Cash Option vs Annuity

Reply #25

dk1421 — Thu, 27 Aug 2009 20:06:32 GMT

InItAndWonIt: I agree with you. Personally, I don't think I'd feel comfortable in a $30 million home. And that is where Hollywood is having problems - they own the homes but can't pay the taxes since they lost their money to Madoff.

I do remember reading a story about a rich, elderly lady who worked with a broker who lost all her money. What she didn't know is that he was able to lose her home, cars, everything! She was so embarrassed by not knowing this, that she refused to tell her neighbor... [ More ]

Reply #24

InItAndWonIt — Thu, 27 Aug 2009 16:23:27 GMT

Market opens earlier too. You want to be up at 6:30am for opening bell? I mean no question you'd have to, but still.

I dunno if I'd want to trade myself (because that constitutes work...lol), but I would definitely want it broker/trader handled. BUT I just want to know at all times what I have and be notified when a buy is done/sell needs to get done. Or figure some kind of way to be involved but still leave it to the professionals.

You are right about keeping it simple. Buying a... [ More ]

Reply #23

markp1950 — Thu, 27 Aug 2009 11:16:07 GMT

but I have never seen 7 figures in my life time....I couldn't fathom 8 or 9 or 10!

Same thing only more zeros. Keep it simple. IMO.

I would need professional help. A CPA,

I would have some sort of accountant here all the time dedicated all the time. I would probably need it.

A financial planner and a tax attorney.

Now here is where things need to be kept as simple as possible. When they throw out things that I don't understand, or something to complicated, it would ALL stop.... [ More ]

Reply #22

InItAndWonIt — Thu, 27 Aug 2009 05:59:17 GMT

The only work I'd have to do after I get my cash option, is just watching my portfolio and talking to my financial advisor. You can certainly get 3% yourself by simply doing bond-funds. You can even go tax free with good muni-bonds. I would never just let any advisor/firm handle my money while I'm not watching. I want some say in how it's spent if something is not right because hey....it could all be gone tomorrow.

It's because people slept at the wheel that folks losts 41% of their weal... [ More ]

Reply #21

markp1950 — Wed, 26 Aug 2009 15:05:21 GMT

The economy is on the rise. There are many better opportunities out there, much better than the 3% that the lottery offers...

But then you have to work at it... Who wants to work it it when you're rich... :-)

Hey a Billion $$$ doesn't buy what it used to....

MarkP

Reply #20

dk1421 — Wed, 26 Aug 2009 14:38:45 GMT

I have flip-flopped on this topic a few times. Originally, I was all for the Cash Option. Heck, I could invest it and possibly make more or the same - and I'm in charge.

Then I thought about it. Personally, my spouse and I could use some discipline when it comes to money. Mostly our debt is from old medical bills, an occasional vacation, and that stupid hdtv that HAD to be bought when our tv died. So then I thought an annuity would be good for helping us budget. And yes, we would get a financ... [ More ]

Reply #19

markp1950 — Wed, 26 Aug 2009 11:10:47 GMT

I WILL take the $147,000,000 cash money after taxes that I win on friday to a tax free state.

Then I only have to pay Obama.

MarkP

Reply #18

Socalaxe — Sun, 23 Aug 2009 00:31:30 GMT

Well either way, I will let everyone know what i choose to do with the $252 mill I win on tuesday.

Reply #17

Stack47 — Thu, 20 Aug 2009 23:00:29 GMT

And I don't see taxes in the higher brackets going down in the future but it's still pay me now or pay me later . We know what the percentages are now and who knows what the tax will be in the future.

Reply #16

DC81 — Thu, 20 Aug 2009 19:58:09 GMT

Yeah this topic certainly does come up a lot.

Taxes will not take that much of it in most states and even if it did, within 25 years (with the MM annuity) you could easily still exceed the annuity with extremely safe, low risk and possibly tax-free investments, if not tax free then at the very least incur less tax than you will with the annuity payments which would be taxed in the highest bracket which will soon rise. Oh and it's a good idea to hire a tax attorney, you could actually end u... [ More ]

Reply #15

Socalaxe — Thu, 20 Aug 2009 16:29:42 GMT

Well actually out of the current $207 mill mega jackpot the cash option would be $130 mill. Taxes are going to consume at least half (if not more). So your left with $65 Mill at best after taxes.

If you do invest that into something with a higher return then you would have to consider effects of capital gains, etc. Just watch out for the Bernie Madoffs in the world.

Reply #14

BaristaExpress — Thu, 20 Aug 2009 13:53:36 GMT

and besides, everyone knows taxes always go up and very rarely do they down! Annuities are not good tax wise! Not for anyone at anytime!

