Lump Sum or payments?

Reply #67

mylollipop — Fri, 07 Mar 2008 06:25:22 GMT

Lump, Lump, Lump, no matter what my age. I just do not trust an annuity. Says who we will be a USA in 20-30 years. The power moguls that be make take over and there would be no lottery-no nothing!

So LUMP it here

Reply #66

BaristaExpress — Wed, 20 Feb 2008 18:48:18 GMT

oops 26,500,000 my bad

Reply #65

BaristaExpress — Wed, 20 Feb 2008 18:44:22 GMT

Lump sum pays less in taxes over time vs annuity! Yes, no matter what you are going to be hit the first payment with 25% right off the top and another 10% at the end of the year for either the lump sum or annuity! But this is where the difference begins. The lump sum is now all paid up in the tax department and now you can invest it to yield the most possible income in the years to come. Now with that you now have to pay taxes on capitol gains (I see light bulbs going off) Yep you pay that at th... [ More ]

Reply #64

KY Floyd — Wed, 20 Feb 2008 07:07:01 GMT

If it was possible to get a higher rate of return withoutsignificant risk, why wouldn't the lottery be getting that higher rateand offering an even bigger annuity?

Of course it depends on whatyou mean by sigificant risk. The lottery is guaranteeing to pay theannuity, so they take a modest interest rate in exchange for very lowrisk. You can do the same by investing the lump sum in a savingsaccount, CD, government secuities, or any number of investmentsthat offfer a defined return on your inves... [ More ]

Reply #63

JackpotWanna — Wed, 20 Feb 2008 02:46:27 GMT

Good point. Money loses value over time.

Reply #62

time*treat — Wed, 20 Feb 2008 00:21:17 GMT

Lump sum. I want it while it's still worth something.

Reply #61

pacattack05 — Tue, 19 Feb 2008 23:41:53 GMT

If I win a million net, I'd like a dollar a year for a million years. This way i wouldn't spend it all at once.

Reply #60

justxploring — Tue, 19 Feb 2008 23:40:25 GMT

Yes, but you have to figure out how long it will take you to make back the 50% or more that you gave up selecting the lump sum. At least in FL many of the payouts are often as high as 60%. Their 20 yr annuity (MegaMoney) is 70%. (a woman who just won $2M got $1.4M)

I don't think it's a no-brainer. Depends on the jackpot. Also, celebrities can blow everything and make just one movie to earn millions. Rock stars can go broke and go on tour and make more than you'll ever see in a lifetime. When... [ More ]

Reply #59

JWBlue — Tue, 19 Feb 2008 23:28:21 GMT

It seems like a no brainer to take the lump sum. Wouldn't it be possible to get a higher rate of return by investing the lump sum than the effective rate with taking the annual payments without significnt risk

Reply #58

bigato1010 — Mon, 18 Feb 2008 05:09:14 GMT

Hey stack47 i woud like to thank for taking time out to explain the questions i had on vtract numbers and how they work. Thank you for people like you .. few in a millions.

Reply #57

Stack47 — Mon, 18 Feb 2008 02:21:43 GMT

Since the cash option would give you more money to invest with them, I'm pretty sure a financial advisor would suggest taking the lump sum.

Reply #56

bigato1010 — Mon, 18 Feb 2008 00:51:58 GMT

I would not know which way to go , will consult with my financial advisor first.

Reply #55

pacattack05 — Sat, 16 Feb 2008 00:13:26 GMT

Well that makes sense if you could be anonymous. They wouldn't even think of asking you for money if they didn't know you won, but everybody will know...lol

What? you want 10 grand for a new car? Are you kidding me? I only make 7 million a year....lol

Reply #54

LuckyLilly — Sat, 16 Feb 2008 00:02:04 GMT

That's an excellent line tho! I can't count the number of times I've heard people say they can't afford something because they're on a fixed income. Can you imagine the first time you told someone that as a lottery winner? You want me to buy you a car? Oh I'm sorry, didn't you know? I'm on a fixed income. Bet it'd stop them in their tracks. Well, at least for a minute.

