Lottery: Lump Sum VS Annuity?

***VamPyroX*** · 01-27-2012, 02:23 PM

When playing the lottery, which payout do you usually pick? Why?

Even if you don't play, which payout would you think is best? Why?

For those of you wondering what I mean...

Lump Sum is when you get half the jackpot now.

Annuity is when you get the jackpot broken down per year for a number of years.

For instance, let's say the jackpot is $5,000,000.

If you picked lump sum, you would get $2,500,000 right now.

If you picked annuity (and your state offers 25 annual payments), you would get $200,000 a year for 25 years.

Of course, that's before taxes. What you actually receive would be after taxes.

**Bottesini** · 01-27-2012, 02:24 PM

Take the lump sum and live off the interest.

***VamPyroX*** · 01-27-2012, 02:25 PM

Quote:

Originally Posted by Bottesini

Take the lump sum and live off the interest.

How would you live off the interest?

**Bottesini** · 01-27-2012, 02:28 PM

Quote:

Originally Posted by VamPyroX

How would you live off the interest?

$2,500,000 at 2% interest is 55000 a year, and I could probably get a better interest rate than that.

VacationGuy234 · 01-27-2012, 02:54 PM

Why would anyone trust the state to owe them money?

**TXgolfer** · 01-27-2012, 03:21 PM

Be honest with yourself. If you are responsible....take the lump some. If not take the annuity.

Beach girl · 01-27-2012, 05:22 PM

Quote:

Originally Posted by Bottesini

$2,500,000 at 2% interest is 55000 a year, and I could probably get a better interest rate than that.

You would have to pay taxes out of that original lump sum. That would bring it down to about $1,700,000. Invested well, you might gain 10% some years, lose 20% other years, so on and so forth. There would be no guarantee what you might make - or lose - in any given year.

Plus, human nature being what it is, you are likely to want to treat yourself well, and it is quite possible that family members would come to you for loans and so forth. Charities will come to you asking for money.

Me, I would rather take a 25 year annuity, so long as the 25 years were guaranteed to me and to my beneficiaries in case I died before the 25 years were up.

**Banjo** · 01-27-2012, 05:24 PM

Quote:

Originally Posted by Beach girl

You would have to pay taxes out of that original lump sum. That would bring it down to about $1,700,000. Invested well, you might gain 10% some years, lose 20% other years, so on and so forth. There would be no guarantee what you might make - or lose - in any given year.

Plus, human nature being what it is, you are likely to want to treat yourself well, and it is quite possible that family members would come to you for loans and so forth. Charities will come to you asking for money.

Me, I would rather take a 25 year annuity, so long as the 25 years were guaranteed to me and to my beneficiaries in case I died before the 25 years were up.

It's a good thing we don't have to pay taxes on anything we win in Canada.

Beach girl · 01-27-2012, 05:25 PM

Quote:

Originally Posted by Banjo

It's a good thing we don't have to pay taxes on anything we win in Canada.

Are you a lottery millionaire now?

**Banjo** · 01-27-2012, 05:27 PM

Quote:

Originally Posted by Beach girl

Are you a lottery millionaire now?

I wish.

Frisky Feline · 01-27-2012, 06:00 PM

I admit that i didn't research on what annuity offers if i die before 25 years. will the leftover $$ go to my relatives? if yes than i would chose annuity. If nope then would take a lump sum and put into other low risk bank and will figure it out from there. I will ask someone I know and ask for more advice at a much later. everyday do change.

SteveMcGarrett · 01-27-2012, 06:10 PM

Id take Annuity. Look at Powerball. If you take lump sum you wont get the whole jackpot before taxes. If you take Annuity you get the whole jackpot for 20 years before taxes. Like if the Jackpot is 200 Million You get around 5 million a year after taxes. If you take the lump sum you get only 120 Million total after taxes. I Need 5 Million so i can buy O's season tickets Club Box,, Ravens season tickets Club Box,,Terps football & Basketball season tickets. And go to vegas and watch my favorite boxer Floyd Mayweather Jr at Ringside. Ill go to the Daytona 500.

SteveMcGarrett · 01-27-2012, 06:15 PM

Quote:

Originally Posted by Banjo

I wish.

Your wish is my Command

**Reba** · 01-27-2012, 06:31 PM

Another reason to get rid of Federal income tax.

**shel90** · 01-27-2012, 07:53 PM

Annuity...I don't trust myself not to go on a wild spending spree and lose it all. Lol

StevieMont927 · 01-27-2012, 09:08 PM

Annuity, definitely. Especially if it was guaranteed. I'd rather know I have money coming in every year than go on a spending spree and lose everything.

