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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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mypiemaster's avatar - 2015021003pileofcash
JACKPOT HUNTER

United States
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April 2, 2013
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Posted: February 12, 2014, 9:35 am - IP Logged

Wow, so we've moved from reasons to choose cash over annuity to name calling, mud slinging and political diatribe. How about everyone agree to disagree and get back to the actual point. 

To that end, very good points LottoMetro. Between history and the numbers, you get less in the long run taking the annuity. And for those who think annuity payments mean that bankruptcy is unlikely because you don't have access to all the money upfront, that's a fallacy. JG Wentworth has made a lot of money from desperate annuity takers who overspend their yearly checks. Think about the fact that jackpots never used to have a cash option. It was all annuities.  Andd think of how many of those early winners have anything left.

The voice of reason has spoken again. Very well said indeed.Thumbs Up

Seek and ye shall find -Matt. 7:7 ...Ask and ye shall receive -John 16:24 ...Give and it shall be given unto you -Luke 6:38 ...Be careful what you ask for!!! -Mypiemaster 1:1

Having Money Solves Problems That Not Having Money Creates Yes Nod ****John Carlton****

    mypiemaster's avatar - 2015021003pileofcash
    JACKPOT HUNTER

    United States
    Member #141034
    April 2, 2013
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    Posted: February 12, 2014, 9:36 am - IP Logged

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

     

    some say old age has something to do with it.

    I Agree! Thumbs Up

    Seek and ye shall find -Matt. 7:7 ...Ask and ye shall receive -John 16:24 ...Give and it shall be given unto you -Luke 6:38 ...Be careful what you ask for!!! -Mypiemaster 1:1

    Having Money Solves Problems That Not Having Money Creates Yes Nod ****John Carlton****

      Jill34786's avatar - Lottery-006.jpg
      Windermere, FL/Franklin, TN
      United States
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      Posted: February 12, 2014, 2:37 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

      You may want to take a peek at the annuity payment schedule as it's heavily back end weighted. It would take the winner 17 years just to get a payment that exceeded $7 million.

      The "average net per year" is not relevant in either the MM or PB.

      ** Some people fulfill their dreams by receiving entitlements from the Government while others wake up and work hard for it! **

        Avatar

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        Posted: February 13, 2014, 12:08 pm - IP Logged

        You may want to take a peek at the annuity payment schedule as it's heavily back end weighted. It would take the winner 17 years just to get a payment that exceeded $7 million.

        The "average net per year" is not relevant in either the MM or PB.

        Yeah but while your waiting for that 7 million dollar payout your getting 3, 4, 5 and 6 million dollars a year up until then....I could certainly live off any of those amounts, especially when Im guaranteed even more the next year than the previous

          Teddi's avatar - Lottery-008.jpg

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          May 13, 2013
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          Posted: February 13, 2014, 1:09 pm - IP Logged

          Yeah but while your waiting for that 7 million dollar payout your getting 3, 4, 5 and 6 million dollars a year up until then....I could certainly live off any of those amounts, especially when Im guaranteed even more the next year than the previous

          I think it has less to do with how much you have to spend and more about how much you have to invest. 

          You're going to have less to invest in upfront and more taxes to pay over time. 

          If the question is why do more people take the cash option when at a glance they're throwing money away, the answer is that (assuming you don't squander your money on nonsense) in the long run, you end up with more money than if you take the annuity. 

          Unless the plan is to keep your money in a safe, never in an interest-yielding bank account and never to invest in anything, to simply live on the jackpot amount won, that would be the only time the annuity would be a better option than the cv.

            Jill34786's avatar - Lottery-006.jpg
            Windermere, FL/Franklin, TN
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            Posted: February 13, 2014, 1:53 pm - IP Logged

            Yeah but while your waiting for that 7 million dollar payout your getting 3, 4, 5 and 6 million dollars a year up until then....I could certainly live off any of those amounts, especially when Im guaranteed even more the next year than the previous

            15-17 years from now, I seriously doubt that anyone who takes the annuity would be netting anything close to what the current annuity schedule reflects.

            Back in 1999, Donald Trump proposed a  one-time 14.25% wealth tax on the net worth of individuals and trusts worth over $10 million. It would have generated close to $6 trillion in new taxes which would have eliminated the national debt at the time.

