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Paying a jackpot over 26 years is too long of a time frame

Topic closed. 42 replies. Last post 9 years ago by RJOh.

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sirbrad's avatar - Lottery-062.jpg
PA
United States
Member #22983
October 6, 2005
2226 Posts
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Posted: March 5, 2008, 12:24 am - IP Logged
YearGross PaymentFederal TaxesState TaxesNet Payment
1$3,084,607$771,152$0$2,313,455
2$3,207,991$801,998$0$2,405,994
3$3,336,311$834,078$0$2,502,233
4$3,469,764$867,441$0$2,602,323
5$3,608,554$902,139$0$2,706,416
6$3,752,896$938,224$0$2,814,672
7$3,903,012$975,753$0$2,927,259
8$4,059,133$1,014,783$0$3,044,349
9$4,221,498$1,055,374$0$3,166,123
10$4,390,358$1,097,589$0$3,292,768
11$4,565,972$1,141,493$0$3,424,479
12$4,748,611$1,187,153$0$3,561,458
13$4,938,555$1,234,639$0$3,703,917
14$5,136,098$1,284,024$0$3,852,073
15$5,341,542$1,335,385$0$4,006,156
16$5,555,203$1,388,801$0$4,166,402
17$5,777,411$1,444,353$0$4,333,059
18$6,008,508$1,502,127$0$4,506,381
19$6,248,848$1,562,212$0$4,686,636
20$6,498,802$1,624,701$0$4,874,102
21$6,758,754$1,689,689$0$5,069,066
22$7,029,104$1,757,276$0$5,271,828
23$7,310,268$1,827,567$0$5,482,701
24$7,602,679$1,900,670$0$5,702,009
25$7,906,786$1,976,697$0$5,930,090
26$8,223,058$2,055,764$0$6,167,293
27$8,551,980$2,137,995$0$6,413,985
28$8,894,059$2,223,515$0$6,670,544
29$9,249,822$2,312,455$0$6,937,366
30$9,619,815$2,404,954$0$7,214,861
Total$173,000,000$43,250,000$0$129,750,000

 

Come on baby, TONIGHT! Lep 

(USA Mega)

    justxploring's avatar - villiarna
    Wandering Aimlessly
    United States
    Member #25360
    November 5, 2005
    4461 Posts
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    Posted: March 5, 2008, 12:41 am - IP Logged

    Thanks, time*treat.  On another thread I said banks work with "partners" but I couldn't think of the name.  Someone brought it up a few months ago and I found a few banks in my local area who are on the network.  The site says CDARS "only" covers up to $50 million total, if I'm reading it correctly. Well, I don't have to worry about it for now!  LOL 

     

    http://www.cdars.com/index.php

      dvdiva's avatar - 8ball

      United States
      Member #2338
      September 17, 2003
      2063 Posts
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      Posted: March 5, 2008, 1:58 am - IP Logged

      Sadly the US hasn't joined the rest of the world in lottery jackpots. In Canada, Europe, Australia, etc when a prize is listed as $20M (or in whatever currency) that's what you win. No income tax and the prize is in cash. Too bad we can't import that idea. 

        Avatar
        NY
        United States
        Member #23835
        October 16, 2005
        3474 Posts
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        Posted: March 5, 2008, 2:14 am - IP Logged

        "I agree that the advertising makes the jackpot seem very inflated, but it's like the ad in the newspaper that says "chairs from $99." "

        I'd say it's more like a car dealer promising they'll pay at least $5000 for any trade. When you come in, or if you look carefully at the website, they disclose the details and tell you that the $5000 will be paid as $50 per month for 100 months. That means it isn't fraud, but if all they advertise is "at least $5000 for any trade" then the advertising is false and misleading.

        For the most part, when lotteries advertise their games they tout the largest prizes without telling you that those prizes are paid as an annuity. That information may be available, but  it's not something they generally advertise. Look at a few of the state lottery websites, and see what  they advertise there. Some states show the cash value (but almost always in a smaller font, of course), which at least implies that the bigger amount isn't paid as cash. Many others only show the annuity value. They all say that the advertised amount is paid as an annuity, but that's almost always buried on the how to play page, and I don't think I've ever seen it on a home page that lists the annuity value.

