you win $10 million in the lottery, which is better a lump sum or annuity payments?
Posted by MarkAug 21
i always wanted anuitty payments over 21 years because you cant spend what you dont have. statistically 80% of people who win the lottery go banrupt. but which makes more financial sense. which one and why.
Annuity:
1) When taking the lump sum you typically get only about 50% of the amount.
2) Much more of your income will be taxed at the highest rate if you take the lump sum.
3) Many people who receive the lump sum have the tendency to piss it away.
If you are not good with money an annuity.
If you know how to invest and save a lump sum.
It has to do with intelligence.
Also, would you ever trust the goverment over a 40 year period? Right now some states are about to go bankrupt.
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I always thought the annuity was better. You don’t get socked with the big tax bill right up front. It will give you much more time to do tax planning over the years. That way you can minimize the burden.
ah i just did this out in my advanced micro economics class. Go with the Lump SUM! you can invest the money, i mean this is only good if you plan on investing not spending. You must be willing to invest though otherwise then you would go bankrupt.
Hope this helped
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I agree with you and would take the annuity.
Unless I was older and might not live long enough to receive all 25 or 26 yearly payments. You can’t give it to your heirs if you set it up as an annuity.
Other than that… I would gladly accept a yearly "allotment", taxes taken out already, and live happily ever after.
Probably wouldn’t even quit my job… I love what I do for a living.
I would be bored to death without my job…
an annuity does not take much financial intelligence to take. you will lose much of the value of the money to inflation over the years. the tax bill will also be higher because you are socked over and over again on the pay outs.
a lump sum would be the best if you had high financial intelligence. a smart investor could easily triple or more the value of the money and get tax advantages too.