Lump Sum or 30 year Annuity?

[Airhog]

If you won powerball, would you take the lump sum or the annuity?

[Raiders Army]

Lump sum. I'm a greedy impatient bastard.

[Draft Dodger]

i personally would probably take an annuity, but only if estate taxes wouldn't screw over my kids if I passed away

[Butter]

If it was a LARGE sum, probably the lump sum. If it was like the el cheapo $15 million or whatever, probably the annuity.

[SFL Cat]

Lump sum, I'd invest most of it while keeping about a mil or so out to have some fun!

[Bonegavel]

Lump baby. Take the money and run, oooh ooh oooooh.

[Peregrine]

Lump sum, I trust my ability to invest it more than the government's.

[albionmoonlight]

Lump sum. I don't expect that my high-end whores and coke dealers will take credit.

[flere-imsaho]

Lump sum, I trust my ability to invest it more than the government's.

Exactly what I was going to write.

[stevew]

Lump sum, and make my own Annuity out of most of it.

[PackerFanatic]

If it was a LARGE sum, probably the lump sum. If it was like the el cheapo $15 million or whatever, probably the annuity.

El cheapo?! Goodness...especially if it were right now, I would take a lumpsum of like....1/30th of that amount, lol.

[rjolley]

i personally would probably take an annuity, but only if estate taxes wouldn't screw over my kids if I passed away

Does it even pass down to your kids if you take the annuity option? I thought you couldn't will it away.

I'd take the lump sum and pass that down. Besides, if the annuity doesn't pass down, you'll mysteriously die in a car accident where you're dead hours before...

[Anthony]

lump sum. i will be dead in 20 years, give or take, so might as well get on with the good foot and do the bad thing now.

[stevew]

lump sum. i will be dead in 20 years, give or take, so might as well get on with the good foot and do the bad thing now.

Dude, you're only 28. Don't get all morbid. Keep riding on the helicopter with guys like Bon Jovi, but don't get near any cool rockers. Then you'll die.

[Anthony]

Dude, you're only 28. Don't get all morbid. Keep riding on the helicopter with guys like Bon Jovi, but don't get near any cool rockers. Then you'll die.

i'm going to Vegas in 13 days, i may not live to see 29.

i wasn't getting morbid, though. i'm the luckiest person i know, but even i know eventually the luck runs out. that's life.

[JeeberD]

Lump sum all the way...

[duckman]

i personally would probably take an annuity, but only if estate taxes wouldn't screw over my kids if I passed away

If you die before your annuity is paid, your family doesn't get anymore money. I would take the lump sum because of that very reason.

[IwasHere]

Annuuity for me. That way I get to be a total idiot with my money every year. Burn baby burn.


Besides the Annuity works out to be a GUARANTEED return on investment of over 18% every year.

[ISiddiqui]

It has to be lump sum. I mean otherwise, all you are basically doing is giving a 30 year interest free loan to the government. You can make far more money over 30 years by investing the lower lump sum amount (even accounting for taxes) than the amount you won.

[KevinNU7]

If you die before your annuity is paid, your family doesn't get anymore money. I would take the lump sum because of that very reason.
For serious? No wonder everyone takes lump sum

[Masked]

Annuuity for me. That way I get to be a total idiot with my money every year. Burn baby burn.


Besides the Annuity works out to be a GUARANTEED return on investment of over 18% every year.

I think you need to check your math. The lump sum is a little less than half of the annuity amount. Therefore the return on the annuity is roughly 3-5% every year.

[stevew]

It has to be lump sum. I mean otherwise, all you are basically doing is giving a 30 year interest free loan to the government. You can make far more money over 30 years by investing the lower lump sum amount (even accounting for taxes) than the amount you won.

Yeah, you get about 25% of the annuity value after taxes in free cash. Using Rule of 72s, If you get 10% interest, you could easily quadruple the annuity payout amount in 28 years.

[bulletsponge]

sorry, id have to do research to see how much per year id get and all the tax issues with annuity before i decide. most likely lump sum cause you can make more in dividends and growth in stock market then you would if you waited 30 years. im not a big spender so i would have my money work for me other than pissing it all away

[IwasHere]

I think you need to check your math. The lump sum is a little less than half of the annuity amount. Therefore the return on the annuity is roughly 3-5% every year.I think it is more like a third. And I am pretty sure the return ended up being over 18%.

[PilotMan]

If you die before your annuity is paid, your family doesn't get anymore money. I would take the lump sum because of that very reason.

This is the winning answer. Lump sum is the only way to go.