Reply #53

pacattack05 — Fri, 15 Feb 2008 23:53:28 GMT

That's hilarious. Are you telling me that people wouldn't come out of the woodwork asking for money because they knew that you were on a fixed income of almost 7 million a year, for 26 years

Reply #52

sfilippo — Fri, 15 Feb 2008 23:40:01 GMT

Powerball Jackpots can be taken by annuity and then cashed out later.

It's a good tactic to use. It let's everyone around you know that you are on a fixed income and once they get used to that idea, you can cash out your annuity and invest it for better gains and do it descretely too.

Reply #51

MissNYC — Wed, 13 Feb 2008 21:03:17 GMT

It's about time this thing starts to grow! Anyone else notice that both the Powerball and Megamillions rarely see the large jackpots the saw about 5 years back? Why is that? It seems like they rarely break 200 million, when at one time they seemed to continuously roll to 300 mil +. Don't get me wrong, I'll be perfectly happy with a 200 mil win, it just is so much more exciting when it grows

Reply #50

EXMECHANIC — Wed, 13 Feb 2008 18:58:30 GMT

Take the lump sum and get your own annunity built around your life style if your that worried that you will blow it all.

Reply #49

BaristaExpress — Wed, 13 Feb 2008 18:51:17 GMT

It makes no sense to take payments at any age! Take the lump sum and get the proper financial advice to maximize your return on your investments and live a comfortable life from then on. The lump sum pays less taxes over time than the annuity! Yes you pay more every year with an annuity! I'd rather pay 15% in capitol gains tax, than the whopping 25% right off the top every year and then still owe another 10% to the IRS for a grand total of 35% in taxes paid each year that I'd receive the annuity... [ More ]

Reply #48

ThatScaryChick — Wed, 13 Feb 2008 18:38:30 GMT

Well I won't be playing since I'm not in a Mega Millions state, but good luck to those who are! I would love to win that jackpot, but then I would love to win a $12 or $15 million jackpot as well.

Reply #47

ThatScaryChick — Wed, 13 Feb 2008 18:35:17 GMT

I love this answer! I will invest and save of course, but I want to have nothing but free time to do the things I love. I don't want to spend my life doing investments and working.

Reply #46

JackpotWanna — Wed, 13 Feb 2008 14:10:58 GMT

Good Luck All!

Annuity

Cash

Mega Millions Jackpot for Fri, Feb 15, 2008

$179,000,000

$110,000,000

Gross Prize 26 annual payments of $6,884,615

Lump-sum cash: $110,000,000

- 25% Federal Tax - $1,721,154

- $27,500,000

Subtotal $5,163,461

$82,500,000

Reply #45

KY Floyd — Wed, 13 Feb 2008 07:13:01 GMT

How would I be paying for the house 3 times?

Whether you pay cash or take a mortgage, the actual cost of the house is the difference between what you have after the house is paid for and what you could have had if you hadn't bought the house. If you have 250k in an investment account and you take it out to pay cash, in 30 years you'll have the house, and nothing at all in that account. That makes the total cost of the house a hair over $700K. If you keep the house for another 10 years, that a... [ More ]

Reply #44

four4me — Wed, 13 Feb 2008 06:27:56 GMT

Here's a thought if you couldn't handle your finances before you win the lottery what makes a person think they can after they win the lottery.

Only so many people are able to accomplish this. The vast majority of people who win big are probably living from paycheck to paycheck.

To handle a jackpot win you need some kind of money management education if you intend to handle your own finances.

I know lots of people who came into money either through an inheritance or the lottery and a fe... [ More ]

Reply #43

Coin Toss — Wed, 13 Feb 2008 05:47:00 GMT

To each his own...

Personally I think parrt of the lure of hitting a jackpot is to have nothing but free time

Reply #42

JackpotWanna — Wed, 13 Feb 2008 02:20:24 GMT

My background is in real estate.

It will keep me grounded and avoid the foolishness from having too much free time.

Reply #41

Coin Toss — Wed, 13 Feb 2008 00:58:18 GMT

JackpotWanna

I will take $8 million in cash. ( buy forclosed real estate )

With that kind of score and that kind of cash, why buy properties and get involved with repairs, improvements, etc...even if you hire a property management copmpany to do it?

Why not REITs (Real Estate Investment Trusts)? I would think the more hands-off investing and the less involvement in the properties, the better.

Reply #40

JackpotWanna — Tue, 12 Feb 2008 18:29:53 GMT

Can you have both?

