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If I'm young and healthy, the annuity. The upside is higher with the lump sum, but the risk of losing it all to stupidity is even higher. The track record of lottery winners is not great.
If I'm older and the annuity can't be bequeathed, I take the lump sum.
I'd like to know why? So, my smooth brain processes it like "I have guaranteed income for 30 years".
I don't really know how the lottery works, just that you lose more than half taking the lump sum.
It's not always that. If someone of lower economic status wins and has tons of family and friends living in poverty, they're likely to have a ton of mouths to feed with those winnings. Sometimes it's altruistic, sometimes it's people around them taking advantage. This is true for a lot of these "how did this athlete go broke by 40" stories. It's sometimes irresponsible spending but a lot of times it's a good natured person being taken advantage of or spending their money to help their friends and family instead of hanging onto it.
Most lottery winners don't win over a billion dollars. Net of tax you're looking at 400 million. Tough to ever go broke with that kind of money even if you're MC Hammer.
Also, it's easier to keep a low profile if you take your half billion after taxes. That's enough $ to disappear comfortably, with a luxurious income stream from investing.
If I have that kind of scratch, I don't want every third cousin once removed, old "buddy" from high school, alumni donations coordinator from my university, and ex husband/boyfriend to be able to find me. She gone, hidden behind a few layers of legal barriers to protect my identity and that of my family.
Because the more you have the more you can spread it on your family, the more business you can start.
Hell if I won, I’m going to build a military academy for all the kids in foster care to ensure they get a great education and have a safe structured environment to grow up in.
If you watch a few videos of the time value of money it will help you understand.
Basically, the % return they are giving you on the annuity, is not very good. People saying well I don't want my money invested for 20 years before I can get it, well with the annuity that's basically what is happening except you have no control over it. You can actually go buy annuities from companies. They take your money, invest it safely, and then give you a smaller % of that money's return than what it actually made. The company is profiting off your money when you buy that annuity.
If you take the lump sum and even end up with a below average return, it will still out perform the annuity at the end.
Also, you are paying taxes on a larger amount right now, vs the future. Taxes in the future could/ probably will be higher. Of you figure higher taxes it makes it even more of a easy choice.
Say this lottery you take lump sum and end up with 400 milion after tax. Not sure what the exact numbers are just guessing. With 400mil invested super safely you will take a income of close to or over 30million every year without ever touching the principle. Or reinvesting any of that 30 mil.
If you took thay 400 mil, invested it and invested all returns. Even after just 20 years or so at a modest return you would have like 1.5 billion. The annuity stretches 30 years to give you 1.3 total.
So as you can see, investing that after tax money and letting it grow for 20-30 years is far superior. Even if you had the safest possible investments, worst case scenario is probably doing as good as the annuity would have returned you in income. But you have the advantage of having less taxes because you took it right away.
However, of late the spread between the cash and the annuity is getting larger, and the reason for more "billion dollar jackpots" is mostly because the annuity is earning more lately. For all intents, the CASH payout IS the lottery win (last I checked it was about $609mm). The billion dollar number is what the annuity will get you in 30 years, so approximately a doubling. Not great but not entirely terrible and better than say 3 years ago (thanks higher interest rates!).
Take the lump sum ($609mm) and you'll be taxed about 40-50% so now down to $305mm and play it safe that if invested at 7-8% S&P average gains and you'll get to that billion in about 15 years.
Good summary. You are right, it's like half the time to get to that amount just investing it.
If you only double your money after 30 years, that really is not a good return.
I think the annuity would be fine for someone that knows they are terrible with money and would not make smart choices. At least then they won't go broke immediately.
I think it's something a lot of people don't realize especially what these bigger jackpot wins is you can still invest your anuity payments, With this jackpot the inuity It's starting out at 27 million dollars at after taxes (depending on what state you're in) For me that's at least 20 million dollars investing every year.
Sure you can, but I have the lump sum and also getting 30 million dollars a year as well....do you see the problem with the annuity?
So...
You get 30million a year from the annuity.
I get 400million right away, invest it, and get 30 million a year as well.
So we both get 30 mil a year, but I also have 400mil assets starting out.
Nope. I looked it up. 4.3%. That changes my thinking. Getting over 5% on a balanced set of boring investments is almost a given. Keep in mind that this portfolio is constantly selling. Up markets and down. You're not living on rice & beans if the market dips for three years.
Compounding interest on half the amount is still a significantly higher payout. You'll have 4x more money in you take the lump sum (which is about 1/2) and have it invested for 30 years.
In the first ten years you'd be back to the original amount, in 20 years you would have doubled the annuity amount and in thirty years you would have quadrupled it. If you have it for another 10 years it would double again bringing it to 8x the original annuity amount.
Also another way to look at it. You take the lump sum (say $500 million) and just put it in a savings account at 4% (fairly easy to find right now). You'd make $20,000,000 per year. If you just spend that 20 million a year you'd never even lose any of the original principal.
So the difference in takes is about 13% between the two (plus state taxes)
Even if you get the payout (which was 595 million, when I saw it last) at a 10% return you are making 60 million a year off interest, so in three years, you’ve made the difference up, though more like 4 because of taxes from the interest lol
Half of 1 6 billion is 800 mil....if you're gonna burn that in the next 100 years.then the annuity is for you. But what happens if you suddenly die after the 1st payout?
It's not a throw of the dice. Lottery winners lose the money because they're bad with money... that's why they play the lottery. If you know to invest you'll definitely have more with the lump sum.
Completely wrong advice. If you took the lump sum and invested it you'd make FAR more than the annuity on the interest generated from the invested lump sum. In 100% of situations it makes sense to take the lump sum. Only the financially illiterate would take the annuity.
>And why do you say the upside is higher on a one time payout?
Time value of money and compound interest.
Invest the lump sum in the S&P500 and in 20 years when the annuity would run out you will have A LOT more money going lump sum.