[stevew]

I think it is more like a third. And I am pretty sure the return ended up being over 18%.

Compound the interest.
Annuity pays over 32 years, if you were getting 18% interest, the cash payout would be about a half of a percent of the annuity value.

My math is wrong here, but in general, if you were getting 18% on your money, the lump sum would be signficantly lower than it is now.

[Daimyo]

Compound the interest.
Annuity pays over 32 years, if you were getting 18% interest, the cash payout would be about a half of a percent of the annuity value.
You also have to take into account that you can also invest the money you get each year from the annuity. 18% is probably high, but could be reasonable if the length of the annuity and the ratio of lump sum/annuity is low enough. If the lump sum is 25% of the total you'd get from the annuity (after all taxes for each) and the annuity pays over 30 years the annuity will give about 15% interest... if the lump sum is 50% then it drops to 8%. You really can't say which is better unless you know the exact terms (length of annuity, ratio of lump sum/annuity, expected rate of return, etc).

Having said that, if the annuity really can't be passed on in death that skews the decision pretty greatly!

[IwasHere]

FYI.
In case you've forgotten, the Dow Jones industrial average lost almost 17 percent last year, 7 percent the year before, and 6 percent the year before that. The Nasdaq Stock Market composite index plunged 31 percent last year, 21 percent in 2001 and 39 percent in 2000.
I like the annunity because it is guaranteed money. No matter what I do I will have another check comming next year. No chance of making the worng investment, or getting cheated out of my money by some scammer.

[Swaggs]

Lumpin' it.

[stevew]

wow, swaggs is close to 5k

[SackAttack]

FYI.

I like the annunity because it is guaranteed money. No matter what I do I will have another check comming next year. No chance of making the worng investment, or getting cheated out of my money by some scammer.

Are you saying you aren't smart enough to handle your money wisely? :p

[DaddyTorgo]

annuity. and then i'd call JG Wentworth and get cash now!

(sorry just saw the commercial)

but actually i'd get the lump sum.

[stevew]

FYI.

I like the annunity because it is guaranteed money. No matter what I do I will have another check comming next year. No chance of making the worng investment, or getting cheated out of my money by some scammer.

Man, you couldn't be more wrong on this issue. You get a much better rate of return on your investment when you have more money. Suddenly things that aren't open to the average joe, are open to you. Yes, there still is the potential to belly up. But the overall risk reward, especially when you factor in death, is just so substantially tilted.

[Grammaticus]

FYI.

I like the annunity because it is guaranteed money. No matter what I do I will have another check comming next year. No chance of making the worng investment, or getting cheated out of my money by some scammer.
Who is to say the lottery won't go bankrupt prior to you getting your 30 years of payments? Nothing is guaranteed until you have it in your hand. Plus, not being able to will your yearly winnings is a total show stopper on its own. Top that with almost all investment experts indicating you have a better chance of making more over 30 years IF you invest the lump sum winnings.

I'd take the lump sum. Of course you have to actually play the lottery to win, which I don't really do. I have only bought 2 tickets. Both when my states power ball got over 300 Million.

[IwasHere]

Who is to say the lottery won't go bankrupt prior to you getting your 30 years of payments?
No, the lottery department is not paying you out of their pocket. Your money is all invested in guaranteed US Government Bonds. You would only lose out if the US was invaded or the government overthrown.

[sabotai]

According to the Powerball FAQ, if you die the annuity does get passed down.

WHAT HAPPENS TO AN ANNUITY PRIZE IF THE WINNER DIES? A lottery prize is just like any other asset. You can pass any remaining annuity payments on to your heirs or to anyone else. The Powerball game will even cash out an annuity prize for an estate. This may make it easier for the estate to distribute the prize. It also may be necessary to cash out the annuity to pay Federal estate taxes.

hxxp://www.powerball.com/pb_contact.asp

[sabotai]

dola,

I'd still take lump sum, though. I trust myself with the money and I'd rather have it all now rather than over the course of many years. Plus, when you take the annuity, you're risking the chance of increasing income tax (doesn't matter if you take lump sum or annuity, it puts you in the highest tax bracket, unless you take the annuity on like a $1 million prize or something small).

[SackAttack]

I'd take the lump sum. Of course you have to actually play the lottery to win, which I don't really do. I have only bought 2 tickets. Both when my states power ball got over 300 Million.

Stop me if I'm wrong, but doesn't your expected value take a hit if you only play with a ridiculously huge jackpot?