For example today's Megamillions Jackpot is $150+ Million.

Cash After taxes about $70 Mil

I will take $45 Million to buy a $90 Million annuity ($2 million in 45 different banks )

I will take $8 million in cash. ( buy forclosed real estate )

I will take $7 million in cash. ( travel, and help family and friends )

I will take the remaining $10 million in cash into short term interest accounts(money market and 3 month cds and saving accounts)

Good luck... [ More ]

Reply #39

Coin Toss — Tue, 12 Feb 2008 17:20:49 GMT

Ky Floyd

You're still paying for the house three times.

Total payments of $540,000 on a house you buy for how much?

Don't forget there was a time when interest on car payments, loans, and credit cards was deductible, and there have already been attmpts at making mortgage interest non-deductible.

Unlikely to happen, but what if it did

Reply #38

OldSchoolPa — Tue, 12 Feb 2008 17:05:45 GMT

Now I would put all of my money in one place...invested with me! Yeah, I too would change my life after winning any type of jackpot...of course, the change would be much bigger with say a $100 million cash value jackpot win than say a $7 million cash jackpot win (yeah, as you can see there would be no annuity option for this kid so I don't even get caught up in the advertised annuitized jackpot prize amount).

But I would definitely purchase a Bentley and a Maserati. The Bentley would be my g... [ More ]

Reply #37

OldSchoolPa — Tue, 12 Feb 2008 16:58:55 GMT

I agree with MissNYC in that those who wouldn't want to change anything should just not play the lottery at all. For goodness sake, even just having one such person or even a congressman win is too much! I have also noticed that people hate to see convicted criminals win jackpot lotteries, but I think congressman are in the same league.

As for justxploring, it is apparent that you would be a weak link on any debate team. This is not a personal attack as I am just rebutting what you wrote (he... [ More ]

Reply #36

jarasan — Mon, 11 Feb 2008 22:25:11 GMT

One of my favorite TV character names was Lumpy on Leave it to Beaver. Eddie Haskell was on some talk show last week, the Beaver rules.

Aw Wally!

Oh Yeah, don't count yer chikins till they is hatched. Interest shimterest, win da jackpot first.

Reply #35

justxploring — Mon, 11 Feb 2008 22:23:32 GMT

Coin Toss was talking about a 20 year payout. I believe that's 5% interest. ex: $2,000,000 would be $100,000 a year for 20 years, although I did mention 30 years in one of my comments.

I was only pointing out that, depending on one's age, making up the 50% loss will take a lot of time. In FL where payouts often exceed 60% it's a little different.

Everyone keeps talking about being responsible and investing wisely. Millions of experts lost a fortune in market crashes. Many people trusted c... [ More ]

Reply #34

KY Floyd — Mon, 11 Feb 2008 21:54:33 GMT

annuity payments on say $200 million might be worth it if I had no choice, but still would never compare to the interest rates of the lump sum.

Have you ever actually compared them? The fixed payment for MM is 3.33% of the annuity value every year for 29 years. For an annuity of $100 million that's $3,333,333.33 every year. If you choose the lump sum the pre-tax payment will be about $62 million. If there's no state tax after the IRS gets their share you'll have about $40.3 million. Take $3,... [ More ]

Reply #33

KY Floyd — Mon, 11 Feb 2008 21:50:29 GMT

Have you ever considered what it costs to pay cash and lose the investment income? If you invested 250k at 5% and lost 30% of the interest to taxes you'd net 3.5% every year. In 30 years that would turn the 250k into just over 700k, for an increase of $500k. If you took a 30 year mortgage on 250k at 6% your monthly payments would be just under $1500, so the total of the payments would be $540,000. $290,000 of that would be interest that's deductible, saving you $87k in taxes. That makes the real... [ More ]

Reply #32

pacattack05 — Mon, 11 Feb 2008 18:56:06 GMT

No you don't have to shut up. I have about 5 more hours before I have to go to work. Be my guest.

Reply #31

ThatScaryChick — Mon, 11 Feb 2008 18:52:31 GMT

I guess I can say the same thing. Aren't I allowed to state my opinion on the subject or do I have to shut up? Like you I was just stating my opinion.