            Our national debt at it's current projection would exceed $40 trillion by 2030. France has implemented a 75% tax rate on any income over a million Euros while still maintaining a yearly wealth tax on total assets so it's possible that the United States Government would consider implementing the same format in the event of a crisis.

            Guarantees especially with future financial uncertainty are no longer set in stone.

            ** Some people fulfill their dreams by receiving entitlements from the Government while others wake up and work hard for it! **

              rcbbuckeye's avatar - Lottery-043.jpg
              Texas
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              Posted: February 13, 2014, 2:16 pm - IP Logged

              Ridge and Mike are right on, as well as Coin Toss. I'll take the cash every time.

              At my age I'll be dead before the annuity is paid, and who is to say the government doesn't decide to take the rest in taxes, which most certainly will go up. Or they take the rest in estate taxes, inheritance taxes, whatever it might be called.

              The money shown in those charts regarding future payments is probably going to be way off in reality.

              The government is not going to be our savior as far as the economy. I had a customer who works at the Fort Worth printing plant where they print money. Guy is working crazy overtime hours. They can't make money fast enough. And read the news this morning that our dear senators in Washington uped the debt ceiling once again.

              Does anyone really believe this can keep going on?

              CAN'T WIN IF YOU'RE NOT IN

              A DOLLAR AND A DREAM (OR $2)

                Jill34786's avatar - Lottery-006.jpg
                Windermere, FL/Franklin, TN
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                Posted: February 13, 2014, 3:11 pm - IP Logged

                I think it has less to do with how much you have to spend and more about how much you have to invest. 

                You're going to have less to invest in upfront and more taxes to pay over time. 

                If the question is why do more people take the cash option when at a glance they're throwing money away, the answer is that (assuming you don't squander your money on nonsense) in the long run, you end up with more money than if you take the annuity. 

                Unless the plan is to keep your money in a safe, never in an interest-yielding bank account and never to invest in anything, to simply live on the jackpot amount won, that would be the only time the annuity would be a better option than the cv.

                "Unless the plan is to keep your money in a safe, never in an interest-yielding bank account and never to invest in anything, to simply live on the jackpot amount won, that would be the only time the annuity would be a better option than the cv."

                I Agree! That could very well be the only logical reason for taking the annuity. 

                ** Some people fulfill their dreams by receiving entitlements from the Government while others wake up and work hard for it! **

                  Avatar

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                  Posted: February 13, 2014, 3:22 pm - IP Logged

                  15-17 years from now, I seriously doubt that anyone who takes the annuity would be netting anything close to what the current annuity schedule reflects.

                  Back in 1999, Donald Trump proposed a  one-time 14.25% wealth tax on the net worth of individuals and trusts worth over $10 million. It would have generated close to $6 trillion in new taxes which would have eliminated the national debt at the time.

                  Our national debt at it's current projection would exceed $40 trillion by 2030. France has implemented a 75% tax rate on any income over a million Euros while still maintaining a yearly wealth tax on total assets so it's possible that the United States Government would consider implementing the same format in the event of a crisis.

                  Guarantees especially with future financial uncertainty are no longer set in stone.

                  Hey I didnt say I wouldnt take the cash payout, but I could very well see taking the annunity as well. Also no matter what the financial climate is you would stil be collecting way more than you would ever earn at your job now...unless your a hedge fund manager LOL

                    Avatar
                    NY
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                    Posted: February 14, 2014, 4:41 am - IP Logged

                    15-17 years from now, I seriously doubt that anyone who takes the annuity would be netting anything close to what the current annuity schedule reflects.

                    Back in 1999, Donald Trump proposed a  one-time 14.25% wealth tax on the net worth of individuals and trusts worth over $10 million. It would have generated close to $6 trillion in new taxes which would have eliminated the national debt at the time.

                    Our national debt at it's current projection would exceed $40 trillion by 2030. France has implemented a 75% tax rate on any income over a million Euros while still maintaining a yearly wealth tax on total assets so it's possible that the United States Government would consider implementing the same format in the event of a crisis.

                    Guarantees especially with future financial uncertainty are no longer set in stone.

                    You realize that a wealth tax, whether it's a one time thing or an annual tax, will take more from a lump sum than from the annuity payments, right?

                      mediabrat's avatar - 18z0typ
                      upstate NY
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                      Posted: February 14, 2014, 10:23 am - IP Logged

                      You realize that a wealth tax, whether it's a one time thing or an annual tax, will take more from a lump sum than from the annuity payments, right?

