Welcome Guest
Log In | Register )
You last visited December 9, 2016, 12:16 pm
All times shown are
Eastern Time (GMT-5:00)

Annunity versus lump-sum payment

Topic closed. 15 replies. Last post 12 years ago by Kristin.

Page 1 of 2
PrintE-mailLink
dphillips's avatar - littleuns
Albuquerque, New Mexico
United States
Member #5128
June 18, 2004
377 Posts
Offline
Posted: June 23, 2004, 12:09 pm - IP Logged

Last night on the radio, I heard that the $145 million Texas winner chose a lump-sum payment (after the lottery official verified and validated the numbers on the slip.)  Also, Texas assigns a person to work only with lottery winners.  Personally, I think this is a good idea!  I am not sure if New Mexico offers that service.

If you win, do you want annunity payments: 20, 25, or 30 year payouts -- depending upon your state -- or do you want your lump-sum payment, now?  Remember: there are LESS TAXES ON ANNUNITY PAYOUTS THAN LUMP-SUM PAYOUTS. Since the winner opted for a lump-sum payment, which is, $80 million less the taxes, he or she is going to have more taxes deducted.  However, if he or she had chosen annunity payouts, the winner would have less taxes deducted.  When responding, please explain your rationale!


    United States
    Member #379
    June 5, 2002
    11296 Posts
    Offline
    Posted: June 23, 2004, 4:00 pm - IP Logged

    Phillips:

    TX requires the cash/annuity choice to be made when you PLAY, not after you win.

    Almost all BIG winners take the lump sum.

      Avatar
      New Member
      Michigan
      United States
      Member #5145
      June 20, 2004
      15 Posts
      Offline
      Posted: June 23, 2004, 5:27 pm - IP Logged

      Why would you take lump sum?  If you won $145M and went with annunity, you'd get about $100M after taxes. If it's a 30 year pay out, you're getting $3.4M a year!!  Can you seriously use that much? 

      Another way to look at it:  A lot of people who win the lottery actually end up in debt.  If you take annunity payment and don't spend more than $3.4 million a year (stay away from credit cards!), you'll be set for AT LEAST 30 years.  That's a 30+ year assurance that you'll be rich.  :)

      And because these people end up in debt, it goes to show that most people who win the lottery don't deserve it. It should go to us!

       

      P.S. Yes, I am new here, and learning lots of good strategies. :)


        United States
        Member #3676
        February 10, 2004
        425 Posts
        Offline
        Posted: June 23, 2004, 5:51 pm - IP Logged

        Seriously you take the 80 million lump sum, after taxes its probably say around 50 million.  Blow 20 and do whatever you want with it right away and then take the other 30 million and invest it in tax frees, real estate etc, and even a moron could make 10% a year( and then you will have that 30 million for infinity not just 30 years. )  NO BRAINER.

          Cleveland,Oh
          United States
          Member #1856
          July 16, 2003
          531 Posts
          Offline
          Posted: June 23, 2004, 6:16 pm - IP Logged

          take the payments the rest will go to your estate!

          why give the goverment more money!

          you can only spend so much!

          ms

          It takes 30 years to make a million @ 33,333 a YR!

            Avatar
            Morrison, IL
            United States
            Member #4657
            May 13, 2004
            1884 Posts
            Offline
            Posted: June 23, 2004, 6:19 pm - IP Logged

              I would take the annuity payments if I won Mega Millions or Powerball because, as ChaosTheory said, many lottery winners go through their winnings in only a few years.  Really, who needs more than $150,000 a year?

              Fwup's avatar - babylaugh 086.gif

              United States
              Member #3654
              February 9, 2004
              70 Posts
              Offline
              Posted: June 23, 2004, 10:17 pm - IP Logged

              Most people take the lump sum because the financial advisors they hire encourage them to take the lump sum, which is benificial to the advisors because they make a lot of money managing it for the winner. Why not let the lottery people manage it for you for free, by taking the annuity?



              Even if you took the lump sum you couldn't spend it, because you'll need most of it set aside to invest. And, suprising as it may seem, it's very difficult to earn 10% consistantly on your investments. Plus, unless you invest in very conservative investments, you may end up losing a large chunk of it if we go through another recession like we just did.



              Also, if you take a fifty million lottery win and blow 20 million of it right away, you'll get used to living at that level. After you blow the 20, you'll start blowing the 30 million faster than your investments will replace it. Taking the annuity will allow you to adjust your lifestyle so you can live off the annuity payments for the next 30 years. Anyone remember MC Hammer? When he made it big he started spending it as fast as he earned it. When the money stopped coming in he kept spending, because he couldn't stop. He ended up broke.



