMT

It would be a no-brainer for me.

Reply #171

LOTTOMIKE — Sat, 07 May 2005 20:26:43 GMT

i think a lot of people have a hard time making the choice of cash or annuity when they win a major jackpot......

Reply #170

CASH Only — Sat, 07 May 2005 13:29:43 GMT

Never

Reply #169

LOTTOMIKE — Sat, 07 May 2005 07:47:22 GMT

the more i think about it if it was a great big jackpot like 100 million i might choose annuity.....maybe

Reply #168

LOTTOMIKE — Fri, 06 May 2005 02:04:37 GMT

include mega millions....