                      Come on now, let's not bring facts into it...

                        Jill34786's avatar - Lottery-006.jpg
                        Windermere, FL/Franklin, TN
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                        Posted: February 14, 2014, 10:24 am - IP Logged

                        You realize that a wealth tax, whether it's a one time thing or an annual tax, will take more from a lump sum than from the annuity payments, right?

                        "You realize that a wealth tax, whether it's a one time thing or an annual tax, will take more from a lump sum than from the annuity payments, right?"

                         

                        That is a rather strange question. I will attempt to be as simplistic as possible so I don't confuse you.

                        Lump sum amounts are always much larger than an annuity payment that is spread out over 30 years.

                        An additional tax whether it is a 3.8% Obamacare tax or 1.5% annual wealth tax (currently assessed in France) will always be a larger on a lumps sum amount.

                        If you are shopping for a new vehicle and one of them is $300,000 while the other one cost $20,000, the tax bill for the more expensive car will be substantially higher. Even if you purchase the $300k vehicle in a state that has a lower sales tax rate like 4% and compare that to the cost of buying a $20k car in a different state with a higher sales tax of 10%, bottom line it will cost you more in sales tax by purchasing the more expensive vehicle. 

                        I do not want to squash your endorsement of annuity payments but if the top tier income tax rate rises to say 75%(rate currently inplemented in France), then the after tax income of the annuity will as a whole be substantially less than the lump sum amount that is taxed at the current top rate of 39.6%.

                        I hope this explanation hasn't confused you. If need be, I can elaborate further on why larger amounts of money/income have a higher tax bill than much smaller ones.

                        ** Some people fulfill their dreams by receiving entitlements from the Government while others wake up and work hard for it! **

                          rdgrnr's avatar - walt
                          Way back up in them dadgum hills, son!
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                          Posted: February 14, 2014, 10:27 am - IP Logged

                          Come on now, let's not bring facts into it...

                          The facts were brought in by Jill.

                          Not by the KY Jellyman.

                          But don't let me interrupt your attempt to start trouble, mediumbratwurst....

                            rdgrnr's avatar - walt
                            Way back up in them dadgum hills, son!
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                            Posted: February 14, 2014, 10:37 am - IP Logged

                            Come on now, let's not bring facts into it...

                            Ya know, mediumbratwurst, because of the fact that you're rarely here and then once in a great while you stop by to start problems, usually of a political nature, it always makes me wonder...if you're here, who's making the fries at Mickey D's?

                              CDanaT's avatar - tiger avatar_04_hd_pictures_169016.jpg
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                              Posted: February 14, 2014, 10:59 am - IP Logged

                              "You realize that a wealth tax, whether it's a one time thing or an annual tax, will take more from a lump sum than from the annuity payments, right?"

                               

                              That is a rather strange question. I will attempt to be as simplistic as possible so I don't confuse you.

                              Lump sum amounts are always much larger than an annuity payment that is spread out over 30 years.

                              An additional tax whether it is a 3.8% Obamacare tax or 1.5% annual wealth tax (currently assessed in France) will always be a larger on a lumps sum amount.

                              If you are shopping for a new vehicle and one of them is $300,000 while the other one cost $20,000, the tax bill for the more expensive car will be substantially higher. Even if you purchase the $300k vehicle in a state that has a lower sales tax rate like 4% and compare that to the cost of buying a $20k car in a different state with a higher sales tax of 10%, bottom line it will cost you more in sales tax by purchasing the more expensive vehicle. 

                              I do not want to squash your endorsement of annuity payments but if the top tier income tax rate rises to say 75%(rate currently inplemented in France), then the after tax income of the annuity will as a whole be substantially less than the lump sum amount that is taxed at the current top rate of 39.6%.

                              I hope this explanation hasn't confused you. If need be, I can elaborate further on why larger amounts of money/income have a higher tax bill than much smaller ones.

                              Looks pretty straight forward to me.

                              Jill what you forgot to mention was, in THIS country between 1944-1963, the top earner's income tax rate was at 91-92%
                              from 1964-80 it was between 70-77%....Only since the start of the Reagan years has this gone down below 50%.

                              That would have been "just lovely" to have happened...P***ed