          Badger's avatar - adu50016 NorthAmericanBadger.jpg
          Wisconsin
          United States
          Member #1303
          March 27, 2003
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          Posted: March 5, 2008, 7:05 am - IP Logged

          Thanks for the information, Time*Treat.

          ============

          How can you tell if a politician is lying?

          Answer: His lips are moving.

            JackpotWanna's avatar - squiz

            United States
            Member #4121
            March 23, 2004
            817 Posts
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            Posted: March 5, 2008, 9:46 am - IP Logged

            More than plenty for me.  WOW! 173m over 30 years baby! 

              Guru101's avatar - rw6jhh
              Indiana
              United States
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              January 7, 2007
              1953 Posts
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              Posted: March 5, 2008, 11:17 am - IP Logged

              yes the jackpot value is very misleading. But keep in mind the lottery does pay it, and are not the IRS. "We pay the actual amount listed" they told me a long time ago in an email. But of course they know it is not actual amount. and sadly most peopel think you get the advertised amount.

              I am a lump sum guy, but if the jackpot is as high as it is now I would not have a problem taking annuity if I had to. I would never even spend the principle if I tried, and no worries about investing and taxes etc. But I prefer to live off of the huge lump sum's interest. But still the annuity would be more than enough. Almost $5 million a year is one heck of a paycheck.

               

               

              Jackpot Analysis For Pennsylvania Powerball
              Draw Date: Wednesday, March 05, 2008
              Payment OptionsAnnuityCash
              Jackpot Amount $173,000,000 $85,700,000 
              Gross Prize 30 Annual Payments of  
              $5,766,666 
              Lump-Sum Cash 
              $85,700,000 
              25% Federal Tax -$1,441,666 -$21,425,000 
              No State Tax on
              Lottery Prizes 
              No State Tax No State Tax 
              Net Pay Yearly Net Pay: 
              $4,325,000 
              Total Pay After 30 Payments: 
              $129,750,000 
              Lump-Sum Net Payout: 
              $64,275,000 

              It's not misleading. It's up to the player to read the rules of the game. The lottery doesn't have some magic telepathy machine to send brain waves to everybody's brain to tell them the rules. Being the lottery, I don't care if a person doesn't read the rules, but just because they don't, doesn't mean they can complain when they find out there is a cash option.

              Gonna win.Big Smile

                BaristaExpress's avatar - BaristaExpressMX zpsfb0d8b5d.png
                Magnolia, Delaware
                United States
                Member #18795
                July 20, 2005
                789 Posts
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                Posted: March 5, 2008, 3:14 pm - IP Logged

                yes the jackpot value is very misleading. But keep in mind the lottery does pay it, and are not the IRS. "We pay the actual amount listed" they told me a long time ago in an email. But of course they know it is not actual amount. and sadly most peopel think you get the advertised amount.

                I am a lump sum guy, but if the jackpot is as high as it is now I would not have a problem taking annuity if I had to. I would never even spend the principle if I tried, and no worries about investing and taxes etc. But I prefer to live off of the huge lump sum's interest. But still the annuity would be more than enough. Almost $5 million a year is one heck of a paycheck.

                 

                 

                Jackpot Analysis For Pennsylvania Powerball
                Draw Date: Wednesday, March 05, 2008
                Payment OptionsAnnuityCash
                Jackpot Amount $173,000,000 $85,700,000 
                Gross Prize 30 Annual Payments of  
                $5,766,666 
                Lump-Sum Cash 
                $85,700,000 
                25% Federal Tax -$1,441,666 -$21,425,000 
                No State Tax on
                Lottery Prizes 
                No State Tax No State Tax 
                Net Pay Yearly Net Pay: 
                $4,325,000 
                Total Pay After 30 Payments: 
                $129,750,000 
                Lump-Sum Net Payout: 
                $64,275,000 

                I look at it this way in the long run and I hope it makes sense to the rest here on the LP. I see $1,441,666 going out 30 times to Uncle Sam, which comes to $43,249,980 verses the one time payment of $21,425,000 that one year only!

