Why Do You Think Lottery Winners Always Take The Cash Option?

Reply #62

Win$500Quick — Mon, 31 Mar 2014 16:49:33 GMT

I have changed my mind about taking the annunity. Take the money and run! Inflation will eat at your money t a faster rate.

Reply #61

Win$500Quick — Sun, 16 Mar 2014 23:17:10 GMT

Reply #60

Drenick1 — Tue, 25 Feb 2014 21:03:46 GMT

Annuities do indeed make sense IF you don't plan on investing/earning any income with your money.

Reply #59

helpmewin — Mon, 24 Feb 2014 17:44:55 GMT

Annuity payments would make more cent

Reply #58

spartan1707 — Mon, 24 Feb 2014 17:38:43 GMT

Great reasontoo take the cash. Big Gov needs big taxes.

Reply #57

Win$500Quick — Mon, 24 Feb 2014 17:26:11 GMT

I found this article online from 2012 and it made me rethink the annunity option:

If You Win The Mega Millions Jackpot, Don't Take The Annuity!

Yesterday, we asked readers how they'd take their lottery winnings if they won this week's Mega Millions jackpot. The choice is between a lump sum and annuity.

Mega Millions describes the options: Annuity option: Provides annual payments over a 26-year period. For every $1,000,000 in the jackpot, you will receive approximately $385,000 per year... [ More ]

Reply #56

jjtheprince — Thu, 20 Feb 2014 16:22:07 GMT

Insane inflation, that is why.

Getting an annuity of $750,000 a year sounds good now, but it won't be so sweet in 25 years when an average new car costs $250,000, new homes $2,000,000, a gallon of gas $75, and a weeks worth of groceries $5,000.

Reply #55

Win$500Quick — Wed, 19 Feb 2014 00:51:06 GMT

Not a bad idea. There was a couple on the LCML who did the same thing. The husband and wife took half annunity and half cash. Financial advisorus prey on people who are not financially savvy and win a huge windfall. No one will protect your money more than you. Take a finance course and learn to manage your own money.

Reply #54

GYM RICE — Tue, 18 Feb 2014 22:37:28 GMT

I play two sets of numbers on Powerball and Mega Millions. When the jackpot gets over 200 million, I play the same numbers twice. Meaning if I hit the jackpot, I have two winning tickets. I would then take half lump sum and half anniuty no matter what my financial advisors tell me to do. Which of course they would tell me to take it all in a lump sum. I know taking half of it in an annuity will leave plenty of money on the table because of interest rates where they are today. But it's all about... [ More ]

Reply #53

rcbbuckeye — Sun, 16 Feb 2014 14:22:46 GMT

Amen OldSchoolPa.

Reply #52

OldSchoolPa — Sat, 15 Feb 2014 23:17:54 GMT

Although I would be very tempted to take the cash value, I could also consider the annuity if my accountant lays out a compelling reason to go that route. What I would have to weigh is

1) How long will short term and long term interest rates remain pathetically low?

2) How high will the effective tax rate go on high income earners?

3) How long it will be before US elects president and Congress that is serious about reigning in spending?

The reason all of that matters is when I hit th... [ More ]

Reply #51

Teddi — Sat, 15 Feb 2014 22:41:03 GMT

Jill, a word of advice, don't lower yourself by responding to the inanity. Simply ignore it. Some people wallow in their wrongness and will go to the mat arguing that the sky is green. Nothing you can say will change their view and the more sense you make the more they resort to petty name calling and puerile behavior. It ain't worth it. Leave them to their belief that the sky is green because them thinking that doesn't negate the FACT that the sky is blue AND you save yourself the aggravation.... [ More ]

Reply #50

kapla — Sat, 15 Feb 2014 16:37:47 GMT

Yea, its all about CONTROL of ALL of the money. Not hard to beat the annuity return it offers.

GIMMY THE CASH UPFRONT

Reply #49

rdgrnr — Sat, 15 Feb 2014 16:16:18 GMT

I can find only one flaw in your whole theory, Jellyman -- it's stupid.

Now grease your comb-over down good today, it's windy out there.

You look like a total goof when it flips over the other way in the wind.