Reply #30

pacattack05 — Mon, 11 Feb 2008 18:43:17 GMT

Anybody here can do whatever their heart pleases. I really couldn't care less.

I was only stating my opinion. Am I allowed to do that? Or is there a new restriction law about replies to a thread I wasn't aware of

Reply #29

MissNYC — Mon, 11 Feb 2008 18:08:08 GMT

I'll definately take the lump sum and try to get all the financial advise I can from various sources to decide where to put it all, because I definately won't put it all in one place. With 100 mil after taxes, off-hand, I'd say it's a good idea to award yourself about 10 million to spend, and invest the rest at first. Hopefully the 10 mil would last, if it doesn't, hopefully you're smart enough to realize how lucky you are that you didn't award yourself the full amount to spend and slow down. Pe... [ More ]

Reply #28

ThatScaryChick — Mon, 11 Feb 2008 17:06:16 GMT

A nifty search button. Really!

I know there is a search button. Re-read my post. I said: There are new people who may want to discuss topics, but can't because they are closed. So by your post above, they can search for the topic which is true, but what if it is closed? Can they not start a new one to discuss it? The search feature has nothing do with a topic that has been closed. Understand what I am getting at? I am sure that you have created a topic or two that has been done in the p... [ More ]

Reply #27

pacattack05 — Mon, 11 Feb 2008 16:28:06 GMT

There's a nifty feature called search. And if they look through them, there's a pretty good chance they'll find just about every aspect of the subject covered.

10 time over, and more to boot.

Just my opinion, nothing more.

Reply #26

ThatScaryChick — Mon, 11 Feb 2008 15:53:52 GMT

True, but those threads are closed right? How are people who are new, suppose to discuss those topics? I notice that lots of threads are repeats, but then you can only talk about so many things that have to do with the lottery before something is repeated.

Reply #25

pacattack05 — Mon, 11 Feb 2008 13:28:08 GMT

This subject has been discussed here on about 27 other occasions.

Reply #24

OldSchoolPa — Mon, 11 Feb 2008 10:49:23 GMT

I would only take the lump sum because I am a level headed person. I don't think it makes much difference whether a person takes the lump sum or the annual payments if they are irresponsible or have any kind of destructive habit...the money is still going to be blown. Taking the annual payments would just mean those people would respond to those JG Wentworth commercials to get their hands on the rest of their lottery winnings sooner. So let's put this to bed...if a person is irresponsible, it ma... [ More ]

Reply #23

sirbrad — Mon, 11 Feb 2008 06:55:59 GMT

Not to mention the fact that most lottery winners have not structured and planned their lives around a potential lottery win, I have for the last 5 years. To most it is a complete surprise, and they are ill-equipped to handle such a situation because they never gave it any prior thought. I know everything I am going to do all the way down to the clothes I will wear, the words I will say at the press conference, and how I will handle the claim and who I will call for help.

Most never prepare f... [ More ]

Reply #22

sirbrad — Mon, 11 Feb 2008 06:51:36 GMT

Exactly. David Edwards just blew it on crap. I would not even buy more than three cars TOPS, probably only two. I don't need a lot to be happy, just the security to know that I will not be without money ever again. All I would have to do is invest in a 60 month CD at 5.5%, and I would be sitting pretty for a long time, then renew as needed. Now annuity payments on say $200 million might be worth it if I had no choice, but still would never compare to the interest rates of the lump sum.

About... [ More ]

Reply #21

LuckyLilly — Sun, 10 Feb 2008 19:12:57 GMT

SirBrad Says: Umm yes I can say I would be highly responsible with even a $100 million. Maybe a lot of people do say they wish they had never won, but I can guarantee you that A LOT more who have won are glad they did, and we don't hear about their cases because the media is not interested in successful/positive stories. You don't know how much money I have, or how much I have won, so don't make assumptions.

I concur 100%. I know exactly how I'd handle a huge amount of money, and nobody can t... [ More ]

Reply #20

lottocalgal — Sun, 10 Feb 2008 14:35:16 GMT

This is in response to Sirbrad.