                Now think about it for a few minutes, taxes never go down (most of the time they go up) and you actually still owe another 10% at todays tax rate at the end of the year every year for the next 30 years on your winnings! But if you invest any of those winnings your now going to owe another 15% capital gains taxes on top of that!

                The highest tax rate of 35% is as of today, but if the government pushes the tax rate up another 3% 15 years down the road you are really getting the screws put to you and your family! See what I'm getting at here! Take the lump sum and pay the one time tax payment and invest the money and only pay the 15% capital gains taxes on the investments rather the 35% tax rate for 30 years plus the another 15% for capital gains your going to pay on your investments over that same time period!

                Annuities are for people who wish to overpay taxes to their government! They are not good investment vehicles for anyone at anytime!

                Keep dreaming the impossible dream, it just may come true! Thumbs Up

                  JackpotWanna's avatar - squiz

                  United States
                  Member #4121
                  March 23, 2004
                  817 Posts
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                  Posted: March 5, 2008, 4:55 pm - IP Logged

                  I look at it this way in the long run and I hope it makes sense to the rest here on the LP. I see $1,441,666 going out 30 times to Uncle Sam, which comes to $43,249,980 verses the one time payment of $21,425,000 that one year only!

                  Now think about it for a few minutes, taxes never go down (most of the time they go up) and you actually still owe another 10% at todays tax rate at the end of the year every year for the next 30 years on your winnings! But if you invest any of those winnings your now going to owe another 15% capital gains taxes on top of that!

                  The highest tax rate of 35% is as of today, but if the government pushes the tax rate up another 3% 15 years down the road you are really getting the screws put to you and your family! See what I'm getting at here! Take the lump sum and pay the one time tax payment and invest the money and only pay the 15% capital gains taxes on the investments rather the 35% tax rate for 30 years plus the another 15% for capital gains your going to pay on your investments over that same time period!

                  Annuities are for people who wish to overpay taxes to their government! They are not good investment vehicles for anyone at anytime!

                  No problem.  Let me win $173 million today and I'll pay all the taxes the government requires of me and more.   Banana

                    sirbrad's avatar - Lottery-062.jpg
                    PA
                    United States
                    Member #22983
                    October 6, 2005
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                    Posted: March 5, 2008, 6:48 pm - IP Logged

                    At this rate no taxes are going to matter to me. It is so much money I don't really care. However as I already said I am a lump sum guy, but would take the annuity at this level with no complaints if I had to. If it is not misleading why don't they post "after taxes" estimate? Because it IS misleading that is why.

                      justxploring's avatar - villiarna
                      Wandering Aimlessly
                      United States
                      Member #25360
                      November 5, 2005
                      4461 Posts
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                      Posted: March 5, 2008, 7:30 pm - IP Logged

                      At this rate no taxes are going to matter to me. It is so much money I don't really care. However as I already said I am a lump sum guy, but would take the annuity at this level with no complaints if I had to. If it is not misleading why don't they post "after taxes" estimate? Because it IS misleading that is why.

                      If it is not misleading why don't they post "after taxes" estimate?  What?

                      I agree...I'd be very happy too.  And as I said before, there's no point in debating this issue if we all have different ways of looking at things.

                      However, your last comment struck me as odd.  If you apply for a job and are told "We'll give you $600 a week" do you expect to get a check for $600 on Friday? 

                      All income is taxed, including prizes. 

                        justxploring's avatar - villiarna
                        Wandering Aimlessly
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                        Posted: March 5, 2008, 7:52 pm - IP Logged

                        KY Floyd writes:  if all they advertise is "at least $5000 for any trade" then the advertising is false and misleading.

