If You Won the Lottery.....

too many risks to take the annual payments...higher taxes possibly, state bankruptcy, death, inflation, opportunity cost. lump sum is the way to go.

 

http://www.straightdope.com/columns...ery-should-i-ask-for-a-lump-sum-or-an-annuity

^That's part of a long article that goes on to talk about favorable lump sum situations, taxes, etc.

 

Yeah lump sum will probably kill you on taxes.

 

I definitely need the annual payments. It would keep me within a relatively modest lifestyle for many a year, rather than living lavishly and blowing it all within a few years.

 

I'd take the lump sum...i'd rather invest it on my own and earn interst on my $$$

 

Two chicks at the same time... So lump sum...

 

Except you only need 3.53% to grow $500k to $1m over 20 years, compounded anually. What calculator is that guy using? Maybe the straight dope means he's smoking it.

 

How close have you guys got to winning the lottery? I got oh so close. I played the Texas Lottery and usually I pick my own numbers and that day I did, but as I was getting ready to purchase my tickets I told the clerk to add 5 more quick picks. This is when hurricane Ike hit, so our internet was down, so I had to check the numbers from the newspaper old school style. Turns out the ticket I got at the last min was the winning ticket for me as I hit 5 out of 6 numbers. I know I should of been happy winning but I wanted to when the whole thing and the number that I was missing, I picked it several times on my other tickets. But anyways, I got screwed cause when you hit 5 out of 6 numbers you usually get 2 to 3 grand but since the hurricane came that week not alot of people bought tickets I guess and lowered the winning pot. But I won 1600 and they still managed to tax me 200 bucks.

link

 

DAMN. Oh so close.

 

I don't understand. You won 1600 (1400 net after the taxes)... but you got... screwed???

I'd be happy. I think most of us would be. No?

 

Like I said in my post, most of time when you hit 5 of 6 you get 2 to 3 grand.
But anyways, me and you are diffrent. You might be happy hitting 5 out of 6 but I have my sights on the big one like today.

 

:grin: That's what SHE said!

 

if you select the annual payments, and die, the payments stop, right?

with the lump sum, you guarantee yourself a huge sum of money. Even if you die, your money is there to take care of your loved ones.

I guess it depends on your life situation, but I would no doubt grab the lump sum.

 

Got my tickets, chose the the cash value option (lump sum) upon purchase and it shows the payout value to be $208,300,000.

 

10% advisory commission

 

You are but they default to Cash Value if you don't specify.

 

Rule of 72 says you're right.. the crack must be good..

 

Yup, Mega Millions. The clerk asked me before I could tell him. I usually say cash value option when purchasing tickets to be sure.

 

I'm surprised the math geeks haven't called out Yonkers. The article math is OK. They should be comparing a stream of $50K payments to a one time $500K (not a $1m payment 20 yrs out). The editor was sloppy with the wording, but the calculator was OK.

The other tid bit from the article is that unless you pre-select the annual payments, you're probably taxed on the lump sum amount in yr one. That kind of forces your decision unless you've got lots of free cash flow! (and I guess that's why the diligent clerks are asking beforehand).

I know two people who've won the lotto (none family ). One was invited to an office pool at a temp place she was working. They won a couple mill, and her share was about $120K -- not bad for a week's assignment! The other won a house worth just over $2m -- which she sold and lived happily ever after.