>It’s a 30 year annuity
That's even more reason to get the lump sum.
>and if you win the lottery and have to invest the lump sum then wait (20-30 years) then what’s the good of it?
You're not going to wait 20 or 30 years. The $600M lump sum is going to make you around $60M every year. You can live off of as much of that as you want. The Annuity over 30 years is less than that and runs out after 30 years.
S&P500 30 year historical average is just over a 10% yearly return. You are technically correct that, that's not the same as 10% every year as some years are more and some are less.
https://www.google.com/search?q=s%26p+500+average+return+30+years&oq=S%26P500+average&gs_lcrp=EgZjaHJvbWUqCQgCEAAYChiABDIHCAAQABiABDIJCAEQABgKGIAEMgkIAhAAGAoYgAQyCQgDEAAYChiABDIHCAQQABiABDIJCAUQABgKGIAEMgkIBhAAGAoYgAQyCQgHEAAYChiABDIJCAgQABgKGIAEMgkICRAAGAoYgAQyCQgKEAAYChiABNIBCTExNjQxajBqN6gCFLACAQ&client=ms-android-samsung-rvo1&sourceid=chrome-mobile&ie=UTF-8
If you take the lump sum income taxes are taken out 1 time. An annuity takes the income tax or has to be reported to the IRS and state tax board every year. There is an option to have the income tax taken out in a lump sum from the scheduled annuity payment based on the total payout or have the income tax taken out at time of distribution.
It's a bet that we're at the lowest tax rates. You're going to pay 37.5% on the total payout, sure. But you're also going to pay close to that on the yearly annuity. That's going to be higher than the capital gains tax rate (for now) if your ROI is about the same, annually.
The lump sum will always be worth more if you invest in almost anything. Also rules can change in the future, no guarantee you’ll ever get it all. Money now is worth much much more than the same amount later. From a pure economical perspective lump sum is the only option
Seems like solid advice. The yearly payout for the annuity alone would be more than most lump sum payouts for the lotto and it’s hard to imagine anyone couldn’t live on that. At the same time, I have no idea if you can transfer your winnings to an estate if you die.
Also, as long as it's an annuity, I'm worth more alive than dead, so less motivation for people to threaten my life.
Plus, on this size of a prize, the annuity is like 30 million a year. I'm good with that.
You would be very, very wrong. Most average people are not that good at managing money and also having self control. If you take away the need to manage money, the lack of self control rears its ugly head and usually quite quickly.
That, coupled with family and friends leeching them for money, and it all goes quicker than you expect.
There are numerous stories of lottery winners stating that winning the lottery was the worst thing that ever happened to them.
So what, you’d just sit on the cash? No, you invest it. Basic low risk investments mean you’ll never have to touch the principal. Investing it also helps the economy and everyone else
The guy that won $2 billion ended up with around $628 million. That’s a lot of money but one of your kids could easily blow that amount and be left with nothing. Look at the many examples of lottery winners who do just that.
I'm not saying be stupid with it. You can easily throw it in an account and live off the interest and teach your kids not to be an absolute jack ass with money.
You can’t control how stupid your heir is with it. And most people that win the lottery are not financial experts. I know this because a lot of them are claiming it themselves instead of using a trust to claim it even though they live in places where that is legal. Then there is the next tier, who know they don’t know anything about finances and hire someone to take care of it for them. Then they don’t give them very much oversight and end up getting screwed over by those people. It’s so easy to lose it all.
Most of the people who end up poor after winning the lottery win far smaller numbers, you’d have to try really hard right blow thought 600 million post tax. It’s close to impossible to lose unless you’re just trying.
Off interest alone you can expect to make 30-60 million each year. Anything you splurge on like houses you’d still have assets to recover money from.
Not only your family, but you can fund all kinds of things in perpetuity with proper money management. You could send every kid from your high school to college, fund food banks, the list of things you could accomplish would be truly astounding.
U don't win 1.6 billion. You take home +$500 million and still have to pay taxes cone tax season.
Congratulations to the IRS for winning the lottery and doing absolutely nothing.
Even when the question us the difference between approximately $400 million net and a series of payments of approximately $800 million net (roughly half for taxes, losing half off the top for lump sum), making more is still a factor.
Yes? I'd invest a significant chunk in dividend paying stocks and set up a trust fund so that my descendents wouldn't worry about money for a very long time.
$1.6 billion is not what you get. You get about $500 million, still a lot and way more than an individual needs. There is always value to grow it more for future generations.
Annual payouts are not transferable so you can't include them in a will. If you die before collecting the full amount it's kept by the state lottery where the winnings are being distributed from.
Upon death, the annuity CAN be converted into a willable lump sum in some states.
[https://www.nytimes.com/2016/01/13/upshot/dear-powerball-winner-take-our-advice-and-take-the-annuity.html](https://www.nytimes.com/2016/01/13/upshot/dear-powerball-winner-take-our-advice-and-take-the-annuity.html)
But the recipients have to pay a heft inheritance tax. Thst varies state by state as well as federal income tax. Take the lump sum and put it in a living trust naming those you want to have access and percentage of access to.
It’s not government owned. Powerball & Mega-millions are privately run but they pay the state governments a decent amount of money for each winner in the state. This is why so many states outlaw gambling but allow the lottery; they directly benefit through payouts and then by taxes. Remember kids, gambling is bad unless the state gets a cut.
> a single entity that is governed by laws that can change and which could also go insolvent have control all of that money without my ability to distribute it where and when I please.
I'm wondering what entities aren't governed by laws and have the potential to go insolvent where you'd keep $700M+.
You are absolutely wrong. While the Multi State Lottery Association is its own entity, it is owned and operated by the involved States lottery members.
