Lotto Payout Lump or Annuity

RobbieB said:
Damn.

I already screwed it up thinking about the Beach House, the new Big Boat and the Captain before the Lawyer.

OK, I better stick with the annuity, can't blow it all fast that way easy - :)
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You could have it all RobbieB with that kind of money.
 
Choosing the annuity does not guarantee you won't go bankrupt. Some winners have gone with the annuity but bought every luxury they wanted, and went deep into debt. There are companies that buy such annuities for a lump sum so they do that, but it's not as good of a deal as the original. The lump sum gets them out of immediate trouble, but if they keep spending, or have upkeep costs on the toys they bought, they burn through the rest.

I know there are a lot of stories of people blowing through lottery money, but I wonder what % of people who win a large lottery, say $10M, go bust. Though another sad tale is the people who win but it ruins their life. I don't think that Whittaker guy in WV went bust but a lot of things went bad in his life.
 
street said:
I see the lump would be ~1 billion and annuity be ~29 million a year for 29 years. I don't know the legals on options for the annuity.

How would you take the winnings?
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I wouldn't take them!

I didn't buy a ticket, because I think I'd rather not spend my remaining years constantly meeting with attorneys, accountants, and so on, and/or listening to greedy people beg for money.

I already have what I want in life (my home, and enough income to pay for my utilities, taxes, insurance, and food). Plus I can sleep all day if I want to. Winnings of $1.9 billion would be a burden that I don't want to shoulder.
 
I did decide to spend $10 on it, went to website, and IL gave me 2 free plays of other lotteries, where I won $15.
Then I played the 1.5 B draw for $14 and won $4.
So I played the 2 B draw for $14 and won another $4

I have $5 left in my account after all the excitement, can't be bothered to play again until the prize is over 100 Million and worth winning ;)
 
Lump sum, bird in hand, future solvency. Would remain anonymous if at all possible.
 
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I bought a ticket and gave it to my wife. Was I worried. No. The odds are in my favor that life would not change and that is fine with me.

Cheers!
 
Souschef said:
The first thing you do after changing your phone number, is hire a lawyer. That way, if anyone, especially friends or family ask for money, you tell them to talk to your lawyer. That relieves you of the drama.
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There are still states where the winner can remain anonymous or claim via a trust setup by CPAs/lawyers.

I would only buy tickets in those states. :)

And did I win I'd hire one of the out-of-state firms that has represented previous winners...nobody local.

As for lump sum vs annuity, sure, for the national games like Powerball.

However, the state games really can rook you the way they do the math...e.g. here a million dollar winner took the lump sum instead of the annuity.

He ended up with only around $350k.

Versus $50k annually for 20 years guaranteed...a much better option.
 
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Always fun day dreaming. I barely buy tickets but did a few times this round. My initial plan would be get with a lawyer to claim the lump anonymously. Put about $10M in an irrevocable trust to provide a comfortable living situation and medical care for me if I screw up and lose the rest. Keep about $10M in cash for immediate fun money/pure BTD. I'm pretty content and other than spending a bit more on entertainment and travel, would still live pretty modestly so the majority would be used for various philanthropic ideas... mostly local but a few organized causes I'd anonymously support too.



The hardest part would be to able to be generous to friends and family without suspicion. I would probably occasionally "get lucky" winning all expense paid vacations etc. Would have some brain storming sessions with accountants and lawyers.


Of course, I didn't win but being FIREd feels like winning anyway!
 
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Annuity Sum = $2.0400B
Lump Sum = $0.9976B
Delta = $1.0422B

That's a huge amount to be left on the table! If it was me, my team of experts and I would want to hear all about the +'s and -'s of their annuity.
 
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ncbill said:
As for lump sum vs annuity, sure, for the national games like Powerball.

However, the state games really can rook you the way they do the math...e.g. here a million dollar winner took the lump sum instead of the annuity.

He ended up with only around $350k.

