• We’re currently investigating an issue related to the forum theme and styling that is impacting page layout and visual formatting. The problem has been identified, and we are actively working on a resolution. There is no impact to user data or functionality, this is strictly a front-end display issue. We’ll post an update once the fix has been deployed. Thanks for your patience while we get this sorted.

If u win lottery which one u would pick?Annuity VS Instant Cash

Page 2 - Seeking answers? Join the AnandTech community: where nearly half-a-million members share solutions and discuss the latest tech.
Probably best to do lump sum. Inflation over 20 years will make your annuity worth less.

Buy a nice house, pay off debts, live off the interest. Heck, even do something fun part time if you like.
 
Lump sum.

Half would be placed in income producing investments. Half in long term investments. Every ~10 years I'd divert some of the gains from the long term investments to the income producing investments to make sure yearly income stays in line with inflation.
 
soulcougher73 said:
Lump sum. I could never spend that much anyways. And dont want family to lose it if i were to die.
Click to expand...

In the early days of the modern lotterys, lottery annuities didn't pass on to family. That however changed a long time ago. Lottery annuities pass to whoever is in the will or by intestate succession. The issue is with the estate tax. And it is not really that big off issue, other than it being complicated.

Upon a lottery winners death, their estate is subject to the estate tax. With an annuity, the estate is taxed at the present value of the annuity. And Uncle same wants its money immediately. Take for example Powerball, the estate can request the lottery commission transfer the securities backing the annuity(which is more or less the present value of the annuity), to the estate, to allow the estate to sell off the securities to pay the estate tax and the the heirs would get whats left over.
 
Shlong said:
Doesn't the annuity automatically get converted to lump sum for the estate taxes if you die and leave it to your heirs?
Click to expand...

Automatically? No. The estate has to request that, if the estate can pay the estate taxes without asking they don't necessary have to convert it to a lump sum.

On a side note. IMHO all states should allow for partial lump sum/partial annuity. However, only a handful do. And Texas should stop being the only state that requires people to select their payout before winning, and let it be chosen after winning.
 
Lump sum, followed by giving the money to some sort of management service where they invest it in a diversified portfolio and only give me an annuity
 
A bird in the hand >>> many in the bush => lump sum.

/thread

<unless you are a clueless moron with big money..eg. Jack Whitaker for example>
 
Lump. I'll do my own investing to derive an income even if I am almost guaranteed to do terrible.

FML, I'd like to win $1M and be set for life -- low demands, small spender.
 
At my age...Lump sum. I doubt I'll live long enough to collect over 26 years (average of lottery payment spread) and even if I did, I'm sure my "quality of life" wouldn't be good enough to enjoy the money later.

It's MY money and I want it NOW!
 
They only offer the annuity option for people who do not trust themselves, which is understandable.

But any logical person would be super dumb for picking the annuity.
 
I think most people who take the annuity on big prizes do it because they are scared. Not sure they can handle it. I would take lump sum on a big prize because I want to protect future income from taxes. No matter how much the tax is on the lump sum, at least I would not have to watch as the top tax rate goes up and up.
 
BoomerD said:
At my age...Lump sum. I doubt I'll live long enough to collect over 26 years (average of lottery payment spread) and even if I did, I'm sure my "quality of life" wouldn't be good enough to enjoy the money later.

It's MY money and I want it NOW!
Click to expand...

JG Wentworth can help!
 
In the UK there is no option as far as I know and there is no tax to pay on any winnings of a lottery or through gambling so that is of no issue either.
 
It seems most of you don't understand the annuity option (which isn't surprising).

The annuity automatically increases 4% each year for inflation. Also, the lump sum is the cash value at the point (which is usually about half) and then you're taxed nearly another 50%. It is very unlikely you are going to make more than the initial winning. If it is 600 million, you're getting around 150 million in lump sump, while that is a large amount, it is a lot less than the 10+ million you get for the next 30 years.

Also, the annuity IS transferable upon death. It is part of your estate.

I also believe (but powerball.com is blocked at work), upon taking the annuity, the state puts the cash value in a investment account they choose and you get any gains, while having the base value guaranteed.

Personally, I'd only take lump sum if the value was over say 300 million, and even then the first thing I'd do is hire and accountant / money manager and discuss it with them.

Oh, and this is based on the US multi state lotteries. If you're in another country, my advice might be different.
 
cool.dx.rip said:
i have seen in many sites giving advice powerball lottery winners about which one should they pick.but it seems they are confusing.Some say annuity is best.some say instant cash.I want to know what option u would choose if win that lottery and why? We take the big prize as a example.prize is about 200$M+++(prize varies from state to state) if the prize 600$M will u change ur option if u win 200$M?
Click to expand...

Depends on the discount rate they used on it.
 
You must log in or register to reply here.

TRENDING THREADS

Back
Top