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DO you really lose money if u take the annunity over the lump sum?

Topic closed. 125 replies. Last post 4 years ago by rdgrnr.

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wisconsin
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July 23, 2012
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Posted: August 12, 2012, 2:42 pm - IP Logged

I wasn't talking about consumer goods and the latest gadgets.

More along the lines of real estate, farmland and water.

I couldn't agree more.

    Piaceri's avatar - sarsony1
    Republic of Texas
    United States
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    January 9, 2008
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    Posted: August 12, 2012, 5:43 pm - IP Logged

    DO YOU REALLY LOSE OUT IF YOU TAKE THE ANNUNITY? The jackpot for this weekend is 253 million, so they take half that leaves 126.5 million. Now over 29 years you'd get 4.3 million b4 taxes. In my state taxes are 32%,  25% federal 7% state so then that would b roughly 2.9 million a year for 29 years...Now Ive been broke never been rich so if and when I do win...I want to keep it and get that check every year.

    At my advanced age, why yes, I'd lose out because I'll probably be dead before I see the final payment. 

     

    A bird in the hand is worth 2 in the bush. Or so they say.

    face

    singlewinnersinglewinnersinglewinner   

      mediabrat's avatar - 18z0typ
      upstate NY
      United States
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      March 31, 2011
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      Posted: August 12, 2012, 6:43 pm - IP Logged

      coin is right ronnie, that's why they hope no one wins. If there is a winner, they have to ask congress for a loan and that's why it takes 2 weeks to get your first JP check.

      Your tinfoil hat needs adjusting, possibly repair.

      Just to expand upon Coin's post regarding the difference between the "cash value" and the "estimated annuitized jackpot":  The lump sum exists regardless of the payment method the winner chooses.  It's either paid out immediately or used to fund the annuity.  The rest of the money, of course, comes from the interest that builds up on the principal over the years.  The reason why it takes a couple weeks to receive your money -- again, regardless of lump sum vs. annuity -- is that it takes that long to gather each state's share of the prize money.  Given the amounts involved, it takes a big longer than the everyday bank transactions we're used to.  I've read here that sometimes the state lottery can float you a million or so right away if you "need" it, but I don't know if that's an accurate statement.

      To address the original question as to whether taking the annuity is a losing proposition, that seems to be a matter of opinion more than anything else.  If you think you can do a better job than the lottery of investing the lump sum, thus earning yourself more money in the long run, go for it.  If you'd prefer to let the lottery and its bank(s) handle that, go for it.  Don't let the tinfoil hats here tell you what to do with YOUR winnings; it's your decision and yours alone.

      The other "concern" is the various catastrophes the tinfoil hats come up with:

      • the lottery and/or the bank(s) handling the annuity will go belly-up, taking your winnings with it (one, wouldn't that happen if the bank(s) you chose to invest the lump sum with likewise failed?; two, there seems to be some confusion as to whether or not the annuity provided through the lottery is guaranteed)
      • taxes will go sky high, wiping out most of your future annuity checks (uh, wouldn't that happen even if you invested the money yourself?)
      • society will collapse and the government will confiscate all wealth (again, that would affect you even if you took the lump sum, especially if these alleged confiscations include real estate holdings; besides, if the sh*t hits the fan, you've got bigger problems than "they took my lottery money!")
      • society will collapse and the dollar will lose all value (again, I fail to see how that doesn't affect you if you opted for the cash; if you stockpiled it, it's still worthless, and if you acquired real property, it's likewise worthless, because how are you going to leverage that property when you can't sell it and no one can afford to rent it from you?)

      And, obviously, the one common retort to all of those is:  Really?  Get a grip!

      Patriot


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        Posted: August 12, 2012, 6:47 pm - IP Logged

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          Florida
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          February 12, 2012
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          Posted: August 13, 2012, 1:15 am - IP Logged

          Your tinfoil hat needs adjusting, possibly repair.

          Just to expand upon Coin's post regarding the difference between the "cash value" and the "estimated annuitized jackpot":  The lump sum exists regardless of the payment method the winner chooses.  It's either paid out immediately or used to fund the annuity.  The rest of the money, of course, comes from the interest that builds up on the principal over the years.  The reason why it takes a couple weeks to receive your money -- again, regardless of lump sum vs. annuity -- is that it takes that long to gather each state's share of the prize money.  Given the amounts involved, it takes a big longer than the everyday bank transactions we're used to.  I've read here that sometimes the state lottery can float you a million or so right away if you "need" it, but I don't know if that's an accurate statement.

