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cash vs. annuity

Topic closed. 267 replies. Last post 11 years ago by CASH Only.

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if you won a jackpot,pick lump sum cash or annuity

i'd pick lumo sum cash [ 82 ]  [73.21%]
i'd pick annuity [ 22 ]  [19.64%]
undecided [ 8 ]  [7.14%]
Total Valid Votes [ 112 ]  
Discarded Votes [ 7 ]  

United States
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June 5, 2002
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Posted: February 23, 2005, 9:48 am - IP Logged

You have to pay taxes yearly on the annuity.

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    United States
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    December 30, 2002
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    Posted: February 23, 2005, 11:02 am - IP Logged

    Yes, you pay taxes on the yearly payout check. But the state doesn't pay taxes on the amount they invest to get that money. That's the key to the higher rate of return. If you started your own annuity with the cash, you would be starting with 35% less than the state invests to get its annuity.

    The question is: How would one equal or surpass the state lottery's annuity after 20 years with the cash you are left with after taxes? Let's assume you invest every penny.

    I would take the cash anyway, but I have no illusions I'll get the same payout as the state does with its annuity.

     

    Quote: Originally posted by CASH Only on February 23, 2005






    You have to pay taxes yearly on the annuity.





      LOTTOMIKE's avatar - cash money.jpg
      Tennessee
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      October 15, 2004
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      Posted: February 24, 2005, 2:16 am - IP Logged

      i'd take the cash

        LOTTOMIKE's avatar - cash money.jpg
        Tennessee
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        Posted: February 28, 2005, 12:17 am - IP Logged

        after giving it a lot of thought,i think annuity would be a risk because if something happens to you unexpectedly.lump sum seems more safer.....

          Maverick's avatar - yinyang
          USA
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          October 29, 2004
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          Posted: February 28, 2005, 12:36 am - IP Logged
          Quote: Originally posted by LOTTOMIKE on February 28, 2005


          after giving it a lot of thought,i think annuity would be a risk because if something happens to you unexpectedly.lump sum seems more safer.....




          Exactly. Things change over time, especially over 20 years... even state/lottery laws. Take the cash, then you need not interact with all those unnecessary people. I'd take the cash even if it was an annuitized $3 million dollar jackpot.

          PS. Look at the war in Iraq, other countries touting nuclear arms, tsunami's outta nowhere... Take the cash!


            United States
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            June 5, 2002
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            Posted: February 28, 2005, 6:25 pm - IP Logged

            I'm glad the overwhelming choice is cash.

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              ohio
              United States
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              February 28, 2005
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              Posted: February 28, 2005, 9:25 pm - IP Logged

              You always come out better taking the cash. Any good investment adviser can double your money every 5 to 7 years

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                San Gabriel
                United States
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                March 6, 2005
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                Posted: March 6, 2005, 3:05 pm - IP Logged

                you only pay a 3rd party if he is fee based.  There are many financial vehicles out there that are guaranteed (fixed) around 5%.  This means a lump sum of 5 million placed in a fixed account will pay you 10,000 a month. $120,000.00 a year.  Not bad huh..  Why would anyone let the state make the interest that belongs to you? stupid... yes!  Even a first year financial planner can set you up real nice.  UUUU UUUUU take the money and run.

                  MADDOG10's avatar - smoke
                  Beautiful Florida
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                  July 18, 2004
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                  Posted: March 6, 2005, 3:15 pm - IP Logged
                  Quote: Originally posted by AIG planner on March 6, 2005


                  you only pay a 3rd party if he is fee based.  There are many financial vehicles out there that are guaranteed (fixed) around 5%.  This means a lump sum of 5 million placed in a fixed account will pay you 10,000 a month. $120,000.00 a year.  Not bad huh..  Why would anyone let the state make the interest that belongs to you? stupid... yes!  Even a first year financial planner can set you up real nice.  UUUU UUUUU take the money and run.


                  exactly, if your going to take the cash option, there are plenty of vehicles of investment for you to take advantage of. why let the state make money off your entity?   

                                                               

                                                                 "  When Injustice Becomes Law, Resistance Becomes Duty "

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                    Roslindale, MA
                    United States
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                    July 1, 2004
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                    Posted: March 6, 2005, 4:01 pm - IP Logged
                    Quote: Originally posted by ryanm on February 22, 2005

                       Also, do you really think you'd spend the whole year's payment in a year if you took the annuity? Really, who needs more than $100,000 a year?








                    There have been many lottery jackpot winners who've done exactly that, then borrowed money against the next payment (or several).



                    If someone's fiscally irresponsible enough to blow an lump-sum payout at once, I don't think they'd be any better off taking the annuity.



                    Not that I ever expect to win, but I'd take the cash if I did.
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                      Morrison, IL
                      United States
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                      May 13, 2004
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                      Posted: March 6, 2005, 4:34 pm - IP Logged

                        You guys have convinced me.  Cash is safer.  I'd just invest the lump sum in municipal bonds so I can get future interest tax-free!

                        Annual Payments's avatar - annual 20payments.jpg
                        Houston, TX
                        United States
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                        December 23, 2004
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                        Posted: March 9, 2005, 12:33 am - IP Logged

                        Is there anyone out there who will definately take annual payments?  All I see is cash.

                          mrmst's avatar - disney14
                          Glen Burnie, MD
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                          June 27, 2002
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                          Posted: March 9, 2005, 8:38 am - IP Logged

                          Does not look like there are many that would take the state's annuity.  Besides, you can always buy your own annuity with all or part of the money if you want to - you'd probably get a better deal if you shopped around.

                          MrMST

                          Good luck and have a Disney Day ºoºHiding Behind Computer

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                            United States
                            Member #972
                            December 30, 2002
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                            Posted: March 9, 2005, 2:48 pm - IP Logged

                            The only scenario that I would consider an annuity is if the jackpot & annuity amount was pretty small.  I think there is a gray area where you have won say $400,000 - 800,000 and feel pretty wealthy, but you know you aren't wealthy enough to quit your job, travel and live it up until you are 80 years old on your winnings alone.  So you have lots of money and still have to work, pretty depressing. If I had the lump sum, that big pile of cash, just sitting there in the bank, I might start to think I was really rich and be tempted to quit my job.  By taking the annuity, I wouldn't feel that wealthy and could continue life as usual.  It would all come down to whether the lump sum was enough so I could quit working for a living.

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                              New Member

                              United States
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                              March 9, 2005
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                              Posted: March 9, 2005, 10:37 pm - IP Logged

                              You win Powerball, you meet with an investment consultant before you even head down to claim your winnings.  If you don't have one, call one of the larger companies (Merrill Lynch, Prudential, etc).  They can assess the situation for you.  You want lower-risk investments that yield lower interest rates?  You want to take some of your newly found cash and play with some risky high return stuff? You want to put it all in a tax-free shelter and pull what you absolutely need from it?  Anyway you slice it, you're going to get a better ROI if you choose cash.  Sure there are those who see newly found gobs of money and act like complete fools and blow the cash within months or years...but those are the ones who will borrow off their annuity as well and screw themselves either way.  You win a million dollars or more you get someone who can manage money.  Btw, you see the latest Powerball winners?...classic example of winners not researching the possibilities before choosing.  19mil and they chose annuity....where will YOU be in 29 years?

                                 
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