Reply #48

Jill34786 — Sat, 15 Feb 2014 16:00:12 GMT

Confused? It seems you are the one who doesn't understand basic arithmetic. The annual interest earned on both PB and MM jackpot annuities is just a tad over 2%. Any competent investor or firm can and should easily double those returns.

Lets say in five years our Government follows in the footsteps of socialist France and implements their 1.5% annual wealth tax along with the top tier tax rate of 75%. Without factoring any potential investment gains from the lump sum, the total net will far e... [ More ]

Reply #47

sully16 — Sat, 15 Feb 2014 01:00:02 GMT

I agree, 100 percent

Reply #46

KY Floyd — Sat, 15 Feb 2014 00:37:34 GMT

I'll try to keep this simple since you're already confused.

The lump sum is less than the annuity payments, because it doesn't include the interest earned by the annuity. A one time asset tax would be based on the entirety of the lump sum, but only the portion of the annuity that has already been received. An annual asset tax would tax the lump sum over and over, but would still only tax the portion of the annuity that had been received to date. That means that the tax would take more from th... [ More ]

Reply #45

Jill34786 — Fri, 14 Feb 2014 17:22:06 GMT

CDana, Actually I have mentioned those historical rates in past post but elected to use a rate that was currently in effect at the present time(75% in France).

Most of those who doubt that the top tier tax rate will never go back to those historical levels, even the 70% rate from the early 1980's are clueless and have either too much trust or dependency in Government.

In times of crisis, the Government will look at every means possible in order to increase revenue. Taxation is by far... [ More ]

Reply #44

CDanaT — Fri, 14 Feb 2014 15:59:00 GMT

Looks pretty straight forward to me.

Jill what you forgot to mention was, in THIS country between 1944-1963, the top earner's income tax rate was at 91-92%

from 1964-80 it was between 70-77%....Only since the start of the Reagan years has this gone down below 50%.

That would have been just lovely to have happened...

Reply #43

rdgrnr — Fri, 14 Feb 2014 15:37:34 GMT

Ya know, mediumbratwurst, because of the fact that you're rarely here and then once in a great while you stop by to start problems, usually of a political nature, it always makes me wonder...if you're here, who's making the fries at Mickey D's

Reply #42

rdgrnr — Fri, 14 Feb 2014 15:27:49 GMT

The facts were brought in by Jill.

Not by the KY Jellyman.

But don't let me interrupt your attempt to start trouble, mediumbratwurst....

Reply #41

Jill34786 — Fri, 14 Feb 2014 15:24:50 GMT

You realize that a wealth tax, whether it's a one time thing or an annual tax, will take more from a lump sum than from the annuity payments, right?

That is a rather strange question. I will attempt to be as simplistic as possible so I don't confuse you.

Lump sum amounts are always much larger than an annuity payment that is spread out over 30 years.

An additional tax whether it is a 3.8% Obamacare tax or 1.5% annual wealth tax (currently assessed in France) will always be a large... [ More ]

Reply #40

mediabrat — Fri, 14 Feb 2014 15:23:22 GMT

Come on now, let's not bring facts into it...

Reply #39

KY Floyd — Fri, 14 Feb 2014 09:41:24 GMT

You realize that a wealth tax, whether it's a one time thing or an annual tax, will take more from a lump sum than from the annuity payments, right

Reply #38

Shelby Mustang — Thu, 13 Feb 2014 20:22:36 GMT

Hey I didnt say I wouldnt take the cash payout, but I could very well see taking the annunity as well. Also no matter what the financial climate is you would stil be collecting way more than you would ever earn at your job now...unless your a hedge fund manager LOL

Reply #37

Jill34786 — Thu, 13 Feb 2014 20:11:02 GMT

Unless the plan is to keep your money in a safe, never in an interest-yielding bank account and never to invest in anything, to simply live on the jackpot amount won, that would be the only time the annuity would be a better option than the cv.

That could very well be the only logical reason for taking the annuity.

Reply #36

rcbbuckeye — Thu, 13 Feb 2014 19:16:53 GMT

Ridge and Mike are right on, as well as Coin Toss. I'll take the cash every time.