Versus $50k annually for 20 years guaranteed...a much better option.
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I think I mentioned this in another lottery thread, but here goes:

We have a casual friends that won about 1.7million. After doing the math they decided on the annuity. They will pay far less in taxes and have a guaranteed income stream.
 
latexman said:
Annuity Sum = $2.0400B
Lump Sum = $0.9976B
Delta = $1.0422B

That's a huge amount to be left on the table! If it was me, my team of experts and I would want to hear all about the +'s and -'s of their annuity.
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Using the numbers from your earlier posts I get an IRR of 4.4%. I think I can do better than that over 29 years -even with minimal risk but I'd be willing to take more risk for more return. Considering taxes, I'd rather eat 37% on the full amount now rather than risk higher taxes on upper brackets in the future further eroding the purchasing power along with inflation. Locking in 4.4% for 29 years, even if "risk free" is not appealing to me. I can also likely more easily protect funds in hand legally where an annuity coming in would limit my legal options should something bad happen. Alas, it's not a problem I need to deal with....
 
latexman said:
Annuity Sum = $2.0400B
Lump Sum = $0.9976B
Delta = $1.0422B

That's a huge amount to be left on the table! If it was me, my team of experts and I would want to hear all about the +'s and -'s of their annuity.
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A 2.47% interest rate compounded monthly will turn $997.6M into $2.04B over 29 years (annual payout option term), you could safely generate a (much) greater return than that today. You’re not leaving anything “on the table.”
 
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Lump sum since: (off the top of my head)


(1) I'd like to be here to spend it.:dance:
(2) The way inflation is going it may all be worthless before too long anyway:LOL:
(3) I'd only be pushed in the top IRMAA bracket for one year :2funny:
 
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Lump sum... pull a couple Mil out for our Play/savings account.
Set up a charitable trust fund with the wife and I earning 50-100K a year making choices with the job getting past down the family line.
 
FLSUnFIRE said:
Using the numbers from your earlier posts I get an IRR of 4.4%. I think I can do better than that over 29 years -even with minimal risk but I'd be willing to take more risk for more return. Considering taxes, I'd rather eat 37% on the full amount now rather than risk higher taxes on upper brackets in the future further eroding the purchasing power along with inflation. Locking in 4.4% for 29 years, even if "risk free" is not appealing to me. I can also likely more easily protect funds in hand legally where an annuity coming in would limit my legal options should something bad happen. Alas, it's not a problem I need to deal with....
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My incremental IRR analysis confirms your 4.4%. I agree one should be able to do better, based on my past performance. I guess my view is, why would one want to? The game is obviously won. But, to each his own.
 
ShokWaveRider said:
I would take the annuity and after year 5 donate all the payments to charity so no taxes are paid on it. :)
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I think your charitable deduction for cash donations is limited to 50 or 60% of your AGI. That limit was waived in 2021 but it seems to be back.
 
ShokWaveRider said:
I was thinking I could just sign it over to them, so I do not own it anymore. Maybe not.
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I don't think so, but for lottery money you'd be hiring a tax advisor to make sure.

People reading this might be thinking, none of us will ever win the lottery so we'll never run into anything like this, but I have, and others probably have or will. I hit the 30% AGI limit on deductible stock donations the year I funded my DAF with highly appreciated mutual fund shares. I also reallocated my taxable holding to better control my income for ACA subsidies in future years. It was also the last year of the smaller standard deductions so I was able to take care of a lot of things that year, but I'm glad that I was aware of all of the tax consequences so I could work out just how much I could take in income to stay under NIIT, and how much I could donate the the DAF and have it be fully deductible.
 
I have never bought a lottery ticket. I figure dollar cost averaging all the money I could have spent on tickets help me retire at 57 with plenty of money to live comfortable. It has since more than doubled even living on it for 17 years so I guess I did win the lottery.

A friend bought be 60 scratcher tickets for my 60th birthday, I won $2.
 
Jeb-NY said:
I have never bought a lottery ticket. I figure dollar cost averaging all the money I could have spent on tickets help me retire at 57 with plenty of money to live comfortable. It has since more than doubled even living on it for 17 years so I guess I did win the lottery.

A friend bought be 60 scratcher tickets for my 60th birthday, I won $2.
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DCA on what?
 
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