          To address the original question as to whether taking the annuity is a losing proposition, that seems to be a matter of opinion more than anything else.  If you think you can do a better job than the lottery of investing the lump sum, thus earning yourself more money in the long run, go for it.  If you'd prefer to let the lottery and its bank(s) handle that, go for it.  Don't let the tinfoil hats here tell you what to do with YOUR winnings; it's your decision and yours alone.

          The other "concern" is the various catastrophes the tinfoil hats come up with:

          • the lottery and/or the bank(s) handling the annuity will go belly-up, taking your winnings with it (one, wouldn't that happen if the bank(s) you chose to invest the lump sum with likewise failed?; two, there seems to be some confusion as to whether or not the annuity provided through the lottery is guaranteed)
          • taxes will go sky high, wiping out most of your future annuity checks (uh, wouldn't that happen even if you invested the money yourself?)
          • society will collapse and the government will confiscate all wealth (again, that would affect you even if you took the lump sum, especially if these alleged confiscations include real estate holdings; besides, if the sh*t hits the fan, you've got bigger problems than "they took my lottery money!")
          • society will collapse and the dollar will lose all value (again, I fail to see how that doesn't affect you if you opted for the cash; if you stockpiled it, it's still worthless, and if you acquired real property, it's likewise worthless, because how are you going to leverage that property when you can't sell it and no one can afford to rent it from you?)

          And, obviously, the one common retort to all of those is:  Really?  Get a grip!

          I humbly agree with you on this. In the event that anything should happen to society, the value of the dollar, and the failure of banks, regardless if you chose it or the lottery commission does, if the event was that dire, it would be rendered useless. Maybe you would be able to prevent which bank would fail on you, but if the economy was that far down the toilet, it would happen eventually. Even if you had investments in real estate, like you said, if nobody can afford it then it just hurts you to have bought it in the first place. From a purely business stand point, if anything got THAT bad, the value of anything seriously plummets beyond reason. So, really, considering how America and the rest of the world has been in worse times than now financially, I think it's rather silly to be that afraid, but it's still good to be mindful of it. 

           

          Back to the OP, I think the only major difference between accepting the lump sum versus the annuity is as follows:

          1.) Taking the lump sum versus the annuity allows you to control how your assets are distributed around, while with the annuity it is in the hands of the lottery commission to decide that for you. If you believe that you can get a better return on your investments that what the lottery commission can provide you, or you think you can hire someone to do it for you, then do so by all means. You'll profit exponentially more and know exactly where that money is going, for the most part. If you believe you can't handle the pressure of that burden, even by hiring someone to help you, then accept the annuity.

          2.) Estate tax. This is the big one for me personally. When someone dies, there is a tax on the amount of their assets and estate, if given by inheritance. However, with the lottery, it must be paid immediately after the original winner dies of the total amount accumulated of the 30 years. So, what that means is this: If you died, say, in your 12th year of receiving your annuity, your children or whoever you allocate that money to in your inheritance will have to pay the estate tax on the ENTIRE amount of your valued winnings after 30 years and NOT during the 12th year you died in. Your children could still accept the money for the amount of years needed to fulfill it afterward to the 30 years, but they would have to pay the estate tax for that entire amount the year it was given to them.

          I, personally, could never put that kind of financial burden on anyone, let alone my own family. This is the biggest reason why I would go for the lump sum over the annuity any day. Yeah, sure, I may or may not eventually end up in a desolate, broken, and poor society. Maybe, maybe not, that future is indiscernable. What WILL happen to all of us though is death at any time, and I couldn't even in death put anybody through that kind of substantial problem. That and I would prefer handling my own assets. 

          The decision is really up to you, OP! Sun Smiley


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            Posted: August 13, 2012, 10:47 am - IP Logged

            If our Marxist government made tin foil hats a "right" it would be illegal to NOT own one.

              time*treat's avatar - radar

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              Posted: August 13, 2012, 10:52 am - IP Logged

              I wasn't talking about consumer goods and the latest gadgets.