***VamPyroX*** · 01-27-2012, 09:20 PM

Quote:

Originally Posted by Bottesini

$2,500,000 at 2% interest is 55000 a year, and I could probably get a better interest rate than that.

2% of $2,500,000 is $50,000. At $50,000 per year for 25 years is $1,250,000. If you were to spend that $50,000 and leave the $2,500,000 in the bank, you would still have $2,500,000 in the bank 25 years later.

At 25 annual payments, that's $200,000 per year for 25 years. At 2%, that's $4,000 for the first year. If I spend $50,000 the first year, I would have $154,000. When I get $200,000 the second year, I would have $354,000 and 2% of that is $7,080. Again, if I spend $50,000 that year... I would end the year with $311,080. Repeating this process for 25 years would have me end the 25th year with $4,932,666 in my bank account. With a spending loss of $1,250,000 during those 25 years, my ending total only shows a loss of $67,334.

StevieMont927 · 01-27-2012, 09:22 PM

Quote:

Originally Posted by VamPyroX

2% of $2,500,000 is $50,000. At $50,000 per year for 25 years is $1,250,000. If you were to spend that $50,000 and leave the $2,500,000 in the bank, you would still have $2,500,000 in the bank 25 years later.

At 25 annual payments, that's $200,000 per year for 25 years. At 2%, that's $4,000 for the first year. If I spend $50,000 the first year, I would have $154,000. When I get $200,000 the second year, I would have $354,000 and 2% of that is $7,080. Again, if I spend $50,000 that year... I would end the year with $311,080. Repeating this process for 25 years would have me end the 25th year with $4,932,666 in my bank account. With a spending loss of $1,250,000 during those 25 years, my ending total only shows a loss of $67,334.

SO MANY NUMBERS!!!

**Bottesini** · 01-27-2012, 09:23 PM

Quote:

Originally Posted by VamPyroX

2% of $2,500,000 is $50,000. At $50,000 per year for 25 years is $1,250,000. If you were to spend that $50,000 and leave the $2,500,000 in the bank, you would still have $2,500,000 in the bank 25 years later.

At 25 annual payments, that's $200,000 per year for 25 years. At 2%, that's $4,000 for the first year. If I spend $50,000 the first year, I would have $154,000. When I get $200,000 the second year, I would have $354,000 and 2% of that is $7,080. Again, if I spend $50,000 that year... I would end the year with $311,080. Repeating this process for 25 years would have me end the 25th year with $4,932,666 in my bank account. With a spending loss of $1,250,000 during those 25 years, my ending total only shows a loss of $67,334.

If I am certain I can't live for 25 years , it won't do me any good. And I would have the $2500000 to leave my kids.

**Reba** · 01-27-2012, 09:33 PM

Quote:

Originally Posted by VamPyroX

2% of $2,500,000 is $50,000. At $50,000 per year for 25 years is $1,250,000. If you were to spend that $50,000 and leave the $2,500,000 in the bank, you would still have $2,500,000 in the bank 25 years later.

At 25 annual payments, that's $200,000 per year for 25 years. At 2%, that's $4,000 for the first year. If I spend $50,000 the first year, I would have $154,000. When I get $200,000 the second year, I would have $354,000 and 2% of that is $7,080. Again, if I spend $50,000 that year... I would end the year with $311,080. Repeating this process for 25 years would have me end the 25th year with $4,932,666 in my bank account. With a spending loss of $1,250,000 during those 25 years, my ending total only shows a loss of $67,334.

Minus taxes.

rolling7 · 01-28-2012, 10:32 AM

Quote:

Originally Posted by Reba

Minus taxes.

But a whole new world of "friends" and "long lost cousins three times removed"

SteveMcGarrett · 01-28-2012, 12:13 PM

Here a loophole. When you win move to Canada. And give up your American citizenship and you wont pay taxes. And if the I.R.S Pesters you,, get yourself a lawyer and you SUE the I.R.S!!!

rolling7 · 01-28-2012, 05:36 PM

Depends. Anyone who wind an American-based lottery pays tax on the winning amount.

Roca · 02-05-2012, 05:44 PM

I'd take an annuity rather than lump-sum.

**Banjo** · 02-05-2012, 06:55 PM

Quote:

Originally Posted by Roca

I'd take an annuity rather than lump-sum.

What if the lottery corporation files for bankruptcy?

SteveMcGarrett · 02-06-2012, 01:01 AM

Quote:

Originally Posted by Banjo

What if the lottery corporation files for bankruptcy?

Then you sue the State.

