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Do you still feel the same about Cash Option or Annuity??

Topic closed. 21 replies. Last post 8 years ago by mymonthlypicks.

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Cash Option or Annuity ..Which to choose?

Annuity [ 8 ]  [12.50%]
Cash Option [ 43 ]  [67.19%]
Don't trust the Gov't would take the money and run [ 12 ]  [18.75%]
Take Annuity if State fails ask for Bailout [ 0 ]  [0.00%]
Other [ 1 ]  [1.56%]
Head for country with Flat tax rate [ 0 ]  [0.00%]
Total Valid Votes [ 64 ]  
Discarded Votes [ 3 ]  
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United States
Member #26330
November 16, 2005
330 Posts
Offline
Posted: December 6, 2008, 1:01 pm - IP Logged

I'm asking in the current economic enviroment is your opinion of Cash Vs. Annuity still the same?  I ask this because of the fluctuating stock market and states like California asking for Bailouts. 

 

My thoughts are I wouldn't trust the state to control my money and dole it out to me.  As a voluntary tax I doubt many tax payers would agree to send Millions of Dollars to a state lottery agency for their debt obligations.    So While you probably would get your money eventually if worse came to worse you might be waiting a long time for your lotto check!   I would choose the cash option personally.   Although I would get a lower amount of money in the short term I would be in control of the money.  I would invest in something very safe like GOLD and wait and see how things pan out in the new year.  On the other hand with the new Priority on "Green" technology that may be a good spot to put some money. Or trying to find alternative fuels...I might invest in Corn futures..might be big money in ethanol! Plus not getting political but Obama has stated he WILL increase taxes on the rich.   If you take an Annuity your payments will get taxed every year.  When Either tax increases are put in place or Bush tax cuts expire you will pay more of your lottery money to the gov't!  I feel taking the Lump Sum now(if you will in 2008) would be a far better plan.  I think you would pay far fewer taxes this year than next and the following years.   (I wonder how hard it would be to start my own Non Profit Group and claim tax exempt status??) LOL .     SORRY if this is too long just had some thoughts my 2 cents.   What's  YOUR opinion?????

    Guru101's avatar - rw6jhh
    Indiana
    United States
    Member #48725
    January 7, 2007
    1953 Posts
    Offline
    Posted: December 6, 2008, 1:25 pm - IP Logged

    I would take the cash option, but not because I think that if I take the annuity, then I won't get all my money. I think I would.

    Gonna win.Big Smile

      ThatScaryChick's avatar - x1MqPuM
      Idaho
      United States
      Member #56506
      November 21, 2007
      6537 Posts
      Offline
      Posted: December 6, 2008, 3:05 pm - IP Logged

      I still feel the same as I did before. I would take the cash option.

      "No one remembers the person who almost climbed the mountain, only the person who eventually gets to the top."


        United States
        Member #58528
        February 18, 2008
        710 Posts
        Offline
        Posted: December 6, 2008, 4:30 pm - IP Logged

        Cash option,of course.

          Piaceri's avatar - sarsony1
          Republic of Texas
          United States
          Member #57557
          January 9, 2008
          1095 Posts
          Offline
          Posted: December 6, 2008, 6:14 pm - IP Logged

          Actually, the cash option is a smart one right now. Not only because of the likelyhood of an Obama tax increase, but because the cash option is paying 68% of the jackpot. The T-Bill rates have dropped so much that the lottery commission has to put more cash up front to fund the annuity.  And that is what the cash option pays, right? The amount of cash it takes to fund the jackpot annuity. Just last month the cash option was around 60%. 

          My question would be if the T-Bill rates increase between the draw and the time you claim, is the cash option amount likely to change?  Or do they set the cash option on the day the jackpot is won?  That could have a bigger affect on your winnings than if the top tax rate goes from 35% to 39%, making it beneficial to claim the jackpot close to the end of the tax year instead of waiting for the new year.

          face

          singlewinnersinglewinnersinglewinner   

            Coin Toss's avatar - shape barbed.jpg
            Zeta Reticuli Star System
            United States
            Member #30470
            January 17, 2006
            10351 Posts
            Offline
            Posted: December 6, 2008, 7:33 pm - IP Logged

            Cash!