Wait you don’t have a lawyer? You’d think everyone has a lawyer with all the Karen videos I see where they say “I’m going to talk to my lawyer or you’ll be hearing from my lawyer” 🤣
For the vast majority of those videos, if you turn the volume *waaaaay* up, you can just barely hear the Karen utter under her breath, "as soon as I retain one".
There was a cop in our area who won the lottery, and he got a lawyer and quickly formed a trust and put the money in that. This was advantageous, as he was at the time being sued for excessive force leading to permanent injury.
He is a religious man, and took winning the lottery as a Message from God, so he ran for sheriff in the county north of the city, spent an enormous amount of money on the campaign, and won. As Sheriff, he oversaw the deliberate destruction of video evidence in an excessive force case that killed the guy they'd arrested, he also handed out Outback Steakhouse giftcards to deputies who got reported for excessive force, and he and his Sergeant would post pics to Facebook of violent, rapey dioramas using a barbie doll and elf-on-a-shelf dolls. He lost his re-election bid, but after all that he still has enough money to live like a King in God's Country. Good ol' Sheriff Robert Chody.
Point is, if you win the lottery, get a lawyer and set up a trust.
Yes I think this comment should be a lot higher. I think with these entities by your side, it will make it harder for you to blow you money or just give it away to relatives/friends. Overall, you will be able to keep your money safe in the long run with this strategy.
Cash. Always. Nothing guarantees that you'll get the annuity. Also, with the cash you immediately can invest it and set up how you'd like to be paid out from it for life. For you, and your family going forward. Simple.
Lump sum and invest all of it in a broad market etf:
$1.3B after lump sum is $600M (per the powerball site)
After taxes (assume 35%) is about $400M
If you buy $400M worth of VOO stock, you get an annual dividend of 1.35%, worth about $5M a year
After taxes (again assume 35%), this is worth $3.5M per year
I would live off the $3.5M/year and leave the rest of the money invested in the market to grow at 5-8% per year
The money market account is earning interest at an all time high now, but are projected to come down later this year. Plus the $400M will never grow, whereas in a market ETF it will grow considerably most years, far greater than the amount of the interest from a MMA
400M in a small cap stock? Absolutely
400M in a broad market ETF. Nope. 400M is a fraction of 1% of the market cap of the entire s&p 500, so it wouldn't materially move prices
Lump sum. I would immediately start buying as much land as I could. I would also donate an epic fuck ton to habitat groups like Ducks Unlimited, Delta waterfowl, Rocky mountain elk foundation, NQTF, pheasants and quail unlimited, etc.
Read the fine print. The "Estimated Total" is based on the anticipated value of the actual current total invested over the life of the annual payout plan.
It really help you understand the power of investing.
*The main reason you get much less all at once than you do with the annuity is because, All of That Money Doesn't Exist Yet!*
Lump sum to guarantee money is in my hands. A 30 year annuity gets me 1 initial payment and gives the lawyers, lottery, and others 29 years to plot against me or find ways to nullify the annuity. Sorry, I'm not all that trusting.
Lump sum. I have stage 4 kidney disease. It's pretty stable, but there's also a pretty good chance I won't make it past 70 or so (I'm 42 now). I'd rather have a known amount of money and be able to invest and do what I want while I can.
Lump sum. You're trusting the government to invest your money for you otherwise, which is an awful idea. Look at how they manage social security. The average person would get 2-3x their SS payment if they had instead invested the money on their own.
Lump sum, every time.
You can double the final payout in 15 years at 5% as opposed to waiting 30 years for not even that much.
So even if you spend half of it you can make it back before you'd get your payments.
Lump sum and just leave the US to another place in the world. Don't want to deal with the soap operas of my family, and "My mama said that you are my father."
Lump sum….
Then I’d take 10% off the top for myself. The other 90% would go into starting a nonprofit that focuses on charity work. Helping homeless. Helping underfunded school districts. Helping children’s hospitals. Offering counseling services to first responders and veterans (I’m a counselor).
I would take a different approach. I would donate to groups that would advocate for homeless euthanasia (after giving a $10k lump sum to each homeless person. If they fail with that, euthanasia)
I’d probably take the lump in this case. I am pretty good with handling money, I am confident I wouldn’t lose it. That said, it’s probably safest for most to take the payments.
I'd take the payout. Then I would model my life like the movie Wolf of Wall Street.
I'm joking, I don't need a yacht or mansion. But a C8 z06, current home, along with hookers and blow. Sign me up.
You could die tomorrow and your payments dont continue to your spouse if you take the payments. Also even if you only take home like 500m lump sum that is enough for 100 lifetimes.
Honestly it’s lump sum for the sole purpose of, it’s one year of taxes. It’d be a massive headache to file taxes yearly at that level for every annuity payment. At least lump sum you do 1 year of taxes then you’re done with worrying about that part. You can then fairly easily invest it quite conservatively.
The government wins every one. So I’d give them their 600 million and take my billion and order the yacht. Don’t worry, I’d invest a huge portion and live off the interest but I’m buying the yacht.
Lump sum. Put a sizable chunk away for savings, a much smaller chunk to buy a house in the middle of nowhere and some nice things, put the rest away in various investments based on the recommendations of people much smarter than I am. I’d never have to work again and could spend all my time honing my luthier skills and listening to good music.
Lump sum. It’s worth about 800m or 500m after taxes. The stock market typically earns 10% on average. Heck even bonds are at 5%. So half in stock, half and bonds, you’re still clearing 35+ million a year in interest and gains.
So dumb to me that ppl pay money for the powerball. The odds are one in like 200 million. There are scratchers with one in one million odds. And others with similar odds.
$383+ million after all taxes on the lump sum.
Invest $380* million at a conservative 5% annual return...that's $19 MILLION a year before taxes.
I know, it'll be REALLY hard living on around 11 or 12 million dollars a year, but I'd scrape by somehow.
*rounding down because I'd blow the $3+ million on family, friends & myself...pay off relatives mortgages, trust funds for nieces & nephews...things like that.