At my age I'll be dead before the annuity is paid, and who is to say the government doesn't decide to take the rest in taxes, which most certainly will go up. Or they take the rest in estate taxes, inheritance taxes, whatever it might be called.

The money shown in those charts regarding future payments is probably going to be way off in reality.

The government is not going to be our savior as far as the ec... [ More ]

Reply #35

Jill34786 — Thu, 13 Feb 2014 18:53:43 GMT

15-17 years from now, I seriously doubt that anyone who takes the annuity would be netting anything close to what the current annuity schedule reflects.

Back in 1999, Donald Trump proposed a one-time 14.25% wealth tax on the net worth of individuals and trusts worth over $10 million. It would have generated close to $6 trillion in new taxes which would have eliminated the national debt at the time.

Our national debt at it's current projection would exceed $40 trillion by 2030. France has i... [ More ]

Reply #34

Teddi — Thu, 13 Feb 2014 18:09:58 GMT

I think it has less to do with how much you have to spend and more about how much you have to invest.

You're going to have less to invest in upfront and more taxes to pay over time.

If the question is why do more people take the cash option when at a glance they're throwing money away, the answer is that (assuming you don't squander your money on nonsense) in the long run, you end up with more money than if you take the annuity.

Unless the plan is to keep your money in a safe, never... [ More ]

Reply #33

Shelby Mustang — Thu, 13 Feb 2014 17:08:45 GMT

Yeah but while your waiting for that 7 million dollar payout your getting 3, 4, 5 and 6 million dollars a year up until then....I could certainly live off any of those amounts, especially when Im guaranteed even more the next year than the previous

Reply #32

Jill34786 — Wed, 12 Feb 2014 19:37:53 GMT

You may want to take a peek at the annuity payment schedule as it's heavily back end weighted. It would take the winner 17 years just to get a payment that exceeded $7 million.

The average net per year is not relevant in either the MM or PB.

Reply #31

mypiemaster — Wed, 12 Feb 2014 14:36:21 GMT

Reply #30

mypiemaster — Wed, 12 Feb 2014 14:35:00 GMT

The voice of reason has spoken again. Very well said indeed.

Reply #29

Win$500Quick — Wed, 12 Feb 2014 14:08:34 GMT

Reply #28

Win$500Quick — Wed, 12 Feb 2014 14:04:44 GMT

Gloria should have taken the cash. But in past few years we have had a couple winners under 30 years old that also took the cash. Most lottery winners go broke within 5 years. Poor David Edwards took the lump sum and blew threw $27 million in cash and died broke.

Reply #27

Shelby Mustang — Wed, 12 Feb 2014 12:46:57 GMT

Im serious!! Why must we start talking politics? You are right Teddi it always ends up with mud slinging and name calling. We know where politics takes up cant we just leave it at the door on this site

Reply #26

Candlelight777 — Wed, 12 Feb 2014 12:19:13 GMT

Reply #25

Teddi — Wed, 12 Feb 2014 12:04:06 GMT

Another good point. I'd have been shocked if Gloria took the annuity.

Reply #24

helpmewin — Wed, 12 Feb 2014 10:02:42 GMT

Why Do You Think Lottery Winners Always Take The Cash Option?

some say old age has something to do with it.

Reply #23

weshar75 — Wed, 12 Feb 2014 05:19:40 GMT

If I am lucky enough to win powerball or mega millions I would struggle to decide which is better when the jackpot is high like they are now. I would not want to have a big chunk of money in the bank so all my so called relatives could try and mooch off of me. But I guess that I do not see myself spending all of the powerball money or mega millions money in my lifetime. But I have lived so long off of little bit of money that millions would be a shock to me. So I would probably take the annuity

Reply #22

Coin Toss — Wed, 12 Feb 2014 04:56:53 GMT

Good one, wisdom there!

In the Army when things went whacky it was the 5 P's:

Pi$$ Poor Proper Prior Planning.

Reply #21

Teddi — Wed, 12 Feb 2014 04:31:51 GMT

Wow, so we've moved from reasons to choose cash over annuity to name calling, mud slinging and political diatribe. How about everyone agree to disagree and get back to the actual point.