Just about any financial adviser that's worth his fees will tell you from a practical stand point (financially), it's always better to lessen your (all a round) tax liability to best maximize the growth of your portfolio. That's why they advise most to take the cash option! That's why you are told to get professional help with handling your new found wealth,... [ More ]

Reply #13

Coin Toss — Thu, 20 Aug 2009 05:24:13 GMT

Some things to think about....since some states have tried to sell their lotteries to private firms, does that tell us that the ststes themselves, in the long run, want the cah option? Hmm? Lets' see, if they're willing to sell the lottery they must want the cash right now! There's a lesson in that.

Also, since states are finding themselves more and more strapped, would it be any great surprise if the tax on annuitiy payments got steeper and steeper?

And what about Federal? Would it shock... [ More ]

Reply #12

manofmany — Thu, 20 Aug 2009 00:52:45 GMT

I'd take the cash option the majority of the time. $89 mil sounds pretty nice right about now

Reply #11

GamerMom — Thu, 20 Aug 2009 00:05:44 GMT

Personally i would want direct deposit but that's just me...

Reply #10

PERDUE — Wed, 19 Aug 2009 23:43:55 GMT

I would most certainly go the route of the annuity. I would go to school and learn to manage my money wisely.

Until then I would deposit my once a year check and continue mastering self control and self discipline. If I lose it all I would rather it be on me than pay someone to escort me back to hard times. Can I do it? Yes. Will it be easy? Of course not. More than likely it will be a constant uphill battle? But it will make for some interesting table talk. Besides, how can I teach my child... [ More ]

Reply #9

Coin Toss — Wed, 19 Aug 2009 22:48:32 GMT

A couple of things....

Many winners who took an annuity wind up selling it to one of those companies that buy them from people who've deciddd they want cash right now after all. Sadly, these compnaies offer comparitive chump change, so those people would have been much better off with the cash option from the lottery from the get go. That's really something to thik about.

The other thing?

Dec 21, 2012

Reply #8

ca-dreamin* — Wed, 19 Aug 2009 22:42:56 GMT

I would take the cash and head for CA LOL

Reply #7

joshuakim — Wed, 19 Aug 2009 21:18:01 GMT

Abig consideration, especially right now, and the reason I'd probablychoose cash value, is income taxes. Tax rates are low now, and if youtake the cash option, you pay all the taxes next year, at the currentrate. If you take the annuitized option, tax rate increases will hurt,especially if you win a larger jackpot and a large majority of it istaxed at the top rate. A smaller jackpot, such as 4 million paid outover 25 years ($160,000 per year) won't be affected as much, becausethe annual payment... [ More ]

Reply #6

Longarm — Wed, 19 Aug 2009 19:56:39 GMT

There are multiple considerations. First you would look at the amount of the jackpot, and your immediate needs. If it's a smaller amount, a few million, and you need money quickly, such as to pay debts or start a business, the annuity payments may, while helpful, still make you wait for the benefit this money can bring you.

Also consider your age. If you're advanced in years and you want to spend your twilight years living high on the hog, the cash value option is better.

If you're irrespo... [ More ]

Reply #5

ThatScaryChick — Wed, 19 Aug 2009 19:14:45 GMT

I agree with Grovel and Coin Toss. I would take the Cash Option and choose where and how to invest it myself. But I do understand why some people would feel more comfortable choosing Annuity. It just wouldn't be the option that I would choose.

Reply #4

Coin Toss — Wed, 19 Aug 2009 19:00:09 GMT

This has been discussed here many times, do a search.

Someone heree has or had a signature, You can buy a better annuity , meaning always take the cash, and with it you can buy a better annuity than the one the state lottery is going to use to pay you with.

Reply #3

Grovel — Wed, 19 Aug 2009 18:42:05 GMT

I am only 25, but I would take the cash option. As long as you are wise with your money, you won't have to worry about blowing it all in just a few years.

Reply #2

JordanT1021 — Wed, 19 Aug 2009 17:32:52 GMT

annuity would be the route I would take...

Reply #1

Socalaxe — Wed, 19 Aug 2009 17:24:30 GMT

I personally think that the annuity would be better. Especially at my age, as im in my early 40's. It is also wise to have disbursements so you become accustom to your sudden wealth and don't blow it all in a short amount of time.

Cash Option vs Annuity

rburton — Wed, 19 Aug 2009 10:54:48 GMT

Which is the better option, cash value or payment over 30 years? It looks like most winners take the cash option but after reading about David Edwards, maybe the cash option isnt such a great idea.