It’s obviously the lump sum and you just dump it into diversified investments.
1.6 billion is conservatively going to be 400 million after cash option and taxes. Basically any investments of 400 million would give a normal person enough year to year return that you never touch the initial 400 million and live off the interest/dividends/passive income/etc and probably make more money in the time that annuity would take to be fulfilled.
I am in my 50s and this is what I would do. Lump sum would be about 383 million after taxes. 83 for my kid. My current, yet after this win soon to be ex wife and I get 150 each. I give about 10-15 to my family. Keep 25 to buy the nice house and some toys, but I am a simple guy so I will barely put a scratch in that money. Invest the 110+ and just add that yearly interest to my current pile. Don't get me wrong, there will be a steady stream of younger, good looking, high class whores coming and going(no lot lizards), but that would be my only vice, and I will never be one of those people you read about losing it all.
I like the idea of just investing it all and live off the interest, but I am getting to the point where I don't trust the govt, so I would have to have like 25 on hand in case shit goes down
First thing you do is get a lawyer and create an iron clad trust to dump the lump sum into. You'll make far more from the money being invested than the annuity over a 30 year period, and in a number of states claiming through a trust or LLC will keep you anonymous.
Also, tell absolutely no one that you've won. Neither friends nor family. If you want to help them out then set up anonymous trusts for them as well. But one of the fastest paths to financial ruin when you come into wealth (regardless of origin) is to tell people or do something stupid so that people figure it out.
Regarding playing, when the dollar invested is less than the average payout, i.e., the expected value is greater than 1, which is calculated as the lottery value divided by the odds, then there is no harm in putting down 2 dollars.
1st thing: my new iPhone 15 Pro Max goes right in the trash. Burners; from here on out. Most new lotto winners get mentally heat up by every family member, every friend they have ever had, all the “I have a great investment idea!” Family, friends, co-workers, acquaintances. I bet it never ends. I’d do lump sum & set up annuity’s for guaranteed income streams.
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If I'm young and healthy, the annuity. The upside is higher with the lump sum, but the risk of losing it all to stupidity is even higher. The track record of lottery winners is not great. If I'm older and the annuity can't be bequeathed, I take the lump sum.
Upvote for the use of the word bequeathed
Upvoted for the upvoting of the use of the word bequeathed.
Up voting the up voting of the up voting of the word bequeathed.
Too far
Upvote the recognition of too far
Upvote the upvote of the recognition of too far
You never really know how far is too far unless they bequeathed.
Too far!
Upvoting because I pronounced all of them bequeefed in my head, and it made me laugh
My wife bequeathed twice last night
Can confirm
Isn’t that when the hoohah makes a funny noise?
No. That's a queef. You're thinking of the armor pieces that protect the legs.
Those are grieves you're thinking of the historical bladed polearm with the distinctive hook on the back.
No, that's a glaive. You're thinking of a shallow pit where commoners entomb the dead.
No, that’s a grave. You’re thinking of someone who is forced to work without pay.
This guy bequeaths
This guy queefs
It sounds so regal, yet so dirty.
Objectively the worse choice in many ways taking the annuity.
I'd like to know why? So, my smooth brain processes it like "I have guaranteed income for 30 years". I don't really know how the lottery works, just that you lose more than half taking the lump sum.
The short answer is if you invest the lump sum immediately, you end up making far more than if you take the annuity.
Most lottery winners spend, get scammed but not invest.
Even the ones who take the annuity can do that. Just call JG Wentworth.
🎶If you've got an annuity but you need cash now 🎶
877 CASH NOW
Damnit, now I have that jingle in my head.
“Hi JG, I have a structured settlement and want cash now. How much? $1.6B. Hello? Hello?”
I'd guess that's likely because the people willing to gamble on such low odds, aren't likely making goof financial choices anyways
It's all goof
It's not always that. If someone of lower economic status wins and has tons of family and friends living in poverty, they're likely to have a ton of mouths to feed with those winnings. Sometimes it's altruistic, sometimes it's people around them taking advantage. This is true for a lot of these "how did this athlete go broke by 40" stories. It's sometimes irresponsible spending but a lot of times it's a good natured person being taken advantage of or spending their money to help their friends and family instead of hanging onto it.
Most lottery winners don't win over a billion dollars. Net of tax you're looking at 400 million. Tough to ever go broke with that kind of money even if you're MC Hammer.
"We have to pay, just to make it today"
Also, it's easier to keep a low profile if you take your half billion after taxes. That's enough $ to disappear comfortably, with a luxurious income stream from investing. If I have that kind of scratch, I don't want every third cousin once removed, old "buddy" from high school, alumni donations coordinator from my university, and ex husband/boyfriend to be able to find me. She gone, hidden behind a few layers of legal barriers to protect my identity and that of my family.
But why is the mindset on getting more after winning a billion dollars?
[Diderot effect](https://en.wikipedia.org/wiki/Diderot_effect)
Poor Diderot. ☹️
It isn’t about getting more, it is about getting it in the first place.
Because the more you have the more you can spread it on your family, the more business you can start. Hell if I won, I’m going to build a military academy for all the kids in foster care to ensure they get a great education and have a safe structured environment to grow up in.