            What if the elected administration decides to do something like tax lottery annuities at a higher and higher rate every year? I'm just saying....

            Someone here has or had a sig: You can always buy a better annuity...

            and you'd do that by taking cash!

            Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

            Lep

            There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

              Avatar
              NY
              United States
              Member #23835
              October 16, 2005
              3474 Posts
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              Posted: December 7, 2008, 3:12 am - IP Logged

              "if the T-Bill rates increase between the draw and the time you claim, is the cash option amount likely to change?"

              The Ohio lottery website describes the procedures for MM. They apparently buy the govt securities when the cash comes in, and then sell to pay the lump sum. Imagine they buy 100 million worth of bonds paying 2.5% and bonds paying 3% become available before the prize is claimed. Would you pay $100 million for the ones that only pay 2.5%?  Conversely, if rates drop, the value of the bonds will go up.

              IMHO, the real reason not to choose annuity right now is the low rates. If you think that govt securities is the way to go you can buy them with the cash. Unlike the lottery, which has to guarantee a specific payout for the duration of the annuity, you don't need to lock in the current rate for 20 to 30 years. By taking the cash there's a good chance you could spend most of the annuity period safely earning at two to 3 times the rate of the annuity.

                MillionsWanted's avatar - 24Qa6LT

                Norway
                Member #9517
                December 10, 2004
                1272 Posts
                Online
                Posted: December 7, 2008, 2:05 pm - IP Logged

                Considering how many jackpot winners who are broke after only a few years, annuity should be the standard payout.

                  Coin Toss's avatar - shape barbed.jpg
                  Zeta Reticuli Star System
                  United States
                  Member #30470
                  January 17, 2006
                  10351 Posts
                  Offline
                  Posted: December 7, 2008, 2:28 pm - IP Logged

                  Considering how many jackpot winners who are broke after only a few years, annuity should be the standard payout.

                  There are companies that look for people with annuities and lure them into selling them, lump sum, for a lot less than they'd get taking the annual payments. Often the people who go for this blow what they do get, and then wish they'd have kept the annuity.

                  This should teach us that some people are going to blow it all no matter which option they take.

                  Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

                  Lep

                  There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

                    L J1's avatar - chi jpeg.jpg
                    Michigan
                    United States
                    Member #54181
                    August 8, 2007
                    123 Posts
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                    Posted: December 7, 2008, 6:02 pm - IP Logged

                    1st... I would choose the cash option; just to set everything (investments) in motion. I like the annual pymt; however, for the record on the first time around, cash op. is best. Then as I continue to play different lottery games, such as different states, I then would choose annuities & perhaps a cash op here and there, cause I am vested from the cash option from the first Lottery Game. So, in essance, everything after the the first jackpot win, I have the ability to choose as I please. 

                    Balance is Key


                      United States
                      Member #67042
                      November 14, 2008
                      72 Posts
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                      Posted: December 7, 2008, 10:52 pm - IP Logged

                      Annuity if I can stay Anon.! so I don't have to deal with those who pops up out of the blue!See Ya!

                        savagegoose's avatar - ProfilePho
                        adelaide sa
                        Australia
                        Member #37136
                        April 11, 2006
                        3300 Posts
                        Offline
                        Posted: December 8, 2008, 11:13 am - IP Logged

                        yeah im with lj1, my 1st jackpot im taking the cash, when i win my second jackpot ill go for the annuity. taxes can be paid from y 3rd jackpot, and finnaly  ill have to thing about donating to a church  when my 4th jackpot comes around.

