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Why Do You Think Lottery Winners Always Take The Cash Option?

Topic closed. 62 replies. Last post 3 years ago by Win$500Quick.

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Win$500Quick's avatar - Lottery-050.jpg
Florida
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August 1, 2009
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Posted: February 11, 2014, 11:49 am - IP Logged

I was looking at the list of Powerball winners from the pass decade http://www.powerball.com/powerball/pb_stories.asp.  only 3 winners took the annunity and 2 lottery pools are listed as mixed. Even winners of massive jackpots that would have paid them $10+ million a year with the annunity took the cash. For instance the Powerball jackpot is $284 million. If I win that much money it would be very hard to leave $91 million on the table. I could live the rest of my life and support my family with the first check of $7,100,000 for the rest f my life. Even after my passing my estate will continue to recieve the money. Sometimes I think we are condition to take the cash and run. If you won a Powerball or Mega Millions jackpot would you take the cash and leave all that money behind?

 

Florida: No State Tax on Lottery Prizes!            Cash Option
Your average net per year: $7,100,000Your net payout: $122,025,000
After 30 payments: $213,000,000

Guess Who's Back?

    rdgrnr's avatar - walt
    Way back up in them dadgum hills, son!
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    Posted: February 11, 2014, 12:13 pm - IP Logged

    With our current administration, you have to factor in the possibility of a total collapse of the government and the dollar or a police-state crackdown on freedom and the resultant civil insurrection.

    Better to get it all and use a lot of it for things you'll need and have in the event of a breakdown in law and order.

      m3ikaChiz007's avatar - octa feathers.jpg
      Newport News, VA
      United States
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      July 8, 2013
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      Posted: February 11, 2014, 12:19 pm - IP Logged

      I was looking at the list of Powerball winners from the pass decade http://www.powerball.com/powerball/pb_stories.asp.  only 3 winners took the annunity and 2 lottery pools are listed as mixed. Even winners of massive jackpots that would have paid them $10+ million a year with the annunity took the cash. For instance the Powerball jackpot is $284 million. If I win that much money it would be very hard to leave $91 million on the table. I could live the rest of my life and support my family with the first check of $7,100,000 for the rest f my life. Even after my passing my estate will continue to recieve the money. Sometimes I think we are condition to take the cash and run. If you won a Powerball or Mega Millions jackpot would you take the cash and leave all that money behind?

       

      Florida: No State Tax on Lottery Prizes!            Cash Option
      Your average net per year: $7,100,000Your net payout: $122,025,000
      After 30 payments: $213,000,000

      I'm with you Win$500Quick; I will take my annual winnings and make sure my family will still be set when I leave this earth.  I meant to PM you to thank you for your advice on playing an easy pick for $1 when playing my pick 3 numbers.  I have had some success with that.  I am expecting my next big hit today...BLIND FAITH!  Good  luck to you

        LottoMetro's avatar - Lottery-024.jpg
        Happyland
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        Posted: February 11, 2014, 12:50 pm - IP Logged

        If you planned to do zero investing, even in U.S. Treasury bonds or whatnot, then the annuity makes a little more sense. For me, taking the cash is about taxes and returns. Honestly the way things are looking, the only way taxes can go is up, which means those annuity payments won't be as much as if you planned 39.6% tax as worst case scenario. Taking it now gets the tax business out of the way, and you will only have to pay taxes on gains (although there are crafty ways the rich use to reduce this). Also, investing even a portion, say 50-75% of the lump sum, at a very menial rate of return accumulates into a larger amount than the annuity in less time! This is because the annuity is restricted to compounding only 5% of the annual payment. For both cases it is important to take into account inflation. At average rate of 3% in 30 years your annuity will only be worth a little less than $88 million (using the $213M figure you provided). Taking the cash also allows you to exercise an active role in beating inflation.

        If the chances of winning the jackpot are so slim, why play when the jackpot is so small? Your chances never change, but the potential payoff does.
        If a crystal ball showed you the future of the rest of your life, and in that future you will never win a jackpot, would you still play?

        2016: -48.28% (13 tickets) ||
        P&L % = Total Win($)/Total Wager($) - 1

          CDanaT's avatar - tiger avatar_04_hd_pictures_169016.jpg
          TX
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          Posted: February 11, 2014, 1:04 pm - IP Logged

          I was looking at the list of Powerball winners from the pass decade http://www.powerball.com/powerball/pb_stories.asp.  only 3 winners took the annunity and 2 lottery pools are listed as mixed. Even winners of massive jackpots that would have paid them $10+ million a year with the annunity took the cash. For instance the Powerball jackpot is $284 million. If I win that much money it would be very hard to leave $91 million on the table. I could live the rest of my life and support my family with the first check of $7,100,000 for the rest f my life. Even after my passing my estate will continue to recieve the money. Sometimes I think we are condition to take the cash and run. If you won a Powerball or Mega Millions jackpot would you take the cash and leave all that money behind?