              More along the lines of real estate, farmland and water.

              I Agree! Make sure it's in a state where the govt doesn't presume ownership of the groundwater and rain (except when the roof leaks or your basement floods. That water, you own).

              In neo-conned Amerika, bank robs you.
              Alcohol, Tobacco, and Firearms should be the name of a convenience store, not a govnoment agency.

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                NH
                United States
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                December 5, 2009
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                Posted: August 13, 2012, 11:57 am - IP Logged

                Your tinfoil hat needs adjusting, possibly repair.

                Just to expand upon Coin's post regarding the difference between the "cash value" and the "estimated annuitized jackpot":  The lump sum exists regardless of the payment method the winner chooses.  It's either paid out immediately or used to fund the annuity.  The rest of the money, of course, comes from the interest that builds up on the principal over the years.  The reason why it takes a couple weeks to receive your money -- again, regardless of lump sum vs. annuity -- is that it takes that long to gather each state's share of the prize money.  Given the amounts involved, it takes a big longer than the everyday bank transactions we're used to.  I've read here that sometimes the state lottery can float you a million or so right away if you "need" it, but I don't know if that's an accurate statement.

                To address the original question as to whether taking the annuity is a losing proposition, that seems to be a matter of opinion more than anything else.  If you think you can do a better job than the lottery of investing the lump sum, thus earning yourself more money in the long run, go for it.  If you'd prefer to let the lottery and its bank(s) handle that, go for it.  Don't let the tinfoil hats here tell you what to do with YOUR winnings; it's your decision and yours alone.

                The other "concern" is the various catastrophes the tinfoil hats come up with:

                • the lottery and/or the bank(s) handling the annuity will go belly-up, taking your winnings with it (one, wouldn't that happen if the bank(s) you chose to invest the lump sum with likewise failed?; two, there seems to be some confusion as to whether or not the annuity provided through the lottery is guaranteed)
                • taxes will go sky high, wiping out most of your future annuity checks (uh, wouldn't that happen even if you invested the money yourself?)
                • society will collapse and the government will confiscate all wealth (again, that would affect you even if you took the lump sum, especially if these alleged confiscations include real estate holdings; besides, if the sh*t hits the fan, you've got bigger problems than "they took my lottery money!")
                • society will collapse and the dollar will lose all value (again, I fail to see how that doesn't affect you if you opted for the cash; if you stockpiled it, it's still worthless, and if you acquired real property, it's likewise worthless, because how are you going to leverage that property when you can't sell it and no one can afford to rent it from you?)

                And, obviously, the one common retort to all of those is:  Really?  Get a grip!

                One doesn't have to wear a tinfoil hat to know that the tax rate in America was over 70% not that long ago. One also doesn't have to wear a tinfoil hat to know that some sort of socialistic government is in our near future. The tax rate will never be lower than it is today. In fact, it has the potential to go well over 50% sooner rather than later. Now that everybody is use to seeing $3+ gas on a regular basis, we will never see it go below $3. And when "they" bring the top tax bracket over 50%, it will never go below that. 

                Take the cash now


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                  Posted: August 13, 2012, 12:08 pm - IP Logged

                  One doesn't have to wear a tinfoil hat to know that the tax rate in America was over 70% not that long ago. One also doesn't have to wear a tinfoil hat to know that some sort of socialistic government is in our near future. The tax rate will never be lower than it is today. In fact, it has the potential to go well over 50% sooner rather than later. Now that everybody is use to seeing $3+ gas on a regular basis, we will never see it go below $3. And when "they" bring the top tax bracket over 50%, it will never go below that. 

                  Take the cash now

                  Exactly right GYM RICE, the liberal leftist has a habit of treating the "unelite" like they are stupid. It doesn't take a genius to realize that we pay tax in the amount of 70% after you add up all the different underhanded schemes they use to collect from us every day of the week.