                         

                        hehe

                         

                        seriously tho, its cash for me if i get to chose. i didn tthink it would really matter , but with all the financial disasters a few states in usa did have to sue big banks for  the annuities they had invested in , and all that is being paid up noW.  THIS WAS BEFORE  THE BIG COLAPSE

                        2014 = -1016; 2015= -1409; 2016 JAN = -106; FEB= -81; MAR= -131; APR= - 87: MAY= -91; JUN= -39; JUL=-134; AUG= -124; SEP = -123; OCT= -84  NOV=- 73 TOT= -3498

                        keno historic = -2291 ; 2015= -603; 2016= JAN=-32, FEB= +12 , MAR= -86, APR = -77. MAY= -48, JUN= -29, JUL=-71; AUG = -52; SEPT= -43; OCT = +56 NOV = -33 TOT= -3297

                          JackpotWanna's avatar - squiz

                          United States
                          Member #4121
                          March 23, 2004
                          817 Posts
                          Offline
                          Posted: December 8, 2008, 2:34 pm - IP Logged

                          I changed my mind. Before I choose annuity because it will good way to budget my money.   I feel that obama going to raise taxes to pay for the bailout.  Now I will choose cash and move out of the country. Enjoy my life!!!!!!!

                            grengrad's avatar - nw rogue.jpg
                            Raleigh
                            United States
                            Member #49057
                            January 17, 2007
                            172 Posts
                            Offline
                            Posted: December 8, 2008, 3:45 pm - IP Logged

                            Right now is a better time than any in recent history to take the Cash Option.

                            Right now you can buy a house. You can buy into the stock market at prices 30-50% off their peak. You can buy foreign currencies at 2002 levels. Even commodities are down!

                            We may not be at the bottom right now, but the bottom will occur sometime within the next 6-12 months, which means you would also have plenty of time to do some research and find good investments.

                            Some investments will fail, which is why you split your money up into 50 different things.

                            This is the best time in the last 10 years to have 100% cash, because their are so many buying opportunities.

                             

                            Also, right now America is printing money like there is no tomorrow. Inflation will hit, and if you are in an annuity the value of your future earnings will be severely harmed.

                            Cash up front to put into investments now, perhaps even a little bit into TIPS (Treasury Inflation-Protected Securities, is much much better than an annuity.

                             

                            If any of you guys win and need investment advice, I would be happy to help.

                              grengrad's avatar - nw rogue.jpg
                              Raleigh
                              United States
                              Member #49057
                              January 17, 2007
                              172 Posts
                              Offline
                              Posted: December 8, 2008, 3:55 pm - IP Logged

                              I'm asking in the current economic enviroment is your opinion of Cash Vs. Annuity still the same?  I ask this because of the fluctuating stock market and states like California asking for Bailouts. 

                               

                              My thoughts are I wouldn't trust the state to control my money and dole it out to me.  As a voluntary tax I doubt many tax payers would agree to send Millions of Dollars to a state lottery agency for their debt obligations.    So While you probably would get your money eventually if worse came to worse you might be waiting a long time for your lotto check!   I would choose the cash option personally.   Although I would get a lower amount of money in the short term I would be in control of the money.  I would invest in something very safe like GOLD and wait and see how things pan out in the new year.  On the other hand with the new Priority on "Green" technology that may be a good spot to put some money. Or trying to find alternative fuels...I might invest in Corn futures..might be big money in ethanol! Plus not getting political but Obama has stated he WILL increase taxes on the rich.   If you take an Annuity your payments will get taxed every year.  When Either tax increases are put in place or Bush tax cuts expire you will pay more of your lottery money to the gov't!  I feel taking the Lump Sum now(if you will in 2008) would be a far better plan.  I think you would pay far fewer taxes this year than next and the following years.   (I wonder how hard it would be to start my own Non Profit Group and claim tax exempt status??) LOL .     SORRY if this is too long just had some thoughts my 2 cents.   What's  YOUR opinion?????

                              petergrfn

                              I would be very careful investing in Green or Ethanol with how low gas is right now. There is a lot less interest in those projects right now, because of cheep gas. Some of those companies would be a good long-term investment, but many of them do not have enough capital to survive if gas prices stay low for a long time. Also, green companies have already rallied leading up to Obama's election, so they are actually a little overpriced right now.

                              Gold is a very good investment if you want to protect against inflation, but like all things it should not make up too much of your portfolio. I personally have 6% of my portfolio in gold.

                              Starting your own non-profit would not be very hard, but you would have to use the money for charitable functions, not a Ferrari for your "company car".