           

          Florida: No State Tax on Lottery Prizes!            Cash Option
          Your average net per year: $7,100,000Your net payout: $122,025,000
          After 30 payments: $213,000,000

          I have to reasonably believe that most folks want the massive sum to have complete financial control over and spend or share as they please. I agree with that completely. The J.G. Wentworth commercial of "Its my money and I want it now" works quite well for this lotto player. I understand your point on 7.1 million per year but, as we both know, the math to go down that road doesn't make reasonable sound financial advice based on unknown future mandates that would come your way. The biggest is taxation. Nobody can predict with certainty what the Federal/State tax rates will be in 10,15,20 or 25 years. but one thing is certain. We have a federal government that is out of control on spending and they have a need to "feed the beast".
          The other concern I have is "the payback"  in 30 payments....If they have the cash of lets say 122 million on hand(probably more)...and they are giving you a total of 91 million in interest to come up to the $213 million figure??? In 30 payments ???? That's not even doubling your money(122 X 2 = 244)
          Here's why to me that doesn't work for me to take the annuity....Money doubles based on "Rule 72"
          72 divided by 30 payments should be about what your interest is per year....that figures out to be  2.4 % interest per year for 30 years...... AND, don't forget, that the state/fed taxes can change from year to year on the figure you used of $7.1 million. I know, I know...what if those taxes go down ?...Welllllll, I am not feeling that scenario to happen. Sorry, Governments lie and take too frequently for my taste.
          In 30 years,  I honestly believe I can have an investment company more than double my money, have a much higher rate than 2-2.5  % and never think about how much any Government agency is going to take THIS year......Just my opinion on the subject.

            noise-gate's avatar - images q=tbn:ANd9GcR91HDs4UJhjxO7cmeMQWZ5lB_FOcMLOGicau4V74R45tDgPWrr
            Bay Area - California
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            Posted: February 11, 2014, 1:12 pm - IP Logged

            I was looking at the list of Powerball winners from the pass decade http://www.powerball.com/powerball/pb_stories.asp.  only 3 winners took the annunity and 2 lottery pools are listed as mixed. Even winners of massive jackpots that would have paid them $10+ million a year with the annunity took the cash. For instance the Powerball jackpot is $284 million. If I win that much money it would be very hard to leave $91 million on the table. I could live the rest of my life and support my family with the first check of $7,100,000 for the rest f my life. Even after my passing my estate will continue to recieve the money. Sometimes I think we are condition to take the cash and run. If you won a Powerball or Mega Millions jackpot would you take the cash and leave all that money behind?

             

            Florida: No State Tax on Lottery Prizes!            Cash Option
            Your average net per year: $7,100,000Your net payout: $122,025,000
            After 30 payments: $213,000,000

            Because having cash is the way to go.Given the uncertainty of life, people for the most part will want to have it " all upfront" because you in control of what happens to your wealth. Having lowlife cousins or extended family who do nothing but lay around does not sit well with folk who do win the lottery because at the back of their minds is this hideous picture of those relatives showing up after your funeral and demanding a share of your lottery winnings- perhaps even trying to take your own kids to court over their parent's fortune. ..no thank you.
            All upfront Baby, l will slice that cake on my own.
            Then there is Uncle Sam waiting to chop into your cheque each year should you take the...what's the word again?..
            Once again" No Thank You".

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              Posted: February 11, 2014, 1:20 pm - IP Logged

              Ehh I dont believe it has anything to do with the current administration, if Romney had of won people would still have taken the annunity. It's just that it's not often you'll get offered a whole bunch of millions of dollars. Anyways who can wait to see if God wont take them away before they get to spend at least some of it

                RedStang's avatar - tallman zps6gf4inoc.jpg
                NY
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                Posted: February 11, 2014, 2:00 pm - IP Logged

                I want it all now because a gallon of milk will probably be about 1k in five years when the Farmers can't afford to feed their animals with the corn that's used to make bio ethanol to rip us off.

                  Get paid's avatar - Lottery-062.jpg
                  texas
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                  Posted: February 11, 2014, 2:07 pm - IP Logged

                  I think some times age comes into play, an ur tax bracket could change. So as for me I would take the money an RUN.LOL.

                    mikeintexas's avatar - tx avatar-1.gif
                    Texas Panhandle
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                    Posted: February 11, 2014, 2:20 pm - IP Logged

                    I think some times age comes into play, an ur tax bracket could change. So as for me I would take the money an RUN.LOL.

                    Age is the factor that concerns me;  I've said before that I doubt I have 30 yrs. left on this mortal coil and even if I did, there's a good possibility I might not have the mental capability to remember I'm getting checks by the end of the annuity.  No, I want the cash, right now,while I'm still young enough to enjoy and do some good things with it.

