Question about the "Cash" or "Annuity" Option

Reply #7

guesser — Mon, 11 Jul 2011 04:45:30 GMT

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.

Reply #6

Stack47 — Sun, 10 Jul 2011 16:03:20 GMT

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'l... [ More ]

Reply #5

dallascowboyfan — Sun, 10 Jul 2011 13:37:48 GMT

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. with Stack47

Reply #4

karinda — Fri, 08 Jul 2011 14:49:42 GMT

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... [ More ]

Reply #3

guesser — Wed, 06 Jul 2011 16:30:20 GMT

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... [ More ]

Reply #2

Longarm — Wed, 06 Jul 2011 03:28:04 GMT

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 with... [ More ]

Reply #1

Stack47 — Tue, 05 Jul 2011 12:34:38 GMT

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... [ More ]

Question about the "Cash" or "Annuity" Option

karinda — Tue, 05 Jul 2011 04:51:58 GMT

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... [ More ]