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everyone wants a lump sum but

Topic closed. 14 replies. Last post 8 years ago by Coin Toss.

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GamerMom's avatar - tails

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Posted: January 5, 2009, 12:39 pm - IP Logged

wouldn't it make more sense to get an annuity then go to one of those services that buy annuities?  For example if i won the florida lottery right now, as it is 6 million i would only take home about 2,225,000.  BUT if i got the annuity and found somebody to buy me out I could get more than that, maybe even 4 million?  I'm just thinking out loud, i have no idea how those services work.

    justxploring's avatar - villiarna
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    Posted: January 5, 2009, 12:53 pm - IP Logged

    Absolutely not!   How would they make a profit?  Of course they discount the future value of your annuity.  What else would be the point of buying it from you?  That would be like saying a car dealer is going to give you the retail value of your car.  The only way the dealer can stay in business is to give you the trade-in value and then sell it at retail. 

      Jack-C's avatar - us
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      Posted: January 5, 2009, 12:55 pm - IP Logged

      Absolutely not!   How would they make a profit?  Of course they discount the future value of your annuity.  What else would be the point of buying it from you?  That would be like saying a car dealer is going to give you the retail value of your car.  The only way the dealer can stay in business is to give you the trade-in value and then sell it at retail. 

      I Agree!

        GamerMom's avatar - tails

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        Posted: January 5, 2009, 12:55 pm - IP Logged

        exactly.  Re read my question, I didn't say i would get the full 6 million. I merely suggested I would get more than the 2,225,000 i would get from the Fl Lottery . 

          justxploring's avatar - villiarna
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          Posted: January 5, 2009, 12:59 pm - IP Logged

          No, you aren't reading my comment correctly.  What you get from the FL Lottery is about 70% now, which is very good.  Annuities are up, so selling one based on future value doesn't make sense.  Anyway, you still have to pay federal income tax on the win, so you aren't using the correct numbers.   Do you think you only have to pay tax on the first annual payment and then they will pay the rest? 

            BuyLow's avatar - palm tree.jpg
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            Posted: January 5, 2009, 12:59 pm - IP Logged

            exactly.  Re read my question, I didn't say i would get the full 6 million. I merely suggested I would get more than the 2,225,000 i would get from the Fl Lottery . 

            I doubt it.  Those companys like JG Wentworth are in business, they don't do this for charity.

              GamerMom's avatar - tails

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              Posted: January 5, 2009, 1:00 pm - IP Logged

              70%? I thought lump sum was half of the JP less taxes.

               

              Yes I did forget about taxes

                GamerMom's avatar - tails

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                Posted: January 5, 2009, 1:02 pm - IP Logged

                I doubt it.  Those companys like JG Wentworth are in business, they don't do this for charity.

                how would it be considered charity when they make 2 million off of the (hypothetical) deal?

                  BuyLow's avatar - palm tree.jpg
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                  Posted: January 5, 2009, 1:04 pm - IP Logged

                  70%? I thought lump sum was half of the JP less taxes.

                   

                  Yes I did forget about taxes

                  Go to http://www.usamega.com/powerball-jackpot.asp and look at the powerball jackpot analysis for an example.

                    justxploring's avatar - villiarna
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                    Posted: January 5, 2009, 1:05 pm - IP Logged

                    70%? I thought lump sum was half of the JP less taxes.

                     

                    Yes I did forget about taxes

                    No, the lump sum is based on current annuity values.  The MegaMoney is a 20 year payout and has recently been paying about 77-78% of the jackpot.  The Lotto is a 30 year payout and has been paying about 70%.  Still, even with federal income tax (no FL state tax) the most you'll pay, unless there is a tax increase, is 35% and you'll have deductions.   So I figure you'd clear about $3M.  Anyway, you are the owner of the ticket and have to pay the taxes on the entire amount, whether or not you sell it. 

                      BuyLow's avatar - palm tree.jpg
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                      Posted: January 5, 2009, 1:05 pm - IP Logged

                      how would it be considered charity when they make 2 million off of the (hypothetical) deal?

                      I said they DO NOT do this for charity, hence they will take ALL they can from you.

                       

                      Also, did you know that in florida if you play the extra $1 or $2 dollar jackpot increase plays you can then take either the base amount and the bonus as separate prizes meaning you can take the base amount as an annuity and the bonus a lump sum, or vice versa or both.

                        GamerMom's avatar - tails

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                        Posted: January 5, 2009, 1:08 pm - IP Logged

                        No, the lump sum is based on current annuity values.  The MegaMoney is a 20 year payout and has recently been paying about 77-78% of the jackpot.  The Lotto is a 30 year payout and has been paying about 70%.  Still, even with federal income tax (no FL state tax) the most you'll pay, unless there is a tax increase, is 35% and you'll have deductions.   So I figure you'd clear about $3M.  Anyway, you are the owner of the ticket and have to pay the taxes on the entire amount, whether or not you sell it. 

                        very good point! thanks :)

                         

                        It's all very confusing, though, with the payouts.  This winner listed on the Fl Lottery site, for example:

                         

                        Linda McLaughlin, 50, of Jacksonville, won the $1 million top prize in the $600 MILLION HIGH ROLLER Scratch-Off game. McLaughlin, who arrived at Lottery headquarters wearing her Publix uniform, received a lump-sum for her winning in the amount of $708,794.50.

                         

                        So why didn't she just get the $1M if she won it on a scratchoff?  I'm assuming she still has to pay taxes on $708.794.50

                          justxploring's avatar - villiarna
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                          Posted: January 5, 2009, 1:11 pm - IP Logged

                          That was the cash pay-out.  The rules on that instant game must have stated that the million dollars would be paid over a 20 year period.  Otherwise, you'd be correct.   If you had won $1M in the Raffle, you would have gotten the entire million, less tax.   That's why it is important to read the rules on the back of the ticket or on the Florida site.  Not all instant game tickets have cash payouts.   

                            BuyLow's avatar - palm tree.jpg
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                            Posted: January 5, 2009, 1:13 pm - IP Logged

                            That was the cash pay-out.  The rules on that instant game must have stated that the million dollars would be paid over a 20 year period.  Otherwise, you'd be correct.   If you had won $1M in the Raffle, you would have gotten the entire million, less tax.   That's why it is important to read the rules on the back of the ticket or on the Florida site.  Not all instant game tickets have cash payouts.   

                            CORRECT....I happened to have on here at home and just read the back.

                              Coin Toss's avatar - shape barbed.jpg
                              Zeta Reticuli Star System
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                              Posted: January 5, 2009, 5:42 pm - IP Logged

                              wouldn't it make more sense to get an annuity then go to one of those services that buy annuities?  For example if i won the florida lottery right now, as it is 6 million i would only take home about 2,225,000.  BUT if i got the annuity and found somebody to buy me out I could get more than that, maybe even 4 million?  I'm just thinking out loud, i have no idea how those services work.

                              GamerMom

                              What people here have already said, plus know this- such compnaies exist on the premise that they are looking for people with annuities (any type of annuity, including even some pensions) who want it all now, and this are willing to take less for them. Less meaning cents on the dollar, the amount of cents is whatever they feel they can size the people up for.

                              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.