                    As far as investments go, I think I'd opt for safe over high return, at least for most of my winnings.  (1% on a hundred million is a million/year before taxes) I can guarantee you right now there's no way I could EVER blow through that much money, at least not in the time I have left.   Personally, I would invest in some land and after I did, I would go to the local taxing entity (the county in Texas) and try my best to make a deal with them.  For example, if my taxes were $10,000/year, I'd offer to pay 10-20 yrs. of property taxes in advance, even kicking in a premium for any future improvements to the property.  I'd bet they'd jump on that offer.  I'd have the agreement carved in stone, just in case of any turbulent times ahead, such as a huge tax increase or even a "mark of the beast" type thing.   Might sound silly to someone, but I'd want to protect as best I could my main investment, my land and roof over my head.

                      lejardin's avatar - Lottery-014.jpg

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                      Posted: February 11, 2014, 2:46 pm - IP Logged

                      I agree with RDGRNR and MIKE.  I would take the cash because I do not trust our ever expanding, invasive government and this admin is the worst.  The President lied from day one and I feel 100% he won his re election by fraud.  Romney would have made a vast improvement, first being he is a businessman and I think HONEST, imagine that, an HONEST President?  That aside, I would take the cash, who can be assured we would have a government?  What happened in Cypress can happen here.  While I dont have an exact plan where to put BIG win money, a huge amount would be in cash, gold, silver and real estate.  The idea Mike has for the taxes is an excellent idea and what state would turn down cash?  I dont think that is silly in the least, it is prudent and looking out for your future the best you can under the circumstances.  For banks, the FDIC only covers $250K per account altho some special deal might be worked out.  The bankers (big banks) are just as crooked as our government, I trust neither. 

                      Doubtful I could use up $100 million in my lifetime but looking at some of the past winners I guess it is possible but not likely.  Can I have the chance to find out?

                        New York's avatar - 103h4yr
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                        Posted: February 11, 2014, 3:01 pm - IP Logged

                        Because they want it one shot. Its like winning a $500 scratcher, some cash it instantly. Some wait. I don't know. Humans just become so excited when a huge amount of money is theirs. They want it all!

                        Who wouldn't? As for others who choose annuity, they have a plan I guess. But in my opinion, the lump sum is the better way to go.

                        As for politics, screw politics. Who cares about liberal or republican.

                        The 3 branches of government ain't doing squat! No reform in the past 20 years, nothing!

                        We're never gonna move in this country because there is never agreement. It's like I win $1 and decided to give that to charity, the other party member would vote it down because he/she believes that $1 could be invested into a liquor store. Wow! Disgusting!

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                          Posted: February 11, 2014, 3:56 pm - IP Logged

                          LottoMetro, I agree with you 100%!

                            noise-gate's avatar - images q=tbn:ANd9GcR91HDs4UJhjxO7cmeMQWZ5lB_FOcMLOGicau4V74R45tDgPWrr
                            Bay Area - California
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                            Posted: February 11, 2014, 4:58 pm - IP Logged

                            I agree with RDGRNR and MIKE.  I would take the cash because I do not trust our ever expanding, invasive government and this admin is the worst.  The President lied from day one and I feel 100% he won his re election by fraud.  Romney would have made a vast improvement, first being he is a businessman and I think HONEST, imagine that, an HONEST President?  That aside, I would take the cash, who can be assured we would have a government?  What happened in Cypress can happen here.  While I dont have an exact plan where to put BIG win money, a huge amount would be in cash, gold, silver and real estate.  The idea Mike has for the taxes is an excellent idea and what state would turn down cash?  I dont think that is silly in the least, it is prudent and looking out for your future the best you can under the circumstances.  For banks, the FDIC only covers $250K per account altho some special deal might be worked out.  The bankers (big banks) are just as crooked as our government, I trust neither. 

                            Doubtful I could use up $100 million in my lifetime but looking at some of the past winners I guess it is possible but not likely.  Can I have the chance to find out?

                            Whoa -Where did you read that being a businessman translates into being good at running the Govt?
                            There is no such thing as an honest politician,  they all lie to some extent... from " Well, l am not a crook- " l did not have sex with that woman"..they all lie.if you looking for honesty, better get out your dictionary. .

                              Coin Toss's avatar - shape barbed.jpg
                              Zeta Reticuli Star System
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                              Posted: February 11, 2014, 5:55 pm - IP Logged

                              noise-gate,

                              Well we've already seen five years worth of what not having any business or work experience does for someone running the government.

                              I'm with rdgrnr on the question in the OP - what's not to say lottery annity payments aren't a future government grab? Or at leasr jackin up the taxes on them to make someone who took the annuity really wish they had taken the cash?

                              The current regome doesn't look for ways to produce, actually stimulate the economy, as nauseam.

                              All it does is looke for more and more ways how to leach of of those that do succeed.

                              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.