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Why not choose the annuity?

Topic closed. 47 replies. Last post 2 years ago by Romancandle.

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MsNumberDreamer's avatar - lottery balls-cash.jpg
North Carolina
United States
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August 11, 2013
258 Posts
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Posted: August 1, 2014, 8:21 am - IP Logged

Someone won 1 million on a scratch off down the street from my house. He chose the cash option and the prize dropped to 600,000.  After taxes he only took home a little over 400,000.

First off, I didn't know the highest prizes on scratch tickets had a cash option. But I am surprised the amount can drop so drastically.

So in this situation would you choose annuity? Or why wouldn't you choose annuity and take the much lesser amount?

To God be the glory... 

When you're winning you're being blessed by Him!

 

    maringoman's avatar - images q=tbn:ANd9GcTbRxpKQmOfcCoUqF2FyqIOAwDo7rg9G-lfJLAALPGWJWwiz19eRw
    Massachusetts
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    Member #37433
    April 14, 2006
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    Posted: August 1, 2014, 10:25 am - IP Logged

    The problem with annuity is that you cannot be sure what the government will decide as far as taxes are concerned. A few years back NJ  imposed taxes on lottery (prior to that they never taxed lottery at the state level) and backdated them to the beginning of that year.

    That money's gone fo ever

      Avatar
      Sunny California
      United States
      Member #40295
      May 31, 2006
      7712 Posts
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      Posted: August 1, 2014, 10:28 am - IP Logged

      Someone told me once to take the cash because it's worth more now then it will be 20+ years from now.

        Pita Maha's avatar - 940d8157 d1fb-4f70-a715-6ad04d915489.jpg
        SW Florida
        United States
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        Posted: August 1, 2014, 10:58 am - IP Logged

        What would be the first annuity payment on a million jackpot?  $15,000?  You can do a lot more with $400,000 now, than be drip-fed much smaller amounts over the years.  What if you die in 3 years?  And as others have said, what if the tax rate goes to 50%? 60%? Or higher?

        I'd never take the annuity for any jackpot.  And from the stats, most don't.  Besides, I don't focus on the advertised jackpot amount.  I look at it from the cash-option, after-taxes point of view.  And it always looks like a lot of very nice money to me.

          Coin Toss's avatar - shape barbed.jpg
          Zeta Reticuli Star System
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          January 17, 2006
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          Posted: August 1, 2014, 11:24 am - IP Logged

          Today's annuity amount might sound tempting but by the end of the term of the annuity that last payment might buy a car. Or a happy meal!

          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.

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            United States
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            November 29, 2012
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            Posted: August 1, 2014, 12:04 pm - IP Logged

            If you really wanted an annuity, you could just take the cash prize and buy an annuity yourself. Choosing the annuity prize gives you no options to convert it to a lump sum at a later time if you change your mind.

              mypiemaster's avatar - 2015021003pileofcash
              JACKPOT HUNTER

              United States
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              Posted: August 1, 2014, 12:28 pm - IP Logged

              There are people out there that will buy your annuity for cash and vice versa. Taking the annuity really depends on your personal choice and situation. If you are one of those people that can't wait to go spending, or you have some form of substance abuse problem, better take the annuity. In the end, the decision is truly yours because if you blow your wad, there is really nobody to blame but yourself. Spend wisely and you have nothing to worry about.

              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****

                Piaceri's avatar - sarsony1
                Republic of Texas
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                January 9, 2008
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                Posted: August 1, 2014, 12:51 pm - IP Logged

                I'm over 50... no lottery annuities for me! ROFL

                face

                singlewinnersinglewinnersinglewinner   

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                  Kentucky
                  United States
                  Member #32652
                  February 14, 2006
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                  Posted: August 1, 2014, 3:04 pm - IP Logged

                  Someone won 1 million on a scratch off down the street from my house. He chose the cash option and the prize dropped to 600,000.  After taxes he only took home a little over 400,000.

                  First off, I didn't know the highest prizes on scratch tickets had a cash option. But I am surprised the amount can drop so drastically.

                  So in this situation would you choose annuity? Or why wouldn't you choose annuity and take the much lesser amount?

                  I posted this link the other day and it probably answers your question. The October 10, 2007 PB jackpot winner was the last to take the annuity and two people were involved. Just guessing but many of the jackpot winners probably spoke with financial advisers and it sure looks like their advice was to take the cash and run.

                    Win$500Quick's avatar - Lottery-050.jpg
                    Florida
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                    August 1, 2009
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                    Posted: August 1, 2014, 5:41 pm - IP Logged

                    Today's annuity amount might sound tempting but by the end of the term of the annuity that last payment might buy a car. Or a happy meal!

                    I Agree! LOL!

                    Guess Who's Back?