              And besides, I'm 40 years old. In 30 years I'll be 70, but I doubt I'll live that long. I don't think I'll have to worry about lottery winnings lasting longer than 30 years.

                Avatar
                New Member

                United States
                Member #4914
                June 3, 2004
                39 Posts
                Offline
                Posted: June 25, 2004, 2:53 am - IP Logged

                I would take the annuity too,cause i would be afraid I would either spend it all,someone would "steal" it out of my account or something else like that. I wouldn't care about getting it all at once,because even 100,000 or more a year is more than I had ,and if i won 10 million or more I would consider it a good investment for my money i spend,usually no more than $5.00 for one draw(cause i am cheap,usually it is a dollar or two(but if you are meant to win all you need is one set of number). So I think it would depend on how much you won,if you win alot(more than 20 million(according to some people on here that isn't much,but it is to me) if you should take the cash option or not. I say if you win a couple hundred million take the cash option if you want. Just be careful,cause alot of people will try to become youre new best friend( if i win i will wear a shirt in the interview that says phantomrainbow,so you will know i won). Me i prefer annuity,so i loose one year's check i will have the other 29 lol. good luck to everyone who plays,and remember all it takes is one set of numbers,if you are meant to have something it will find it's way to you.peace


                  United States
                  Member #379
                  June 5, 2002
                  11296 Posts
                  Offline
                  Posted: June 25, 2004, 4:02 pm - IP Logged

                  Almost everybody takes the LUMP SUM mostly because they have total control over their winnings.

                    Fwup's avatar - babylaugh 086.gif

                    United States
                    Member #3654
                    February 9, 2004
                    70 Posts
                    Offline
                    Posted: June 25, 2004, 4:39 pm - IP Logged
                    Quote: Originally posted by CASH Only on June 25, 2004

                    Almost everybody takes the LUMP SUM mostly because they have total control over their winnings.


                    Yes, but in most cases total control over your winnings isn't a good thing. Isn't there an amazingly high percentage of lottery winners who end up broke after a few years?

                      Avatar
                      Wisconsin
                      United States
                      Member #1610
                      June 3, 2003
                      668 Posts
                      Offline
                      Posted: June 25, 2004, 5:22 pm - IP Logged
                      Quote: O
                      ... the lottery never fails to surprise!
                        Avatar
                        USA
                        United States
                        Member #1849
                        July 15, 2003
                        265 Posts
                        Offline
                        Posted: June 27, 2004, 10:28 am - IP Logged

                        I hate to tell you folks but you can technically go broke with annunity also. Aren't millions of Americans in debt today? Yet they are going to earn a salary next year and still can't pay off their debt with the next 3 years salary, can't a person with an annunity get into trouble still? Sure they can and most do, there alot of people that use shady services to get more money out ahead of time and allow these services to collect their winnings. In the end I think it's a very individual thing. I think if your going to lose it all, it doesn't matter how you get it all, your still going to lose it.

                          hypersoniq's avatar - 8ball
                          Pennsylvania
                          United States
                          Member #1340
                          April 6, 2003
                          2450 Posts
                          Offline
                          Posted: June 27, 2004, 12:06 pm - IP Logged

                          I would take the lump sum..

                          Playing more than one ticket per game is betting against yourself.

                            rabbitfoot's avatar - 8ball

                            United States
                            Member #620
                            August 25, 2002
                            205 Posts
                            Offline
                            Posted: June 27, 2004, 9:28 pm - IP Logged

                            Why not take the lump sum payment and then purchase a small annuity in an amount that you would feel secure with knowing that if you did make some mistakes along the way at least you are not going to end up broke?

                            I play to dream and dream of winning a major jackpot!

                              Bradly_60's avatar - disney37
                              Atlantic Mine, Michigan
                              United States
                              Member #416
                              June 23, 2002
                              1614 Posts
                              Offline
                              Posted: June 27, 2004, 10:30 pm - IP Logged

                              I would like to know why you think you would pay less taxes by taking the annuity.  Obviously by taking the annuity you get more actually cash over the annuities life.  More cash equals more taxes.  Take for instance you win Tuesday's Mega Millions jackpot.  $210,000,000 annuity...$119,000,000 cash.  If you elect to take the annuity for instance in Michigan (my home state) you would pay $2,350,385 a year for 26 payments.  TOTAL = $61,110,010 in taxes. If you take the lump sum you would pay $34,629,000 in taxes upfront.  Even if you have to pay 10% more in taxes you would be taxes just over $40,000,000 up front.  How does the annuity mean you will pay less in taxes?  I would have to disagree. 

                              Brad