a poll about annuities and lump sumPrev Topic Next Topic

New Topic New Poll

should annuities no longer be an option and lump sum an only choice?

yes lotteries should offer only lump sum

[ 8 ]

[ 16.7% ]

no the lotteries should offer annuities too

[ 31 ]

[ 64.6% ]

i'm cash only and of course annuities suck

[ 3 ]

[ 6.2% ]

not sure at this time

[ 6 ]

[ 12.5% ]

Total valid votes

[ 48 ]

Discarded votes

[ 2 ]

LOTTOMIKE

Tennessee
United States
Member #7,853
October 15, 2004
11,352 Posts
Offline

Sep 29, 2006, 2:56 am

how do you feel about annuities and lump sums?
do you think annuities are a waste.
justxploring

Wandering Aimlessly
United States
Member #25,359
November 5, 2005
4,461 Posts
Offline

Sep 29, 2006, 3:17 am

Choices are never a waste.
Rick G

FEMA Region V Camp #21
United States
Member #520
July 27, 2002
5,699 Posts
Offline

Sep 29, 2006, 1:35 pm

I think if more people took the annuity option, the better their money will be handled, the longer it will last, the less chance it will be stolen or mooched, and most important of all, the less chance of a lottery win ruining your life.

Posted 4/6: IL Pick 3 midday and evening until they hit: 555, 347 (str8).
emilyg

50

United States
Member #14
November 9, 2001
31,614 Posts
Offline

Sep 29, 2006, 1:42 pm

Quote: Originally posted by Rick G on Sep 29, 2006
I think if more people took the annuity option, the better their money will be handled, the longer it will last, the less chance it will be stolen or mooched, and most important of all, the less chance of a lottery win ruining your life.

love to nibble those micey feet.
four4me

MD
United States
Member #1,701
June 18, 2003
10,731 Posts
Offline

Sep 29, 2006, 1:48 pm

if people understood how annuities worked they might fare better in the long run and example would be if you won 10 million or more and took the annuity.
Take the first check minus say 100 grand and put the rest in the bank. do not touch any of the money for the first year. longer if you think you could. After the first year set up a portfolio with the second check and live off the interest on the first check you kept in the bank. There are many ways an annuity could work out better than a lump sum. Especially since your practically losing half the proceeds by taking cash.
Taking an annuity is best especially if you have a spending problem. with cash you could go thru it in no time. Whereas with an annuity you have to plan to spend. you will have a check coming in ever year to handle most of any expenses you might have if you continue to live within your means. You can still build some really strong investments with a yearly annuity.
CASH Only

United States
Member #379
June 5, 2002
11,296 Posts
Offline

Sep 29, 2006, 1:51 pm

"i'm cash only and of course annuities suck"
Right from the horse's mouth
floridian

United States
Member #45,801
August 28, 2006
335 Posts
Offline

Sep 29, 2006, 1:57 pm

Quote: Originally posted by LOTTOMIKE on Sep 29, 2006
how do you feel about annuities and lump sums?
do you think annuities are a waste.

This is one of my pet peeves. How did this idea ever come about that annunities are bad. I know in the short time I have been here this subject has really been discussed in great detail.
This is what I know speaking for Florida only!!
The Lottery Commission in Florida wants desperately to buy back annunities from folks that have choses to go that way.
In the fine print it states that if a Lottery winner makes more in interest during the life of the annunity (the anticipated return on investment produces more) the winner is entitled to the extra proceeds.
Correct me if I am wrong but Lotteries are in business to make huge profits. The configuration of the house advantage is much higher than say Vegas. I believe currently in Vegas the house is entitled to a profit of somewhere in the 20% range. Meaning for every dollar they take in they can make as much as 20% profit. This is a number that has been legislated by the State Of Nevada Gaming Commission. So what the Casions do is to give back at least 80% plus of everything they take in. It takes on the form of free shows, free lodging, free meals, free trips and all sorts of other comps.
However, guess what has happened? Because of competition by all the Casinos trying to one up the other one with the best freebies, that profit margin has decreased to somewhere in the 5 to 7% range. I salute competition.
Now, back to our state Lotteries, there is no competition and they are entitled to make in the 50% plus range. This is a totally unreasonable amount. If they want to buy back annunities by using fuzzy Lottery math calculating the present value of a future amount, in my mind, there must be something good about annunities. I also think annunities provide a way to safeguard your money, control run-a-way spending and taxes. I have run many tests on this process and found to my dismay that many times you fare a lot better with the annunity over time. We at LP look at winning combination history and many times base our predictions based on the draws over time. Why should we not collect our winnings the same way?
Floridian
CASH Only