View Poll Results: Which payout do you prefer?
Lump Sum	4	36.36%
Annuity	7	63.64%
Voters: 11. You may not vote on this poll

01-27-2012, 02:23 PM	#1 (permalink)
*VamPyroX* bloody phreak from hell Join Date: Feb 2003 Location: 40.18, 58.41 Posts: 34,193	Lottery: Lump Sum VS Annuity? When playing the lottery, which payout do you usually pick? Why? Even if you don't play, which payout would you think is best? Why? For those of you wondering what I mean... Lump Sum is when you get half the jackpot now. Annuity is when you get the jackpot broken down per year for a number of years. For instance, let's say the jackpot is $5,000,000. If you picked lump sum, you would get $2,500,000 right now. If you picked annuity (and your state offers 25 annual payments), you would get $200,000 a year for 25 years. Of course, that's before taxes. What you actually receive would be after taxes. __________________ Check out my city... C L I C K H E R E! (If you've already visited yesterday, visit again today!)

01-27-2012, 02:24 PM	#2 (permalink)
Bottesini Joe's Friend Join Date: Mar 2008 Location: With Owl Sock Posts: 37,642 Blog Entries: 1	Take the lump sum and live off the interest. __________________

01-27-2012, 02:54 PM	#5 (permalink)
VacationGuy234 Registered User Join Date: Aug 2011 Location: Massachusetts Posts: 2,883	Why would anyone trust the state to owe them money? __________________

01-27-2012, 03:21 PM	#6 (permalink)
TXgolfer Dream Weaver Join Date: Jul 2009 Location: Everywhere Posts: 18,061	Be honest with yourself. If you are responsible....take the lump some. If not take the annuity. __________________ Ps 109:8 let his days be few,and let another take his office -KJV-

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01-27-2012, 06:00 PM	#11 (permalink)
Frisky Feline Registered User Join Date: Jun 2003 Posts: 20,542	I admit that i didn't research on what annuity offers if i die before 25 years. will the leftover $$ go to my relatives? if yes than i would chose annuity. If nope then would take a lump sum and put into other low risk bank and will figure it out from there. I will ask someone I know and ask for more advice at a much later. everyday do change.

01-27-2012, 06:10 PM	#12 (permalink)
SteveMcGarrett Banned Join Date: Jan 2012 Posts: 202	Id take Annuity. Look at Powerball. If you take lump sum you wont get the whole jackpot before taxes. If you take Annuity you get the whole jackpot for 20 years before taxes. Like if the Jackpot is 200 Million You get around 5 million a year after taxes. If you take the lump sum you get only 120 Million total after taxes. I Need 5 Million so i can buy O's season tickets Club Box,, Ravens season tickets Club Box,,Terps football & Basketball season tickets. And go to vegas and watch my favorite boxer Floyd Mayweather Jr at Ringside. Ill go to the Daytona 500.

01-27-2012, 06:31 PM	#14 (permalink)
Reba Granny Terp Join Date: Jun 2004 Location: South Carolina Posts: 39,520	Another reason to get rid of Federal income tax. __________________ Tell us the truth about Benghazi!

01-27-2012, 07:53 PM	#15 (permalink)
shel90 Audist are not welcome Join Date: Sep 2006 Location: A place where crabs are popular Posts: 40,492 Blog Entries: 3	Annuity...I don't trust myself not to go on a wild spending spree and lose it all. Lol __________________ "Wine improves with age. The older I get, the better I like it." --- Anonymous

01-27-2012, 09:08 PM	#16 (permalink)
StevieMont927 Registered User Join Date: Jul 2011 Location: I live near Los Angeles, California Posts: 336	Annuity, definitely. Especially if it was guaranteed. I'd rather know I have money coming in every year than go on a spending spree and lose everything. __________________ ~~~~~~~~~~~~~~~~~~~ "This above all: To thine own self be true."

01-28-2012, 12:13 PM	#22 (permalink)
SteveMcGarrett Banned Join Date: Jan 2012 Posts: 202	Here a loophole. When you win move to Canada. And give up your American citizenship and you wont pay taxes. And if the I.R.S Pesters you,, get yourself a lawyer and you SUE the I.R.S!!!

01-28-2012, 05:36 PM	#23 (permalink)
rolling7 Banned Join Date: Apr 2010 Posts: 3,340	Depends. Anyone who wind an American-based lottery pays tax on the winning amount.

02-05-2012, 05:44 PM	#24 (permalink)
Roca Registered User Join Date: Apr 2011 Location: VA Posts: 71	I'd take an annuity rather than lump-sum.

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