To that end, very good points LottoMetro. Between history and the numbers, you get less in the long run taking the annuity. And for those who think annuity payments mean that bankruptcy is unlikely because you don't have access to all the money upfront, that's a fallacy. JG Wentworth has made a lot of money f... [ More ]

Reply #20

mikeintexas — Wed, 12 Feb 2014 02:48:54 GMT

...full of people who thought it was their spiritual duty to bring about the Second Coming...

Dumbest thing I've read today and I spent a couple hours on Facebook, YouTube and reading comments under Yahoo articles earlier, so that's saying something.

Reply #19

rdgrnr — Wed, 12 Feb 2014 02:44:37 GMT

I believe all that gubmint cheese done made you null and void, son.

Reply #18

mediabrat — Wed, 12 Feb 2014 02:39:54 GMT

As for politics, screw politics. Who cares about liberal or republican.

Some people on this site care more about that than they do about the lottery. And they all seem to lean in the same direction; somehow I think that's not a coincidence.

Frankly, I disagree with their paranoid visions of an impending apocalypse. If we managed to survive the Bush administration, full of people who thought it was their spiritual duty to bring about the Second Coming, we'll get through the Obama administr... [ More ]

Reply #17

mikeintexas — Wed, 12 Feb 2014 02:23:09 GMT

Thanks, lejardin. My own (fantasy) plan includes not only some land where I could try to be as self-sufficient as possible, but also along the lines of a prepper or survivalist, but not really to the extreme. I'd have a large cellar built (practical for Texas since it's in Tornado Alley) and keep freeze dried food down there...again, not thinking I'd be a holdout against zombie hordes or a nuke attack, but just to have the basic things f/ survival. I'd start eating on it a few yrs. before it rea... [ More ]

Reply #16

lejardin — Wed, 12 Feb 2014 00:05:52 GMT

He is successful, whether or not he is good at running the government would have remained to be seen but again I will say, I would choose him over what we have. What I WILL agree with you on is no such thing as an honest politician, at least I could have hoped

Reply #15

noise-gate — Tue, 11 Feb 2014 23:44:55 GMT

My Dad always says - Stay away from the 3 P's.

Priests, Politicians Prostitutes.

Reply #14

Coin Toss — Tue, 11 Feb 2014 22:55:34 GMT

noise-gate,

Well we've already seen five years worth of what not having any business or work experience does for someone running the government.

I'm with rdgrnr on the question in the OP - what's not to say lottery annity payments aren't a future government grab? Or at leasr jackin up the taxes on them to make someone who took the annuity really wish they had taken the cash?

The current regome doesn't look for ways to produce, actually stimulate the economy, as nauseam.

All it does i... [ More ]

Reply #13

noise-gate — Tue, 11 Feb 2014 21:58:41 GMT

Whoa -Where did you read that being a businessman translates into being good at running the Govt?

There is no such thing as an honest politician, they all lie to some extent... from Well, l am not a crook- l did not have sex with that woman ..they all lie.if you looking for honesty, better get out your dictionary. .

Reply #12

bigbear29 — Tue, 11 Feb 2014 20:56:36 GMT

LottoMetro, I agree with you 100

Reply #11

New York — Tue, 11 Feb 2014 20:01:44 GMT

Because they want it one shot. Its like winning a $500 scratcher, some cash it instantly. Some wait. I don't know. Humans just become so excited when a huge amount of money is theirs. They want it all!

Who wouldn't? As for others who choose annuity, they have a plan I guess. But in my opinion, the lump sum is the better way to go.

As for politics, screw politics. Who cares about liberal or republican.

The 3 branches of government ain't doing squat! No reform in the past 20 year... [ More ]

Reply #10

lejardin — Tue, 11 Feb 2014 19:46:26 GMT

I agree with RDGRNR and MIKE. I would take the cash because I do not trust our ever expanding, invasive government and this admin is the worst. The President lied from day one and I feel 100% he won his re election by fraud. Romney would have made a vast improvement, first being he is a businessman and I think HONEST, imagine that, an HONEST President? That aside, I would take the cash, who can be assured we would have a government? What happened in Cypress can happen here. While I dont have an

Reply #9

mikeintexas — Tue, 11 Feb 2014 19:20:08 GMT

Age is the factor that concerns me; I've said before that I doubt I have 30 yrs. left on this mortal coil and even if I did, there's a good possibility I might not have the mental capability to remember I'm getting checks by the end of the annuity. No, I want the cash, right now,while I'm still young enough to enjoy and do some good things with it.

