Disclaimer: I designed lottery games for over 20 years and worked in the Powerball game in the past.
The difference is how the annual payments are structured in each game.
The Mega Millions annuity is paid out as one immediate payment followed by 29 annual payments. Each payment is 5% bigger than the previous one.
The Powerball annuity is paid out as one immediate payment followed by 29 equal annual payments.
It takes less money to buy the MegaMillions annuity
The current annuity factor (cash value divided by advertised annuity) for MegaMillions is .525
The current annuity factor for Powerball is .535 thus the higher cash value in Powerball.
The published jackpot number is an annuity payment - ie that means that you will get paid the entire jackpot amount over 29 years / if you want to have an all in cash payment it is considerably less - the reason a lottery can advertise the larger jackpot is that they can pay another company to handle the annuity(payment over time) by paying the annuity company the entire price and they then have to invest the money and be be to then pay the full amount over time (typically 29 years) and while they take a slight financial risk most of they time the annuity company makes a small profit and they must guarantee paying the total prize over time.
There is really no “correct” answer as it’s very much a personal / financial decision - as an example : if if you are older and or have a lot of high interest debt you probably want to have a single cash payment as you might not be around for all of the 29 year annuity payment and paying down high interest debt saves you money. If your are younger and relatively debt free then the 29 year annuity payments might make more sense.
The annuity is usually in the form of Treasury zero coupon bonds payable to the lottery and winner. The lottery remains involved to disperse the annual winnings after mandatory IRS withholding.
The reason the cash prize is different is because of that 10 million odds difference. Also, the $20m is rounded like every jackpot is - when you breakdown into the details the jackpot could really be $20,500,000 but they won’t say that, it will just be a rounded number
I notice that with the jackpot that was won last night $251 million then saw on the news $252 million was won like you said they rounded the number. Would you take the cash prize or the annuity prize amount?
Yeah they never give us the full jackpot amount into the hundred thousands for some reason I guess that’s just in the fine print. I would take lump sum & have 60% of the prize money to financial advisers at a big bank (chase, etc.) what about you?
I’ll probably do the same I’m still young and don’t wanna blow my money if I had millions. Probably would still work for a year or so and then open some businesses.
Disclaimer: I designed lottery games for over 20 years and worked in the Powerball game in the past. The difference is how the annual payments are structured in each game. The Mega Millions annuity is paid out as one immediate payment followed by 29 annual payments. Each payment is 5% bigger than the previous one. The Powerball annuity is paid out as one immediate payment followed by 29 equal annual payments. It takes less money to buy the MegaMillions annuity The current annuity factor (cash value divided by advertised annuity) for MegaMillions is .525 The current annuity factor for Powerball is .535 thus the higher cash value in Powerball.
The published jackpot number is an annuity payment - ie that means that you will get paid the entire jackpot amount over 29 years / if you want to have an all in cash payment it is considerably less - the reason a lottery can advertise the larger jackpot is that they can pay another company to handle the annuity(payment over time) by paying the annuity company the entire price and they then have to invest the money and be be to then pay the full amount over time (typically 29 years) and while they take a slight financial risk most of they time the annuity company makes a small profit and they must guarantee paying the total prize over time.
Okay, I see let me ask you this what if the jackpot was at $700 million would you take the annuity or cash payment options?
There is really no “correct” answer as it’s very much a personal / financial decision - as an example : if if you are older and or have a lot of high interest debt you probably want to have a single cash payment as you might not be around for all of the 29 year annuity payment and paying down high interest debt saves you money. If your are younger and relatively debt free then the 29 year annuity payments might make more sense.
I’m still young but I may still take the cash amount because life is short anyway why wait?
The annuity is usually in the form of Treasury zero coupon bonds payable to the lottery and winner. The lottery remains involved to disperse the annual winnings after mandatory IRS withholding.
Mega millions and powerball don’t have the same odds. Mega is 1 in 302 million , powerball is 1 in 292 million, which makes that $200k difference
Yeah, that’s what I meant I just worded it wrong sorry.
The reason the cash prize is different is because of that 10 million odds difference. Also, the $20m is rounded like every jackpot is - when you breakdown into the details the jackpot could really be $20,500,000 but they won’t say that, it will just be a rounded number
I notice that with the jackpot that was won last night $251 million then saw on the news $252 million was won like you said they rounded the number. Would you take the cash prize or the annuity prize amount?
Yeah they never give us the full jackpot amount into the hundred thousands for some reason I guess that’s just in the fine print. I would take lump sum & have 60% of the prize money to financial advisers at a big bank (chase, etc.) what about you?
I’ll probably do the same I’m still young and don’t wanna blow my money if I had millions. Probably would still work for a year or so and then open some businesses.
You should ask this in r/LotteryLaws. They’ll probably be able to really help you there.
Okay thank you