Why isn't there a choice to split the Lump sum and the Annuity?Prev Topic Next Topic

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Lotto fanatic

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Jun 30, 2022, 2:56 am

I think that would be ideal. Let's say you win 50 Million in the Powerball. You should be able to get a Lump sum of say $25 million before taxes and $25 million before taxes in Annuity. I don't get why this isn't a thing. Half lump sum, half annuity.
ddude003

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Jun 30, 2022, 2:17 pm

In your example of a $50 million pot, the cash value lump sum would be approximately 1/2 of the $25 million ($12.5MM), while the $25 million annuity pays out across 25 or 26 years... So the approximate total payout would be $37.5 million... Still, seems like an interesting alternate choice...
ah1963

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Jun 30, 2022, 3:06 pm

It is an interesting idea, hope LO's notice your post.
ddude003

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Jun 30, 2022, 4:03 pm

Oops... In the case of the Powerball game the annuity pays out across 29 or 30 years... Other states games annuities pay out over 25 or 26 years...
cottoneyedjoe

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Jun 30, 2022, 6:10 pm

Quote: Originally posted by Lotto fanatic on Jun 30, 2022
I think that would be ideal. Let's say you win 50 Million in the Powerball. You should be able to get a Lump sum of say $25 million before taxes and $25 million before taxes in Annuity. I don't get why this isn't a thing. Half lump sum, half annuity.

The way your state lottery invests money to pay out annuities should be public info. So first, file a public records request to find out how they invest the money. Next, when you win, ask for the lump sum and then invest half of it the way the lottery does. Pay yourself an annuity out of the interest. Boom, now you got an annuity and a lump sum.
Artist77

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Jul 1, 2022, 8:51 am

Quote: Originally posted by cottoneyedjoe on Jun 30, 2022
The way your state lottery invests money to pay out annuities should be public info. So first, file a public records request to find out how they invest the money. Next, when you win, ask for the lump sum and then invest half of it the way the lottery does. Pay yourself an annuity out of the interest. Boom, now you got an annuity and a lump sum.

Great and logical advice!

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rcbbuckeye

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Jul 1, 2022, 8:56 am

Quote: Originally posted by Artist77 on Jul 1, 2022
Great and logical advice!

I agree!

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Jul 1, 2022, 9:41 am

Quote: Originally posted by cottoneyedjoe on Jun 30, 2022
The way your state lottery invests money to pay out annuities should be public info. So first, file a public records request to find out how they invest the money. Next, when you win, ask for the lump sum and then invest half of it the way the lottery does. Pay yourself an annuity out of the interest. Boom, now you got an annuity and a lump sum.

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Jul 1, 2022, 9:43 am

Just in case anyone missed it:

VIDEO: How are lottery jackpots calculated?

Describes how jackpot money is invested to create the annuity.

Check the State Lottery Report Card
What grade did your lottery earn?

Sign the Petition for True Lottery Drawings
Help eliminate computerized drawings!
Raven62

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Jul 1, 2022, 10:26 am

Quote: Originally posted by Lotto fanatic on Jun 30, 2022
I think that would be ideal. Let's say you win 50 Million in the Powerball. You should be able to get a Lump sum of say $25 million before taxes and $25 million before taxes in Annuity. I don't get why this isn't a thing. Half lump sum, half annuity.

You can do that now: Buy two tickets with the same numbers and select Annuity on one and Cash on the other.

Of course Playing that way will Cost you a few Bucks!

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ah1963

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Jul 1, 2022, 1:20 pm

Quote: Originally posted by cottoneyedjoe on Jun 30, 2022
The way your state lottery invests money to pay out annuities should be public info. So first, file a public records request to find out how they invest the money. Next, when you win, ask for the lump sum and then invest half of it the way the lottery does. Pay yourself an annuity out of the interest. Boom, now you got an annuity and a lump sum.

If you invest your own money then risk always remain there. You can withdraw your money anytime and spend it.
KY Floyd

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Jul 1, 2022, 9:57 pm

Quote: Originally posted by cottoneyedjoe on Jun 30, 2022
The way your state lottery invests money to pay out annuities should be public info. So first, file a public records request to find out how they invest the money. Next, when you win, ask for the lump sum and then invest half of it the way the lottery does. Pay yourself an annuity out of the interest. Boom, now you got an annuity and a lump sum.

Obviously an option, but it's an inferior option. The lottery invests the entire untaxed cash value, but if you take the cash you'll only be able to invest what's left after you've paid taxes.

Current cash/annuity values are a bit lower, but if we figured the cash value of the $50 million mentioned by the OP was 60% a split option directly from the lottery would give you $15 million cash (pre-tax, or about $7.5 to $10 million net) and a $25 million annuity. The DIY option would start as $30 million, so after taxes you'd have about $15 to $19 million. Keeping the same cash from a lottery split would leave you about $7.5 to $10 million for your own annuity.

As for why the lotteries don't offer it as an option, it's more work for them if nothing else.
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Jul 1, 2022, 10:25 pm

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Stack47

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Jul 2, 2022, 7:41 pm

Quote: Originally posted by KY Floyd on Jul 1, 2022
Obviously an option, but it's an inferior option. The lottery invests the entire untaxed cash value, but if you take the cash you'll only be able to invest what's left after you've paid taxes.

Current cash/annuity values are a bit lower, but if we figured the cash value of the $50 million mentioned by the OP was 60% a split option directly from the lottery would give you $15 million cash (pre-tax, or about $7.5 to $10 million net) and a $25 million annuity. The DIY option would start as $30 million, so after taxes you'd have about $15 to $19 million. Keeping the same cash from a lottery split would leave you about $7.5 to $10 million for your own annuity.

As for why the lotteries don't offer it as an option, it's more work for them if nothing else.

If a state lottery would offer the half and half option, it should apply to groups too. And not sure if a group claims the jackpot that some members can ask for payments and others ask for cash.

l Lot more work.

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Lotto fanatic

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Jul 13, 2022, 4:28 am

Quote: Originally posted by ah1963 on Jun 30, 2022
It is an interesting idea, hope LO's notice your post.

Thanks for the encouragement. :)