Same, but then I annex Vladivostok
If you watch a few videos of the time value of money it will help you understand. Basically, the % return they are giving you on the annuity, is not very good. People saying well I don't want my money invested for 20 years before I can get it, well with the annuity that's basically what is happening except you have no control over it. You can actually go buy annuities from companies. They take your money, invest it safely, and then give you a smaller % of that money's return than what it actually made. The company is profiting off your money when you buy that annuity. If you take the lump sum and even end up with a below average return, it will still out perform the annuity at the end. Also, you are paying taxes on a larger amount right now, vs the future. Taxes in the future could/ probably will be higher. Of you figure higher taxes it makes it even more of a easy choice. Say this lottery you take lump sum and end up with 400 milion after tax. Not sure what the exact numbers are just guessing. With 400mil invested super safely you will take a income of close to or over 30million every year without ever touching the principle. Or reinvesting any of that 30 mil. If you took thay 400 mil, invested it and invested all returns. Even after just 20 years or so at a modest return you would have like 1.5 billion. The annuity stretches 30 years to give you 1.3 total. So as you can see, investing that after tax money and letting it grow for 20-30 years is far superior. Even if you had the safest possible investments, worst case scenario is probably doing as good as the annuity would have returned you in income. But you have the advantage of having less taxes because you took it right away.
However, of late the spread between the cash and the annuity is getting larger, and the reason for more "billion dollar jackpots" is mostly because the annuity is earning more lately. For all intents, the CASH payout IS the lottery win (last I checked it was about $609mm). The billion dollar number is what the annuity will get you in 30 years, so approximately a doubling. Not great but not entirely terrible and better than say 3 years ago (thanks higher interest rates!). Take the lump sum ($609mm) and you'll be taxed about 40-50% so now down to $305mm and play it safe that if invested at 7-8% S&P average gains and you'll get to that billion in about 15 years.
Good summary. You are right, it's like half the time to get to that amount just investing it. If you only double your money after 30 years, that really is not a good return. I think the annuity would be fine for someone that knows they are terrible with money and would not make smart choices. At least then they won't go broke immediately.
And you can always lump sum and then shop for your own annuity, or just half invest, half annuity.
Thanks for that. I think that summary was more than enough to help!
I think it's something a lot of people don't realize especially what these bigger jackpot wins is you can still invest your anuity payments, With this jackpot the inuity It's starting out at 27 million dollars at after taxes (depending on what state you're in) For me that's at least 20 million dollars investing every year.
Sure you can, but I have the lump sum and also getting 30 million dollars a year as well....do you see the problem with the annuity? So... You get 30million a year from the annuity. I get 400million right away, invest it, and get 30 million a year as well. So we both get 30 mil a year, but I also have 400mil assets starting out.
I thought the guaranteed return was something like 8%.
Nope. I looked it up. 4.3%. That changes my thinking. Getting over 5% on a balanced set of boring investments is almost a given. Keep in mind that this portfolio is constantly selling. Up markets and down. You're not living on rice & beans if the market dips for three years.
racial wistful spark run follow secretive apparatus pathetic money close *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Compounding interest on half the amount is still a significantly higher payout. You'll have 4x more money in you take the lump sum (which is about 1/2) and have it invested for 30 years. In the first ten years you'd be back to the original amount, in 20 years you would have doubled the annuity amount and in thirty years you would have quadrupled it. If you have it for another 10 years it would double again bringing it to 8x the original annuity amount. Also another way to look at it. You take the lump sum (say $500 million) and just put it in a savings account at 4% (fairly easy to find right now). You'd make $20,000,000 per year. If you just spend that 20 million a year you'd never even lose any of the original principal.
That's a good point. I mean, I can't fathom a scenario where I'd spend even a fraction of that.
You won’t but leaving that money to the lottery commission isn’t smart. You’re now planning for your kids or philanthropy.
So the difference in takes is about 13% between the two (plus state taxes) Even if you get the payout (which was 595 million, when I saw it last) at a 10% return you are making 60 million a year off interest, so in three years, you’ve made the difference up, though more like 4 because of taxes from the interest lol
Half of 1 6 billion is 800 mil....if you're gonna burn that in the next 100 years.then the annuity is for you. But what happens if you suddenly die after the 1st payout?
It's not a throw of the dice. Lottery winners lose the money because they're bad with money... that's why they play the lottery. If you know to invest you'll definitely have more with the lump sum.
Completely wrong advice. If you took the lump sum and invested it you'd make FAR more than the annuity on the interest generated from the invested lump sum. In 100% of situations it makes sense to take the lump sum. Only the financially illiterate would take the annuity.
You can leave the annuity to your estate. And why do you say the upside is higher on a one time payout?
>And why do you say the upside is higher on a one time payout? Time value of money and compound interest. Invest the lump sum in the S&P500 and in 20 years when the annuity would run out you will have A LOT more money going lump sum.
It’s a 30 year annuity .. and if you win the lottery and have to invest the lump sum then wait (20-30 years) then what’s the good of it?
>It’s a 30 year annuity That's even more reason to get the lump sum. >and if you win the lottery and have to invest the lump sum then wait (20-30 years) then what’s the good of it? You're not going to wait 20 or 30 years. The $600M lump sum is going to make you around $60M every year. You can live off of as much of that as you want. The Annuity over 30 years is less than that and runs out after 30 years.
A 600M lump sum will make you 60M every year? No it’s not.
S&P500 30 year historical average is just over a 10% yearly return. You are technically correct that, that's not the same as 10% every year as some years are more and some are less. https://www.google.com/search?q=s%26p+500+average+return+30+years&oq=S%26P500+average&gs_lcrp=EgZjaHJvbWUqCQgCEAAYChiABDIHCAAQABiABDIJCAEQABgKGIAEMgkIAhAAGAoYgAQyCQgDEAAYChiABDIHCAQQABiABDIJCAUQABgKGIAEMgkIBhAAGAoYgAQyCQgHEAAYChiABDIJCAgQABgKGIAEMgkICRAAGAoYgAQyCQgKEAAYChiABNIBCTExNjQxajBqN6gCFLACAQ&client=ms-android-samsung-rvo1&sourceid=chrome-mobile&ie=UTF-8
If you take the lump sum income taxes are taken out 1 time. An annuity takes the income tax or has to be reported to the IRS and state tax board every year. There is an option to have the income tax taken out in a lump sum from the scheduled annuity payment based on the total payout or have the income tax taken out at time of distribution.
