Lottery Cash Or Annuity

If you were to win the Jackpot say 3000000000 do you take.

Lottery cash or annuity. If you win the lottery one of the first decisions you need to make is whether to receive a Lump Sum Cash Payout or the 30 year payment Annuity. Most players take the cash which can be significantly lower than the annuity. If I were to win a substantial lotto I would take the lump sum which is substantially less than the annuity payment.

If you really dont want any risk sigh and really cant be trusted hes right. For example if the annual payments for a NY Lotto jackpot work out at less than 10000 per winner the annuity option will not be available and the prize will be paid out as a lump sum. The jackpot will reset to 40 million for Friday nights drawing with a cash option of 281 million.

Many lottery winners end up taking the lump sum and spending all their money in a few years. For instance the advertised jackpot for this Saturdays Lotto America drawing is 1557 million with a cash value of 978 million. According to a study in the Journal of Gambling Behavior lottery winners generally dont go on crazy spending sprees.

Rather than selecting either option emotionally we are presenting this tool to help you make the best financial decision. As one expert put it taking the annuity is a way for the lottery winner to be protected from himself. Lottery winners can collect their prize as an annuity or as a lump-sum.

Josh Barro of the New York Times argues lottery winners should absolutely take the annuity citing tax advantages and protecting you from yourself. Mathematical models can give you a. Advertised lottery jackpots are always almost annuitized amounts.

This means that the amount advertised is made up by taking an initial investment amount and adding the calculated interest that that amount will earn over the 30 years of the annuity. Lottery winners are taxed at the current federal and state rates while annuity payments depend on what the taxes are at the time of payment. Taking the annuity option gives yourself time to figure out how you want to manage your money and protects you against yourself as well as anyone who might take advantage of you.