With the growth of the pool, you would expect more players, and thus more combinations in play. With that increase, the likelihood that multiple people would hold winning tickets also goes up, meaning that IF you somehow got the financial equivalent of struck by lightning, you'd be taking a piece of that overall pie instead of the whole shebang?

[stevew]

Stop me if I'm wrong, but doesn't your expected value take a hit if you only play with a ridiculously huge jackpot?

With the growth of the pool, you would expect more players, and thus more combinations in play. With that increase, the likelihood that multiple people would hold winning tickets also goes up, meaning that IF you somehow got the financial equivalent of struck by lightning, you'd be taking a piece of that overall pie instead of the whole shebang?

Yeah, but supposedly also you get better odds at that same time. If its a 1 in 100 million dollar odds jackpot, and the cash payout is greater than 100 million, your individual dollar has more bang. With the slight possibility of a split cutting down your odds a bit, however.

[Swaggs]

Man, you couldn't be more wrong on this issue. You get a much better rate of return on your investment when you have more money. Suddenly things that aren't open to the average joe, are open to you. Yes, there still is the potential to belly up. But the overall risk reward, especially when you factor in death, is just so substantially tilted.

Plus you don't have to pay interest on the things most people cannot afford to buy without financing, like houses, land, and cars.

[Grammaticus]

Stop me if I'm wrong, but doesn't your expected value take a hit if you only play with a ridiculously huge jackpot?

With the growth of the pool, you would expect more players, and thus more combinations in play. With that increase, the likelihood that multiple people would hold winning tickets also goes up, meaning that IF you somehow got the financial equivalent of struck by lightning, you'd be taking a piece of that overall pie instead of the whole shebang?
I don't know, but the amount getting that high just made it seem like a worthwhile waste of a dollar.

[IwasHere]

Plus you don't have to pay interest on the things most people cannot afford to buy without financing, like houses, land, and cars.
This is where the Annunity makes it money. With the annunity you get to invest 100% of the money. With the Lump Sum you will only be allowed to invest 67% of the money. You will be immediately throwing 33% of your money to the government.

[Vinatieri for Prez]

Lump sum is the way to go. You will make more in the long run investing it yourself, even in low risk ventures. The 18% talked about above is hogwash. If people are worried about overspending then put it in a trust to restrict your access -- this still allows for better management of the money, provide good tax treatment, and leaves money for your kids while skipping any estate tax, etc. The annuity is for suckers.

[stevew]

This is where the Annunity makes it money. With the annunity you get to invest 100% of the money. With the Lump Sum you will only be allowed to invest 67% of the money. You will be immediately throwing 33% of your money to the government.

You realize you have to pay taxes on all those annuity checks too? It's not like they are free from taxes.

[IwasHere]

You realize you have to pay taxes on all those annuity checks too? It's not like they are free from taxes.
Yes, but that is 30 years down the road on some of that money.

[sabotai]

This is where the Annunity makes it money. With the annunity you get to invest 100% of the money. With the Lump Sum you will only be allowed to invest 67% of the money. You will be immediately throwing 33% of your money to the government.

Your annuity checks count towards income taxes, so each of your annuity checks will have 35% taken in federal income taxes, plus whatever state income taxes there are in your state. It's highly unlikely that income taxes in the top bracket will get lower, but I can easily see them getting raised. So you'll be running that risk when you take the annuity checks (that taxes will go up).

[Celeval]

Lump sum, because I wouldn't want to invest all of it right off the bat. If I could take 1/3 as lump sum and the remainder as annuity, I'd have to give it more thought.

[IwasHere]

Your annuity checks count towards income taxes, so each of your annuity checks will have 35% taken in federal income taxes, You do understand that you get to invest the 35% untill it is paid out right? So, until the money is paid to you, this 35% is going to be drawing interest for the next 30 years.

[stevew]

Iwashere is a dupe, he has to be. Every argument just seems to come about from the wrong way.

[Butter]

Your annuity checks count towards income taxes, so each of your annuity checks will have 35% taken in federal income taxes, plus whatever state income taxes there are in your state. It's highly unlikely that income taxes in the top bracket will get lower, but I can easily see them getting raised. So you'll be running that risk when you take the annuity checks (that taxes will go up).

Yeah, I didn't think about that. I think you definitely have to take the lump sum now to avoid tax hikes later.

[judicial clerk]

Where in the hell is Quiksand?

[Draft Dodger]

Where in the hell is Quiksand?

avoiding this like a plague

[flere-imsaho]

QuikSand's talking about the Bump-and-Run in the Strategy section.

[Suburban Rhythm]

I like my oatmeal lumpy...and would take my lottery winnings the same way.