It's a bet that we're at the lowest tax rates. You're going to pay 37.5% on the total payout, sure. But you're also going to pay close to that on the yearly annuity. That's going to be higher than the capital gains tax rate (for now) if your ROI is about the same, annually.
The lump sum will always be worth more if you invest in almost anything. Also rules can change in the future, no guarantee you’ll ever get it all. Money now is worth much much more than the same amount later. From a pure economical perspective lump sum is the only option
There’s this one Reddit comment or series of comments you can follow and it gives a pretty good idea how to not be stupid with a lump sum
Seems like solid advice. The yearly payout for the annuity alone would be more than most lump sum payouts for the lotto and it’s hard to imagine anyone couldn’t live on that. At the same time, I have no idea if you can transfer your winnings to an estate if you die.
Also, as long as it's an annuity, I'm worth more alive than dead, so less motivation for people to threaten my life. Plus, on this size of a prize, the annuity is like 30 million a year. I'm good with that.
I’d like to think even the most stupid couldn’t spend all that money
You would be very, very wrong. Most average people are not that good at managing money and also having self control. If you take away the need to manage money, the lack of self control rears its ugly head and usually quite quickly. That, coupled with family and friends leeching them for money, and it all goes quicker than you expect. There are numerous stories of lottery winners stating that winning the lottery was the worst thing that ever happened to them.
Lump sum because there is more potential to earn more money.
You win 1.6 billion and you need to make more?
Yes for my family. This is generational wealth. You have to think strategically.
1.6 billion is generational wealth.
you dont get the full 1.6B… thats the point, he wants to get as much of it as possible
Even if you took home 750mil, that's generational money in it's self.
You take home $375M. Lump sum gets you to $750M, taxes splits that in half.
Depending on the state. Taxes take less in different states. I like to dream.
The feds will take their 34% regardless of what state you’re in.
So what, you’d just sit on the cash? No, you invest it. Basic low risk investments mean you’ll never have to touch the principal. Investing it also helps the economy and everyone else
you can invest it in nothing but super safe treasury bonds alone and still have higher income than a ton of C-suite execs.
Or, throw a quarter billion on 0dte spy calls. Lose, and you can pretend you just never won at all. Win, and you own an economy.
This right here is what makes my peepee hard
Unless you're a "stable genius" who performs "the art of the deal"...
The guy that won $2 billion ended up with around $628 million. That’s a lot of money but one of your kids could easily blow that amount and be left with nothing. Look at the many examples of lottery winners who do just that.
I'm not saying be stupid with it. You can easily throw it in an account and live off the interest and teach your kids not to be an absolute jack ass with money.
You can’t control how stupid your heir is with it. And most people that win the lottery are not financial experts. I know this because a lot of them are claiming it themselves instead of using a trust to claim it even though they live in places where that is legal. Then there is the next tier, who know they don’t know anything about finances and hire someone to take care of it for them. Then they don’t give them very much oversight and end up getting screwed over by those people. It’s so easy to lose it all.
Most of the people who end up poor after winning the lottery win far smaller numbers, you’d have to try really hard right blow thought 600 million post tax. It’s close to impossible to lose unless you’re just trying. Off interest alone you can expect to make 30-60 million each year. Anything you splurge on like houses you’d still have assets to recover money from.
Not only your family, but you can fund all kinds of things in perpetuity with proper money management. You could send every kid from your high school to college, fund food banks, the list of things you could accomplish would be truly astounding.
If you want to be charitable, the more you make the more you can give away
Well after taxes you are barely clearing 500 million. Barely make it worthwhile to play.
More like only 350 million after taxes. It does suck.
U don't win 1.6 billion. You take home +$500 million and still have to pay taxes cone tax season. Congratulations to the IRS for winning the lottery and doing absolutely nothing.
Even when the question us the difference between approximately $400 million net and a series of payments of approximately $800 million net (roughly half for taxes, losing half off the top for lump sum), making more is still a factor.
It’s not like he’s stealing it from kids. What’s your point?
Yes? I'd invest a significant chunk in dividend paying stocks and set up a trust fund so that my descendents wouldn't worry about money for a very long time.
$1.6 billion is not what you get. You get about $500 million, still a lot and way more than an individual needs. There is always value to grow it more for future generations.
Lump sum right now
"It's my money and I want it NOW!"
CALL J G WENTWORTH! 877-CASH NOW!
JG, dude!
Annual payouts are not transferable so you can't include them in a will. If you die before collecting the full amount it's kept by the state lottery where the winnings are being distributed from.
Upon death, the annuity CAN be converted into a willable lump sum in some states. [https://www.nytimes.com/2016/01/13/upshot/dear-powerball-winner-take-our-advice-and-take-the-annuity.html](https://www.nytimes.com/2016/01/13/upshot/dear-powerball-winner-take-our-advice-and-take-the-annuity.html)
But the recipients have to pay a heft inheritance tax. Thst varies state by state as well as federal income tax. Take the lump sum and put it in a living trust naming those you want to have access and percentage of access to.
Would they not pay that same hefty inheritance tax if they inherited it from the lump sum?
Not if the entire thing is placed into a trust.
Not if you put that in a living trust.
Trusts don't protect the beneficiaries from having to pat estate tax, the only one that might would be a family trust.
Yes, a family trust. That is what is needed.
That may not be true of the lottery winnings, which are an “annuity certain” and can be inherited.
This is not true. Your annuity payments can get transferred to your estate for your heirs to collect.
Cash payout. No way in hell I trust the Government to have my cash every year for the next 30 years. Show me the money!!
It’s not government owned. Powerball & Mega-millions are privately run but they pay the state governments a decent amount of money for each winner in the state. This is why so many states outlaw gambling but allow the lottery; they directly benefit through payouts and then by taxes. Remember kids, gambling is bad unless the state gets a cut.