United States
Member #379
June 5, 2002
11,296 Posts
Offline

Sep 29, 2006, 2:00 pm

Quote: Originally posted by floridian on Sep 29, 2006
This is one of my pet peeves. How did this idea ever come about that annunities are bad. I know in the short time I have been here this subject has really been discussed in great detail.
This is what I know speaking for Florida only!!
The Lottery Commission in Florida wants desperately to buy back annunities from folks that have choses to go that way.
In the fine print it states that if a Lottery winner makes more in interest during the life of the annunity (the anticipated return on investment produces more) the winner is entitled to the extra proceeds.
Correct me if I am wrong but Lotteries are in business to make huge profits. The configuration of the house advantage is much higher than say Vegas. I believe currently in Vegas the house is entitled to a profit of somewhere in the 20% range. Meaning for every dollar they take in they can make as much as 20% profit. This is a number that has been legislated by the State Of Nevada Gaming Commission. So what the Casions do is to give back at least 80% plus of everything they take in. It takes on the form of free shows, free lodging, free meals, free trips and all sorts of other comps.
However, guess what has happened? Because of competition by all the Casinos trying to one up the other one with the best freebies, that profit margin has decreased to somewhere in the 5 to 7% range. I salute competition.
Now, back to our state Lotteries, there is no competition and they are entitled to make in the 50% plus range. This is a totally unreasonable amount. If they want to buy back annunities by using fuzzy Lottery math calculating the present value of a future amount, in my mind, there must be something good about annunities. I also think annunities provide a way to safeguard your money, control run-a-way spending and taxes. I have run many tests on this process and found to my dismay that many times you fare a lot better with the annunity over time. We at LP look at winning combination history and many times base our predictions based on the draws over time. Why should we not collect our winnings the same way?
Floridian

Anybody can take a lump sum and use some or all of it to purchase an annuity. But some lottery games (Lose for Life in GA) still force "winners" to receive periodic payments, with no cash option.
Just6ntlc

United States
Member #16,611
June 2, 2005
3,493 Posts
Offline

Sep 29, 2006, 2:19 pm

LOTTOMIKE, my vote is yes in the future. I hope in the future all jackpots will have cash option only.
Coin Toss

Zeta Reticuli Star System
United States
Member #30,469
January 17, 2006
11,788 Posts
Offline

Sep 29, 2006, 3:14 pm

I voted yes, only for this reason, if any lottery offered nothin but cash option I'm afraid that the prizes would be juggled with so they'd be mush less than any current annuity or cash system.
I'm thinking of a lot of threads I've read here. Since I've been a member here Powerball has lowered the amount of the cash prize.
I wouldn't even be surprised to see a ceiling on a cash option only lotto.
Rick G

FEMA Region V Camp #21
United States
Member #520
July 27, 2002
5,699 Posts
Offline

Sep 29, 2006, 3:33 pm

Quote: Originally posted by four4me on Sep 29, 2006
if people understood how annuities worked they might fare better in the long run and example would be if you won 10 million or more and took the annuity.
Take the first check minus say 100 grand and put the rest in the bank. do not touch any of the money for the first year. longer if you think you could. After the first year set up a portfolio with the second check and live off the interest on the first check you kept in the bank. There are many ways an annuity could work out better than a lump sum. Especially since your practically losing half the proceeds by taking cash.
Taking an annuity is best especially if you have a spending problem. with cash you could go thru it in no time. Whereas with an annuity you have to plan to spend. you will have a check coming in ever year to handle most of any expenses you might have if you continue to live within your means. You can still build some really strong investments with a yearly annuity.