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                    Kentucky
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                    Posted: August 13, 2012, 12:19 pm - IP Logged

                    Coin toss read your fine print on your state lotto rules....the lotto take half of the jackpot upfront cause the amount shown is an estimated value of the actual prize..i.e.  half of 253 million is 126.5 million

                    The advertised jackpot is based on the amount the cash value can get for a 30 year annuity. The current interest rate decides how much so at times the jackpot could be more than twice as high as the cash value or only 50% higher as it is now. The rate can change from one jackpot to the next. The current rate of return on a $203.3 million safe annuity is about 1.4% annually. For the advertised jackpot to be twice as high as the cash value, the annuity would have to pay 2.4% annually.

                    The state lottery withholds 25% in Federal taxes and whatever the state tax percentage is; a North Carolina resident taking the cash would get a check for $138,244,000. If they take the annuity, their total after 30 payments is $211,853,010 after taxes and that's only a difference of 53%. At just a 3% interest rate for 29 years, the $138 million after tax prize would grows to $326 million.

                    If the annuity could get 3%, the current jackpot would be $493 million.


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                      Posted: August 13, 2012, 12:33 pm - IP Logged

                      The advertised jackpot is based on the amount the cash value can get for a 30 year annuity. The current interest rate decides how much so at times the jackpot could be more than twice as high as the cash value or only 50% higher as it is now. The rate can change from one jackpot to the next. The current rate of return on a $203.3 million safe annuity is about 1.4% annually. For the advertised jackpot to be twice as high as the cash value, the annuity would have to pay 2.4% annually.

                      The state lottery withholds 25% in Federal taxes and whatever the state tax percentage is; a North Carolina resident taking the cash would get a check for $138,244,000. If they take the annuity, their total after 30 payments is $211,853,010 after taxes and that's only a difference of 53%. At just a 3% interest rate for 29 years, the $138 million after tax prize would grows to $326 million.

                      If the annuity could get 3%, the current jackpot would be $493 million.

                      Thanks for that info Stack47, I had no idea thats how they est. the JP but now I know.

                        time*treat's avatar - radar

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                        Posted: August 13, 2012, 1:02 pm - IP Logged

                        The advertised jackpot is based on the amount the cash value can get for a 30 year annuity. The current interest rate decides how much so at times the jackpot could be more than twice as high as the cash value or only 50% higher as it is now. The rate can change from one jackpot to the next. The current rate of return on a $203.3 million safe annuity is about 1.4% annually. For the advertised jackpot to be twice as high as the cash value, the annuity would have to pay 2.4% annually.

                        The state lottery withholds 25% in Federal taxes and whatever the state tax percentage is; a North Carolina resident taking the cash would get a check for $138,244,000. If they take the annuity, their total after 30 payments is $211,853,010 after taxes and that's only a difference of 53%. At just a 3% interest rate for 29 years, the $138 million after tax prize would grows to $326 million.

                        If the annuity could get 3%, the current jackpot would be $493 million.

                        People who took the annuity when interest rates (or whatever benchmark they use) were higher may be in for an unpleasant surprise.

                        In neo-conned Amerika, bank robs you.
                        Alcohol, Tobacco, and Firearms should be the name of a convenience store, not a govnoment agency.


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                          Posted: August 13, 2012, 5:22 pm - IP Logged

                          I know there is no $305 million...thats est value...that means if you take the annunity in your state lottos fine print anyways I was refering to my states lotto page when they specificaly say that they do not havethe advertised amount on hand but they give whatever is in the jackpot to the winner minus half and less taxes...Im in NC go to our lotto home page and check it out...that's where I got that from


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                            Posted: August 13, 2012, 5:40 pm - IP Logged

                            I know there is no $305 million...thats est value...that means if you take the annunity in your state lottos fine print anyways I was refering to my states lotto page when they specificaly say that they do not havethe advertised amount on hand but they give whatever is in the jackpot to the winner minus half and less taxes...Im in NC go to our lotto home page and check it out...that's where I got that from

                            I just read all 11 pages and it said nothing about them keeping half.........

                            http://www.nc-educationlottery.org/uploads/docs/8.04A%20Powerball%20Game%20Rules.pdf


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                              Posted: August 13, 2012, 6:04 pm - IP Logged

                              I just read all 11 pages and it said nothing about them keeping half.........

                              http://www.nc-educationlottery.org/uploads/docs/8.04A%20Powerball%20Game%20Rules.pdf

                              Just finished reading as well, found nothing mentioned to that effect.  What?    No Nod