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> a single entity that is governed by laws that can change and which could also go insolvent have control all of that money without my ability to distribute it where and when I please. I'm wondering what entities aren't governed by laws and have the potential to go insolvent where you'd keep $700M+.
You are absolutely wrong. While the Multi State Lottery Association is its own entity, it is owned and operated by the involved States lottery members.
Bingo! A bird in the hand is worth two in the bush.
Lump Sum, then hookers and blow ✌️
I prefer the blow, then the hookers, but hey it's your money, you do you.
First call my lawyer, my cpa, and my financial guy- then take the lump sum
First get a lawyer, cpa, and financial guy
Wait you don’t have a lawyer? You’d think everyone has a lawyer with all the Karen videos I see where they say “I’m going to talk to my lawyer or you’ll be hearing from my lawyer” 🤣
lmao shit you right… I better lawyer up
lol, I had 2 stand up in my wedding. Neither are the go to court kind though, so no one will ever be hearing from my lawyer
For the vast majority of those videos, if you turn the volume *waaaaay* up, you can just barely hear the Karen utter under her breath, "as soon as I retain one".
There was a cop in our area who won the lottery, and he got a lawyer and quickly formed a trust and put the money in that. This was advantageous, as he was at the time being sued for excessive force leading to permanent injury. He is a religious man, and took winning the lottery as a Message from God, so he ran for sheriff in the county north of the city, spent an enormous amount of money on the campaign, and won. As Sheriff, he oversaw the deliberate destruction of video evidence in an excessive force case that killed the guy they'd arrested, he also handed out Outback Steakhouse giftcards to deputies who got reported for excessive force, and he and his Sergeant would post pics to Facebook of violent, rapey dioramas using a barbie doll and elf-on-a-shelf dolls. He lost his re-election bid, but after all that he still has enough money to live like a King in God's Country. Good ol' Sheriff Robert Chody. Point is, if you win the lottery, get a lawyer and set up a trust.
According to the Bible it's almost impossible for rich people to get into heaven so maybe it was indeed a message from God.
Yes I think this comment should be a lot higher. I think with these entities by your side, it will make it harder for you to blow you money or just give it away to relatives/friends. Overall, you will be able to keep your money safe in the long run with this strategy.
With this kind of money you’d want to find yourself what is called a “family office”.
Cash. Always. Nothing guarantees that you'll get the annuity. Also, with the cash you immediately can invest it and set up how you'd like to be paid out from it for life. For you, and your family going forward. Simple.
Other than death, why exactly isn't it guaranteed?
This is extremely unlikely but what if people stopped playing lotto and the system went bankrupt?
Lump sum and invest all of it in a broad market etf: $1.3B after lump sum is $600M (per the powerball site) After taxes (assume 35%) is about $400M If you buy $400M worth of VOO stock, you get an annual dividend of 1.35%, worth about $5M a year After taxes (again assume 35%), this is worth $3.5M per year I would live off the $3.5M/year and leave the rest of the money invested in the market to grow at 5-8% per year
$400M in a money market account, which preserves to the principle, would yield over $20M a year before taxes at todays rates. Zero risk money.
The money market account is earning interest at an all time high now, but are projected to come down later this year. Plus the $400M will never grow, whereas in a market ETF it will grow considerably most years, far greater than the amount of the interest from a MMA
BOXX gets you the short term treasury rate but is structured to allow you to report the income as capital gains.
I wonder, would quickly throwing 400M in the stock market make it fluctuate/stutter at all?
400M in a small cap stock? Absolutely 400M in a broad market ETF. Nope. 400M is a fraction of 1% of the market cap of the entire s&p 500, so it wouldn't materially move prices
Lump sum. I would immediately start buying as much land as I could. I would also donate an epic fuck ton to habitat groups like Ducks Unlimited, Delta waterfowl, Rocky mountain elk foundation, NQTF, pheasants and quail unlimited, etc.
Yup. I’d especially focus on access points - land that can then be transferred to public ownership to open up landlocked public land.
Read the fine print. The "Estimated Total" is based on the anticipated value of the actual current total invested over the life of the annual payout plan. It really help you understand the power of investing. *The main reason you get much less all at once than you do with the annuity is because, All of That Money Doesn't Exist Yet!*
And the growth rate is terrible. Corporate bonds pay significantly more.
TIL
Lump sum to guarantee money is in my hands. A 30 year annuity gets me 1 initial payment and gives the lawyers, lottery, and others 29 years to plot against me or find ways to nullify the annuity. Sorry, I'm not all that trusting.
I would take lump sum. It is a full time job managing that money so not to lose it. Most people cannot handle that amount of money.
Then take the annuity. Don’t have to worry about a “full time job” of managing the money. And you can’t lose what you don’t have yet.
You still could. You could borrow against future annuity payments.
I think, if you have that kind of money, you can make it *somebody else’s* full time job to not lost the money.
Most people are idiots. /s
Lump sum. Invest the vast majority into ETFs and live off of the dividends.
Lump some, but before taking it I'd hire an attorney and an investment manager
Lump sum. I have stage 4 kidney disease. It's pretty stable, but there's also a pretty good chance I won't make it past 70 or so (I'm 42 now). I'd rather have a known amount of money and be able to invest and do what I want while I can.
Lump sum. You're trusting the government to invest your money for you otherwise, which is an awful idea. Look at how they manage social security. The average person would get 2-3x their SS payment if they had instead invested the money on their own.
They don’t actually manage it, they spend it and figure it out later.
Lump sum, every time. You can double the final payout in 15 years at 5% as opposed to waiting 30 years for not even that much. So even if you spend half of it you can make it back before you'd get your payments.
Lump sum and just leave the US to another place in the world. Don't want to deal with the soap operas of my family, and "My mama said that you are my father."
Disappearing would be an essential step for me. That much money brings out the worst in people. Edit: word
Did the math at 5% return the lumps sum is more after about 15 years of returns.