I am the same way, I grew up with nothing and having to struggle for everything I have now. I know how to appreciate the next dollar. I also can take 100 million or even 1 million and use it wisely. I am from the old school where it can be gone tomorrow so you plan for the just in case . The things that I would buy are just better version of things I want right now, things I COULD buy, but be in serious debt if I did. The things Edwards and others purchased wer... [ More ]

Reply #19

justxploring — Sun, 10 Feb 2008 07:22:42 GMT

All I was responding to originally was the statement made that someone older would take the lump sum as opposed to someone younger. The opposite is usually true. Someone 25 can invest the money and take risks and will have plenty of time to make up any losses. Someone 60 who takes a hit is affected much more dramatically. Most people when they retire are looking for a flow of income since they own their homes and no longer have young children, college tuition to pay off, etc. SirBrad is right wh... [ More ]

Reply #18

sirbrad — Sun, 10 Feb 2008 07:14:27 GMT

Umm yes I can say I would be highly responsible with even a $100 million. Maybe a lot of people do say they wish they had never won, but I can guarantee you that A LOT more who have won are glad they did, and we don't hear about their cases because the media is not interested in successful/positive stories. You don't know how much money I have, or how much I have won, so don't make assumptions.

This topic has been done to death here in the past. Most annuities are a bad idea, especially those... [ More ]

Reply #17

Coin Toss — Sun, 10 Feb 2008 07:03:55 GMT

I'm saying that the annuity payment that seemed like a veritable fortune some years ago is just a run of the mill house now.

Think of it like that.

Let's try it this way, say someone won a Reader's Digest sweepstakes or something and it was for $30,000 a year. Let''s say they won it in the 1970's when a new car was around $3,000 or less.

At the time they won it, the $30,000 was a fortune....now it's a car.

Just substitue lottey jackpot for RD sweepstakes, and house for car.

A lo... [ More ]

Reply #16

justxploring — Sun, 10 Feb 2008 06:52:21 GMT

But you are saying this person won that money years ago when a home cost much less. So just one payment would have paid for a heck of a home in 1995 and now it would be worth over a million, depending on where you live. Why would someone win the lottery and wait 20 or 30 years to buy a house? I don't understand what you are saying here.

Everyone always talks about the first thing they'd do, but nobody mentions getting a complete medical exam! Before I made any decisions, I'd want to make sur... [ More ]

Reply #15

justxploring — Sun, 10 Feb 2008 06:47:46 GMT

I too would be wary of someone holding my money. You cant trust anyone with your money.

Yaddamean, so are you saying you would put it under your mattress? If you can't trust the banks, the stock market or the government, then what would you do..buy tons of gold and hide it in your closet? Lease a Brink's truck and hire a couple of armed guards? There is always some risk. I'm just not sure what everyone is saying when they write stuff like this. There are so many scams going on today and nothi... [ More ]

Reply #14

Coin Toss — Sun, 10 Feb 2008 06:39:57 GMT

Justxploring

I'm figuring that anyone who won a jackpot would pay cash for a house - instead of taking on amortgage and paying for it three times over - you know, the heat, eat, and taxes approach - the house (and everything else) is paid for and the only bills are groceries, utilities, and property taxes.

So, if someone had won a lotto years ago, and was getting annual payments in the $200,000 to $300,000 range, and was going to pay cash for a house, there goes that year's annui... [ More ]

Reply #13

Yaddamean — Sun, 10 Feb 2008 06:32:33 GMT

lottocalgal

very interesting perspective on your part that I've never thought of. Although most will see it as being paranoid, I respect your viewpoint. Looking at it that way, I too would be wary of someone holding my money. You cant trust anyone with your money.

Reply #12

justxploring — Sun, 10 Feb 2008 06:27:59 GMT

Coin Toss, are you saying that someone making $230,000 a year wouldn't be able to purchase a nice house? If someone won $6 million 20 years ago and took annual payments, he could easily invest 1/2 of the money and live off of the rest. For some reason, people keep thinking that everyone who takes an annual payment is spending it all and not investing most of it. Let's say you won $24 million (the current FL jackpot) and took payment for 30 years. Sure, you could invest it and double or triple wh... [ More ]

Reply #11

lottocalgal — Sun, 10 Feb 2008 06:27:08 GMT

Yadda,

I would take the lump sum for one reason. I don't trust the government 10 or 20 years down the road. I always wondered what would happen or even IF, our separate states could suddenly declare that due to the recent decline in the state budgets, payoffs for the current annuities have been suspended until further notice. We are aware of the payments due and after continued research... blah blah blah.... I know that is paranoid but our governement pulls so much stuff like that-I wouldnt t... [ More ]

Reply #10

ThatScaryChick — Sun, 10 Feb 2008 06:17:25 GMT

I would take lump sum.

