Making the annuity option more attractive?

Reply #17

ArizonaDream — Tue, 13 Oct 2015 03:11:30 GMT

Option 3 has appeal, above a certain JP level.

Illinois has the money, they just can't release it on a technicality. It's not a main factor in my thinking.

However, thinking about where interest rates and income tax rates are likely to head, better to pay the tax now and keep investments short term, so when rates go up you can take advantage.

Reply #16

Thanks$ — Tue, 13 Oct 2015 00:44:28 GMT

I know nothing about those companies and what they pay. It was just a thought. That's why I called and ask them but I got know answer back.

Reply #15

Coin Toss — Mon, 12 Oct 2015 23:50:11 GMT

Thanks$,

No way would anyone come out ahead with those need cash now companies. Think a dime on a dollar (slight exaggeration but not much).

Reply #14

Thanks$ — Mon, 12 Oct 2015 21:49:51 GMT

I tried to figure-out if you took the annuity and then sold it to a company like J G Wentworth or Peachtree that buys annuity's, would you come out ahead instead of taking the cash payout. I called J G Wentworth and asked that question but they wanted nothing to do with me when they found out I haven't won any lotteries (yet). I guess you'll have to get a lawyer to find out that answer if you ever do win the lottery.

Stay the course and keep playing responsibly and for the fun of it.... [ More ]

Reply #13

mypiemaster — Mon, 12 Oct 2015 19:42:42 GMT

I've always said that the options should be 1. CASH

2. ANNUITY

3. 1/2 CASH-1/2 ANNUITY.

Option 3 might be attractive to some people for their own personal reasons. Personally, after reading about Illinois, it's cash all the way.

Reply #12

psykomo — Mon, 12 Oct 2015 16:48:14 GMT

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Reply #11

Coin Toss — Mon, 12 Oct 2015 16:00:55 GMT

ArizoneDream,

I'd take any Illinois state game JP in cash anyway. It's only with the much higher multi-state jp amounts that I'd consider the annuity.

You wouldn't get paid until a budget is set. Illinois hasn't paid any lottery prize of $25,000 or more since July 1st.

If you're that insistent on an annuity, take the cash and buy yourself a better one. The lotteries aren't looking for the best deal for you, they're looking at the best deal for them.... [ More ]

Reply #10

Stack47 — Mon, 12 Oct 2015 03:39:37 GMT

Hardly anyone ever takes the annuity option on the PB (see winners stories link on the PB site). Clearly the PB still advertises the annuity value only for the publicity value of huge numbers.

They traditionally advertised the highest possible jackpot. Back in the day yearly payments were the only option.

With some reports of up to 70% of winners blowing it all in a few years, it would make sense for lotteries to come up with something to entice more winners to spread out the winnings ov... [ More ]

Reply #9

rcbbuckeye — Sun, 11 Oct 2015 23:48:26 GMT

There is no way on God's green earth that I would ever, ever, ever take the annuity. Everrrrrrrr.

See what's happening in Illinois?

Does anybody think the state or federal government isn't able to step in and say, Sorry, this is a financial crisis. No payments until further notice . Then it's SOL.

You have more options with cash.

Reply #8

ArizonaDream — Sun, 11 Oct 2015 23:16:41 GMT

MM and PB use government backed securities, from the FAQ on the PB site:

There used to be a larger difference between the two games, but the Mega Millions game was recently changed to mirror the Powerball annuity option. The difference (spread) between the cash and annuity jackpots amounts are now about the same. Both games offer an annuity that pays out in 30 payments over 29 years (the first payment is immediate). Both annuity options are graduated. Any difference will be the result of inv... [ More ]

Reply #7

Ron5995 — Sun, 11 Oct 2015 22:49:08 GMT

Annuity option can work out well, but there are some big risks to be aware of:

Higher taxes / additional surtax on lottery winnings, such as briefly occurred in New Hampshire. Annuity company defaulting and not paying out. Many lottery annuities are not government backed.

For example, the Pennsylvania Lottery says this:

-----

What happens to the prize money if a company who got an annuity bid goes bankrupt?

Published 08/04/2003 01:14 PM | Updated 10/21/2010 04:23 PM

What hap... [ More ]

Reply #6

ArizonaDream — Sun, 11 Oct 2015 22:37:54 GMT

Annuitizing over a longer period is what makes the jackpot seem bigger. Due to low interest rates, if the lotteries decreased the payout period then the annuity would be even less attractive than it is now.

Only less appealing in the sense that they'd wouldn't be able to advertise such a large amount. It would actually be much more appealing to me because the amount per year would be higher. But I guess big numbers in the news headlines are the only thing that matters to the lottery com... [ More ]

Reply #5

LottoMetro — Sun, 11 Oct 2015 20:45:24 GMT

Annuitizing over a longer period is what makes the jackpot seem bigger. Due to low interest rates, if the lotteries decreased the payout period then the annuity would be even less attractive than it is now.

Given the above, the only time I would consider taking the annuity is if the cash prize is so large that you would experience diminishing utility from more upfront lump sum. For example, it is highly unlikely you would immediately know where all $400 million cash is going to be parked, inv... [ More ]

Reply #4

morgothaod — Sun, 11 Oct 2015 19:16:33 GMT

Would my bank set that up for me or do I need to go somewhere else

Reply #3

jjtheprince — Sun, 11 Oct 2015 18:36:16 GMT

Yep I'd be worried about the government saying Oops we ran out of money to pay you the rest of your jackpot, sorry!

I could totally see that happening in Illinois. Best thing to do is take the lump sum then have someone setup an annuity of some sort for you if you can't trust yourself not to blow it.

Reply #2

morgothaod — Sun, 11 Oct 2015 18:14:30 GMT

I would prefer getting payments each year. However, I would be too worried about something happening and me not receiving my check each time.

Reply #1

Raven62 — Sun, 11 Oct 2015 17:48:56 GMT

Under tyranny you won't be deciding for yourself: the government will decide for you.

Making the annuity option more attractive?

ArizonaDream — Sun, 11 Oct 2015 17:29:11 GMT

Hardly anyone ever takes the annuity option on the PB (see winners stories link on the PB site). Clearly the PB still advertises the annuity value only for the publicity value of huge numbers. (Same with MM and state lotteries)

Thinking about what I'd do if I won, I like the idea of the annuity so I don't have to make huge decisions all at once. But 30 years? I'm old enough that the actuarial tables say I'm just as likely to be dead in 30 years as not. Also, I want to make a really large purc... [ More ]