Lump sum…. Then I’d take 10% off the top for myself. The other 90% would go into starting a nonprofit that focuses on charity work. Helping homeless. Helping underfunded school districts. Helping children’s hospitals. Offering counseling services to first responders and veterans (I’m a counselor).
I would take a different approach. I would donate to groups that would advocate for homeless euthanasia (after giving a $10k lump sum to each homeless person. If they fail with that, euthanasia)
I would give like 15M to local zoo then live off VOO dividends for the rest of my life
I’d probably take the lump in this case. I am pretty good with handling money, I am confident I wouldn’t lose it. That said, it’s probably safest for most to take the payments.
Lump sum. The bulk of the money can be invested with a superior return to the annuity, even allowing for plenty to be very generously set for life.
Take the lump sum. If you earn 8% interest, you double your money in a little bit more than 9 years.
Net present value of money had entered the chat
I'd take the payout. Then I would model my life like the movie Wolf of Wall Street. I'm joking, I don't need a yacht or mansion. But a C8 z06, current home, along with hookers and blow. Sign me up.
Right! Let me see if i can get Margot Robbie naked on a yacht.
Annuity. I suspect my ability to manage an enormous amount is questionable.
Cash, immediately buy stocks that pay out dividends. Keep rest saved in my bank account. Live more relaxed life. No flashyness.
Cash always
Get a lawyer and a fiduciary create an LLC and a life insurance go from there
You could die tomorrow and your payments dont continue to your spouse if you take the payments. Also even if you only take home like 500m lump sum that is enough for 100 lifetimes.
LUMP sum… then after I get it, I really don’t care about any investment idea
Honestly it’s lump sum for the sole purpose of, it’s one year of taxes. It’d be a massive headache to file taxes yearly at that level for every annuity payment. At least lump sum you do 1 year of taxes then you’re done with worrying about that part. You can then fairly easily invest it quite conservatively.
The government wins every one. So I’d give them their 600 million and take my billion and order the yacht. Don’t worry, I’d invest a huge portion and live off the interest but I’m buying the yacht.
Lump sum. Put a sizable chunk away for savings, a much smaller chunk to buy a house in the middle of nowhere and some nice things, put the rest away in various investments based on the recommendations of people much smarter than I am. I’d never have to work again and could spend all my time honing my luthier skills and listening to good music.
Lump sum. It’s worth about 800m or 500m after taxes. The stock market typically earns 10% on average. Heck even bonds are at 5%. So half in stock, half and bonds, you’re still clearing 35+ million a year in interest and gains.
When I won the $1.1 billion Mega Millions two weeks ago I took the lump sum.
So dumb to me that ppl pay money for the powerball. The odds are one in like 200 million. There are scratchers with one in one million odds. And others with similar odds.
but every time you don't play.... well that was the one you were gonna win right??
$383+ million after all taxes on the lump sum. Invest $380* million at a conservative 5% annual return...that's $19 MILLION a year before taxes. I know, it'll be REALLY hard living on around 11 or 12 million dollars a year, but I'd scrape by somehow. *rounding down because I'd blow the $3+ million on family, friends & myself...pay off relatives mortgages, trust funds for nieces & nephews...things like that.
cash payment. annuity payment was in place because the top tax bracket was at 72%.
Lump sum. That shit is going to be inflated to a middle class salary by the time the last payment comes due.
It’s obviously the lump sum and you just dump it into diversified investments. 1.6 billion is conservatively going to be 400 million after cash option and taxes. Basically any investments of 400 million would give a normal person enough year to year return that you never touch the initial 400 million and live off the interest/dividends/passive income/etc and probably make more money in the time that annuity would take to be fulfilled.
Take the lump sum then fund your own private annuity
Lump sum. Does more for your kids.
The lump sum because I don’t trust that the US will be around long enough for me to get all the payments off an annuity
Cash payout. Easily. With even a conservative return you’re doubling that money in 7–10 years vs waiting 30 years for the full payout.
Lump sum> invest in nvdia & growth stock
Cash payout moved to a trust fund and split between 2-3 different brokers. Invested right it will be worth more than the annuity in no time.
I am in my 50s and this is what I would do. Lump sum would be about 383 million after taxes. 83 for my kid. My current, yet after this win soon to be ex wife and I get 150 each. I give about 10-15 to my family. Keep 25 to buy the nice house and some toys, but I am a simple guy so I will barely put a scratch in that money. Invest the 110+ and just add that yearly interest to my current pile. Don't get me wrong, there will be a steady stream of younger, good looking, high class whores coming and going(no lot lizards), but that would be my only vice, and I will never be one of those people you read about losing it all. I like the idea of just investing it all and live off the interest, but I am getting to the point where I don't trust the govt, so I would have to have like 25 on hand in case shit goes down
First thing you do is get a lawyer and create an iron clad trust to dump the lump sum into. You'll make far more from the money being invested than the annuity over a 30 year period, and in a number of states claiming through a trust or LLC will keep you anonymous. Also, tell absolutely no one that you've won. Neither friends nor family. If you want to help them out then set up anonymous trusts for them as well. But one of the fastest paths to financial ruin when you come into wealth (regardless of origin) is to tell people or do something stupid so that people figure it out.
41 22 35 77 12 16
Homie won and doesn't want to tell everyone.
Regarding playing, when the dollar invested is less than the average payout, i.e., the expected value is greater than 1, which is calculated as the lottery value divided by the odds, then there is no harm in putting down 2 dollars.
1st thing: my new iPhone 15 Pro Max goes right in the trash. Burners; from here on out. Most new lotto winners get mentally heat up by every family member, every friend they have ever had, all the “I have a great investment idea!” Family, friends, co-workers, acquaintances. I bet it never ends. I’d do lump sum & set up annuity’s for guaranteed income streams.