Reply #9

Coin Toss — Sun, 10 Feb 2008 06:08:00 GMT

Yaddamean

We've had many discussions about this topic, but one thing no one has ever mentioned is for people who take annual payments (annuity) there are companies out there that are very, very aggressive and try to talk people into a lump sum from themselves- for a lot less than they'd get keeping the payment.

Someone hits a jackpot, opts for an annuity, one of these companies comes along and says, We'll pay you NOW .....so they turn over their annuity, get musch less for it than they wou... [ More ]

Reply #8

Yaddamean — Sun, 10 Feb 2008 05:51:21 GMT

Your right 40 is not old at all. In the U.S, at 40, its a safe bet to say your only half way through your life.

I made mistake of choosing 40years old, I should have said something around 55-60, a retirement age.

Reply #7

justxploring — Sun, 10 Feb 2008 05:45:41 GMT

You aren't reading what I wrote. I didn't say that taking annual payments makes no sense. I was referring to when you wrote that you would take them at 20, but not at 40. Planning for the future should start as early as possible. Anyway, 40 is far from old. Just ask our members here who are 70. A 71 year old is running for President. In Ethiopia, where the average person doesn't even get to see his 18th birthday because of hunger, dirty water or disease, 40 is very old, but not in the United Sta... [ More ]

Reply #6

Yaddamean — Sun, 10 Feb 2008 05:34:49 GMT

I probably contradicted myself there, but I still would take payments.

Noone knows, not even yourself, know exactly how you would react towards a huge lump sum. Most people go crazy.

All the stories of people going from ragz to riches, they all have one common thing, they SPEND like crazy and dont think of the future. They spend money like its infinite and buy fancy cars, multiple houses, business ventures which they have no idea of, yachts, and throw money around like... [ More ]

Reply #5

Yaddamean — Sun, 10 Feb 2008 05:32:59 GMT

good viewpoint.

but you cant really say that you wouldn't be irresponsible or be responsible with that kind money because you havent experienced it yet first hand. Many people who've won jackpots say they wish they never won.

So you cant really for sure say, I will be responsible with that money. Until you have that 100mill in the bank, noone can say, even yourself, how you would handle it.

Reply #4

justxploring — Sun, 10 Feb 2008 05:28:26 GMT

What you just wrote makes no sense at all to me. If you won the lottery at 25 you should do the same thing! Otherwise you won't have the money to use for investments, retirement, and such.

By the way, I disagree that taking annual payments is a bad idea, so on that issue we agree. I'm not saying I would do that, just that everyone knows his or her personal lifestyle and what's best to be careful.

Reply #3

Yaddamean — Sun, 10 Feb 2008 05:26:25 GMT

not neccesarily... but you never know what could happen.

at that age, I would want to get all the money I could get my hands on. Use it for investments, retirement, and such.

Reply #2

justxploring — Sun, 10 Feb 2008 05:21:05 GMT

If I was a lot older, (40+) I would definitely take lump sum.

So does this mean that someone 40+ is probably not going to last another 29 years

Reply #1

sirbrad — Sun, 10 Feb 2008 05:18:58 GMT

Taking payments is pretty stupid, even at a young age. Mostly because you can earn far more money in compound interest than you will ever get in annuity principal. Now if you think you are irresponsible and will blow it all, that is your problem. I would take cash all the way down to $1.5 million which is still good for $75,000 a year minimum! That means if I never touched it, and spent all the interest, which would never happen, and only further compound.

Lump Sum or payments?

Yaddamean — Sun, 10 Feb 2008 04:55:06 GMT

For me, I would take payments.

Only way I would take lump sum is if it was less then 20 million.

I'm fairly young (late 20's) and payments I think would be best for me. It would prevent me to somehow, blow all that money. I dont think I could trust myself having 100m+ thrown my way. I see it as a type of protection for myself. Receiving a yearly salary from the lottery of 5mill+ would be niceee...

If I was a lot older, (40+) I would definitely take lump sum.

how... [ More ]