                      SammyJoe10's avatar - disney37
                      Middle of Nowhere NC
                      United States
                      Member #151289
                      January 12, 2014
                      428 Posts
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                      Posted: August 1, 2014, 6:14 pm - IP Logged

                      Someone won 1 million on a scratch off down the street from my house. He chose the cash option and the prize dropped to 600,000.  After taxes he only took home a little over 400,000.

                      First off, I didn't know the highest prizes on scratch tickets had a cash option. But I am surprised the amount can drop so drastically.

                      So in this situation would you choose annuity? Or why wouldn't you choose annuity and take the much lesser amount?

                      I also live in NC and the way they penalize winners for taking the lump sum is ridiculous. If the scratch off says you win a million, your prize should be the full million (take home around 700k after taxes). Not that it matters, I gave up buying scratchers a long time ago. There is no way the tickets are distributed randomly. The larger prizes are always awarded to the same geographic locations and to the same players. I'm so sick and tired of reading about Mr. Joe winning his SECOND major scratch off prize, etc. I mean, how is that even possible when there's only a total of FOUR jackpot prizes on a twenty dollar ticket? I'm convinced the NC scratch off distribution is rigged. So, I'll pass on scratch offs and use my money towards Powerball or MM. Just my opinion! Good luck!

                        Coin Toss's avatar - shape barbed.jpg
                        Zeta Reticuli Star System
                        United States
                        Member #30470
                        January 17, 2006
                        10348 Posts
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                        Posted: August 1, 2014, 6:25 pm - IP Logged

                        There are people out there that will buy your annuity for cash and vice versa. Taking the annuity really depends on your personal choice and situation. If you are one of those people that can't wait to go spending, or you have some form of substance abuse problem, better take the annuity. In the end, the decision is truly yours because if you blow your wad, there is really nobody to blame but yourself. Spend wisely and you have nothing to worry about.

                        But it for cash for how much on the dollar?

                        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.

                          maringoman's avatar - images q=tbn:ANd9GcTbRxpKQmOfcCoUqF2FyqIOAwDo7rg9G-lfJLAALPGWJWwiz19eRw
                          Massachusetts
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                          April 14, 2006
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                          Posted: August 1, 2014, 7:05 pm - IP Logged

                          I also live in NC and the way they penalize winners for taking the lump sum is ridiculous. If the scratch off says you win a million, your prize should be the full million (take home around 700k after taxes). Not that it matters, I gave up buying scratchers a long time ago. There is no way the tickets are distributed randomly. The larger prizes are always awarded to the same geographic locations and to the same players. I'm so sick and tired of reading about Mr. Joe winning his SECOND major scratch off prize, etc. I mean, how is that even possible when there's only a total of FOUR jackpot prizes on a twenty dollar ticket? I'm convinced the NC scratch off distribution is rigged. So, I'll pass on scratch offs and use my money towards Powerball or MM. Just my opinion! Good luck!

                          I Agree! The distribution of top prizes of scratch tickets is not random. That's why I won't play them consistently like I do draw games.

                          That money's gone fo ever

                            MsNumberDreamer's avatar - lottery balls-cash.jpg
                            North Carolina
                            United States
                            Member #145690
                            August 11, 2013
                            258 Posts
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                            Posted: August 1, 2014, 7:14 pm - IP Logged

                            I also live in NC and the way they penalize winners for taking the lump sum is ridiculous. If the scratch off says you win a million, your prize should be the full million (take home around 700k after taxes). Not that it matters, I gave up buying scratchers a long time ago. There is no way the tickets are distributed randomly. The larger prizes are always awarded to the same geographic locations and to the same players. I'm so sick and tired of reading about Mr. Joe winning his SECOND major scratch off prize, etc. I mean, how is that even possible when there's only a total of FOUR jackpot prizes on a twenty dollar ticket? I'm convinced the NC scratch off distribution is rigged. So, I'll pass on scratch offs and use my money towards Powerball or MM. Just my opinion! Good luck!

                            You're so right.  I always look at the location of winners for the top prize on scratch offs and they really are always in the same area.  It is very annoying.  I play MM/PB.  Every now and then I will grab a scratch off but I don't expect that big prize on those.  I was really surprise to find out someone scratched a million right below my house.  Big shocker!

                            To God be the glory... 

                            When you're winning you're being blessed by Him!

                             

                              MsNumberDreamer's avatar - lottery balls-cash.jpg
                              North Carolina
                              United States
                              Member #145690
                              August 11, 2013
                              258 Posts
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                              Posted: August 1, 2014, 7:17 pm - IP Logged

                              Today's annuity amount might sound tempting but by the end of the term of the annuity that last payment might buy a car. Or a happy meal!

                              Now I see.  I didn't know the annual check drops after so many years.  That is really crazy!  Also, I didn't think about a change in taxes.

                               

                              I still think it is terrible that you scratch 1 million and your take home is a little over 400,000.

                              To God be the glory... 

                              When you're winning you're being blessed by Him!