4-4-me,
This is absolutely the most intelligent thing I've read on LP considering this subject.
Lottery winners should do exactly as you suggest. Protect the principle, be guaranteed the total amount of the jackpot, and gamble (invest) from their annuity payments.
Very good post.
Cash Only, I love ya' but you cannot argue with this reasoning.

Posted 4/6: IL Pick 3 midday and evening until they hit: 555, 347 (str8).
DoubleDown

Coastal Georgia
United States
Member #2,653
October 30, 2003
1,866 Posts
Offline

Sep 29, 2006, 3:39 pm

Cash Only, I love ya' but you cannot argue with this reasoning.
Rick, Yes he can and yes he will...There is no reasoning with him. He still calls the games names of his choosing rather than their real names. He has been challenged to prove his rant, and the silence was deafening.
DD
justxploring

Wandering Aimlessly
United States
Member #25,359
November 5, 2005
4,461 Posts
Offline

Sep 29, 2006, 4:47 pm

I agree with the value of an annuity. Having a guaranteed stream of income is very comforting to many people and often a wise investment. However, I still think we need to have a choice. For me, if I won the lottery, it would depend upon the amount of the jackpot and the interest rates at the time. Also, my age at the time of the win would matter. I've read a lot of press releases where the winner was 75 or 80.
When FL changed from a 20 year to a 30 year structured annuity, I got very annoyed. This changed the interest rate considerably. For example, if you win $6M and it's divided by 20, that is $300K a year for 20 years. It's like getting around 5% for your money. If you divide $6M by 30 you only get $200K a year. The rates dropped for a while, but now that the interest rates have increased, a $6M win should pay at least $240K x 30 years = $7.2M. I'm not sure how each state calculates the annual payments, that is, if they simply divide the jackpot by the number of years or they use the current rate of return. Of course they are in the business to make money, so they must shop around for whatever costs the State the least.
A smart investor can make a heck of a lot more money than 3.3% but everyone has their own comfort level. Although the State tells you they guarantee the payments, I might be a little uncomfortable having my entire life being controlled by one entity like the State Lottery & desire some diversification. I'm not agreeing with CashOnly that a lump sum is the ony way to go, but I'd always want to check out my options. There should be a lump sum option. The Lottery shouldn't dicatate to people how to manage their finances even if someone wants to blow it all and ends up homeless.
weshar75

Mcminnville, Oregon
United States
Member #3,013
December 13, 2003
6,173 Posts
Offline

Sep 29, 2006, 5:02 pm

I think that the Lotteries will always have both annuity and Cash value to give to its winners. The big hook is seeing $300 million up on a billboard instead on $145 million cash. Not every lottery player is that into their games so they would wait to play a cash value game longer. But once they here $200 million or $300 million they have to get at least one ticket. It is just a shine hook to reel in the suckers. I only pay attention to the cash value myself. Then I turn into a sucker when the jackpot gets high and I get more tickets.-weshar75
ryanm

Morrison, IL
United States
Member #4,657
May 13, 2004
1,885 Posts
Offline

Sep 29, 2006, 6:41 pm

Quote: Originally posted by Coin Toss on Sep 29, 2006
I voted yes, only for this reason, if any lottery offered nothin but cash option I'm afraid that the prizes would be juggled with so they'd be mush less than any current annuity or cash system.
I'm thinking of a lot of threads I've read here. Since I've been a member here Powerball has lowered the amount of the cash prize.
I wouldn't even be surprised to see a ceiling on a cash option only lotto.

Powerball really didn't lower their cash prize amounts. The cash value is what it is. They only inflated their annuity. If they didn't change the annuity structure, the annuity would just be lower instead of the cash being higher.

New Topic New Poll

Subscribe to this topic

a poll about annuities and lump sumPrev TopicNext Topic

a poll about annuities and lump sumPrev Topic Next Topic