As far as investments go, I think I'd opt for safe over high return, at least for most of my winnings. (1% on a hundred million is a million/ye... [ More ]

Reply #8

Get paid — Tue, 11 Feb 2014 19:07:50 GMT

I think some times age comes into play, an ur tax bracket could change. So as for me I would take the money an RUN.LOL.

Reply #7

RedStang — Tue, 11 Feb 2014 19:00:49 GMT

I want it all now because a gallon of milk will probably be about 1k in five years when the Farmers can't afford to feed their animals with the corn that's used to make bio ethanol to rip us off.

Reply #6

Shelby Mustang — Tue, 11 Feb 2014 18:20:55 GMT

Ehh I dont believe it has anything to do with the current administration, if Romney had of won people would still have taken the annunity. It's just that it's not often you'll get offered a whole bunch of millions of dollars. Anyways who can wait to see if God wont take them away before they get to spend at least some of it

Reply #5

noise-gate — Tue, 11 Feb 2014 18:12:15 GMT

Because having cash is the way to go.Given the uncertainty of life, people for the most part will want to have it all upfront because you in control of what happens to your wealth. Having lowlife cousins or extended family who do nothing but lay around does not sit well with folk who do win the lottery because at the back of their minds is this hideous picture of those relatives showing up after your funeral and demanding a share of your lottery winnings- perhaps even trying to take your own kid... [ More ]

Reply #4

CDanaT — Tue, 11 Feb 2014 18:04:45 GMT

I have to reasonably believe that most folks want the massive sum to have complete financial control over and spend or share as they please. I agree with that completely. The J.G. Wentworth commercial of Its my money and I want it now works quite well for this lotto player. I understand your point on 7.1 million per year but, as we both know, the math to go down that road doesn't make reasonable sound financial advice based on unknown future mandates that would come your way. The biggest is taxa... [ More ]

Reply #3

LottoMetro — Tue, 11 Feb 2014 17:50:46 GMT

If you planned to do zero investing, even in U.S. Treasury bonds or whatnot, then the annuity makes a little more sense. For me, taking the cash is about taxes and returns. Honestly the way things are looking, the only way taxes can go is up, which means those annuity payments won't be as much as if you planned 39.6% tax as worst case scenario. Taking it now gets the tax business out of the way, and you will only have to pay taxes on gains (although there are crafty ways the rich use to reduce t... [ More ]

Reply #2

m3ikaChiz007 — Tue, 11 Feb 2014 17:19:08 GMT

I'm with you Win$500Quick; I will take my annual winnings and make sure my family will still be set when I leave this earth. I meant to PM you to thank you for your advice on playing an easy pick for $1 when playing my pick 3 numbers. I have had some success with that. I am expecting my next big hit today...BLIND FAITH! Good luck to you

Reply #1

rdgrnr — Tue, 11 Feb 2014 17:13:59 GMT

With our current administration, you have to factor in the possibility of a total collapse of the government and the dollar or a police-state crackdown on freedom and the resultant civil insurrection.

Better to get it all and use a lot of it for things you'll need and have in the event of a breakdown in law and order.

Why Do You Think Lottery Winners Always Take The Cash Option?

Win$500Quick — Tue, 11 Feb 2014 16:49:18 GMT

I was looking at the list of Powerball winners from the pass decade http://www.powerball.com/powerball/pb_stories.asp. only 3 winners took the annunity and 2 lottery pools are listed as mixed. Even winners of massive jackpots that would have paid them $10+ million a year with the annunity took the cash. For instance the Powerball jackpot is $284 million. If I win that much money it would be very hard to leave $91 million on the table. I could live the rest of my life and support my family with t... [ More ]