                        I usually would be the last person to defend a car dealership, but I disagree with you that this is false advertising.  Someone would have to be a complete moron to think an old beater that isn't even running is worth a trade-in value of $5,000.  Still, wouldn't it be nice if truth in advertising and truth in lending were really enforced?  From my personal experience in sales, many people don't want to be educated. They just want a new car, a new home, new furniture, a new credit card, and they don't want to hear about the jam they'll be in 2 years from now.  In 1996 I got my first retail sales job in FL selling cars. I was very green too. One day I tried explaining to a couple that they were very upside down and that the new interest rate would put them in even a worse situation. They left and went up the street and bought a car.  Why they came back and rubbed it in my face will always be a mystery, but they apparently didn't appreciate my integrity.  Sometimes it's hard to be honest because people don't appreciate it.  It's sort of like politics!  LOL  People often vote for the guys who talk the talk and have the most charisma.

                          Avatar
                          Kentucky
                          United States
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                          February 14, 2006
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                          Posted: March 5, 2008, 8:02 pm - IP Logged

                          KY Floyd writes:  if all they advertise is "at least $5000 for any trade" then the advertising is false and misleading.

                          I usually would be the last person to defend a car dealership, but I disagree with you that this is false advertising.  Someone would have to be a complete moron to think an old beater that isn't even running is worth a trade-in value of $5,000.  Still, wouldn't it be nice if truth in advertising and truth in lending were really enforced?  From my personal experience in sales, many people don't want to be educated. They just want a new car, a new home, new furniture, a new credit card, and they don't want to hear about the jam they'll be in 2 years from now.  In 1996 I got my first retail sales job in FL selling cars. I was very green too. One day I tried explaining to a couple that they were very upside down and that the new interest rate would put them in even a worse situation. They left and went up the street and bought a car.  Why they came back and rubbed it in my face will always be a mystery, but they apparently didn't appreciate my integrity.  Sometimes it's hard to be honest because people don't appreciate it.  It's sort of like politics!  LOL  People often vote for the guys who talk the talk and have the most charisma.

                          "It's sort of like politics!  LOL  People often vote for the guys who talk the talk and have the most charisma."

                          But not in Ohio, Texas, and Rhode Island yesterday.


                            United States
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                            June 22, 2005
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                            Posted: March 5, 2008, 8:21 pm - IP Logged

                            I find it rather interesting how some people can be blinded by their so called knowledge of the real world. They think that there is nothing going on behind closed doors and everything is honky dory.

                            Of course it's MEANT to be misleading. My opinion is that the real issue here is not whether people are so dumb as to know the true value amount they get is the net and not the gross, but because these advertisers are getting away with it, and they don't like it.

                            Just like the dealership that says 99$ a month. But they don't mention that it's only for 3 months or so. Then it goes to the regular rate of whatever. That's not deception?

                            People might come up with a defense that since the lottery really discloses the real amount, if only you read the fine print, well I disagree there too.

                            If the lottery officials know that there will be a significant group out there who will comply with the subliminal approches in ads, then they'll use it to make more money. You doubt me? Well here's an example:

                            To this day, advertisers use 2,999.99 as an amount instead of 3000 bucks...Why? because subconciously 2,999.99 looks better. We all know it's really 3000 bucks, but the adverstisers know something else. They wouldn't to this day be using that kind of strategy if it wasn't working. The human brain, with all it's accomplishments, can still be fooled.

                            So yes, in my opinion, it is misleading, just like the whole odds thingy on another thread.

                            The Florida fantasy five has about 376 thousand possibilities. If I buy a thousand QPs, I'll have a 1:376 chance of winning. But that is misleading. Even though 1:376 looks good, there are still 375,000 other possibilities that can come out. Misleading.

                              lottocalgal's avatar - Lottery-043.jpg
                              CA
                              United States
                              Member #57222
                              December 23, 2007
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                              Posted: March 5, 2008, 8:22 pm - IP Logged

                              What you do with that kind of money, before you get to the investment stage, is park it in a special program the banks have called CDARS (pronounced "cedars"). What they do is in effect spread your money out into $100K blocks across many banks, but to you it looks and acts like one account. You aren't, in that case, required to physically go to every bank and open those accounts. more info.

                              The largest (in terms of the amounts you can put in) option is U.S. treasury notes & bonds. Treasury paper can be sold before maturity, so your money isn't really tied up for the 2 to 10 year lifetime of the note unless you want it to be.

                              Thanks for this information time*treat.

                              I'm stacking up all information I can. Just in case.