Lottery: Lump Sum VS Annuity?

Which payout do you prefer?

  • Lump Sum

    Votes: 4 36.4%

  • Annuity

    Votes: 7 63.6%
  • Total voters
    11
VamPyroX

VamPyroX

bloody phreak from hell
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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.
 
Be honest with yourself. If you are responsible....take the lump some. If not take the annuity.
 
Bottesini said:
$2,500,000 at 2% interest is 55000 a year, and I could probably get a better interest rate than that.
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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.
 
Beach girl said:
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.
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It's a good thing we don't have to pay taxes on anything we win in Canada.
 
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.
 
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.
 
Banjo said:
I wish. :giggle:
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Your wish is my Command
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Another reason to get rid of Federal income tax. :lol:
 
Annuity...I don't trust myself not to go on a wild spending spree and lose it all. Lol
 
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.
 
Bottesini said:
$2,500,000 at 2% interest is 55000 a year, and I could probably get a better interest rate than that.
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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.
 
VamPyroX said:
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.
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:shock: SO MANY NUMBERS!!! :dizzy:
 
VamPyroX said:
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.
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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.
 
VamPyroX said:
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.
Click to expand...
Minus taxes.
 
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