too many risks to take the annual payments...higher taxes possibly, state bankruptcy, death, inflation, opportunity cost. lump sum is the way to go.
http://www.straightdope.com/columns...ery-should-i-ask-for-a-lump-sum-or-an-annuity ^That's part of a long article that goes on to talk about favorable lump sum situations, taxes, etc.
I definitely need the annual payments. It would keep me within a relatively modest lifestyle for many a year, rather than living lavishly and blowing it all within a few years.
Except you only need 3.53% to grow $500k to $1m over 20 years, compounded anually. What calculator is that guy using? Maybe the straight dope means he's smoking it.
How close have you guys got to winning the lottery? I got oh so close. I played the Texas Lottery and usually I pick my own numbers and that day I did, but as I was getting ready to purchase my tickets I told the clerk to add 5 more quick picks. This is when hurricane Ike hit, so our internet was down, so I had to check the numbers from the newspaper old school style. Turns out the ticket I got at the last min was the winning ticket for me as I hit 5 out of 6 numbers. I know I should of been happy winning but I wanted to when the whole thing and the number that I was missing, I picked it several times on my other tickets. But anyways, I got screwed cause when you hit 5 out of 6 numbers you usually get 2 to 3 grand but since the hurricane came that week not alot of people bought tickets I guess and lowered the winning pot. But I won 1600 and they still managed to tax me 200 bucks. link
I don't understand. You won 1600 (1400 net after the taxes)... but you got... screwed??? I'd be happy. I think most of us would be. No?
Like I said in my post, most of time when you hit 5 of 6 you get 2 to 3 grand. But anyways, me and you are diffrent. You might be happy hitting 5 out of 6 but I have my sights on the big one like today.
if you select the annual payments, and die, the payments stop, right? with the lump sum, you guarantee yourself a huge sum of money. Even if you die, your money is there to take care of your loved ones. I guess it depends on your life situation, but I would no doubt grab the lump sum.
Got my tickets, chose the the cash value option (lump sum) upon purchase and it shows the payout value to be $208,300,000.
Are you talking about the Mega Millions? They never ask me annual or lump sum. I just say give $5 and they give me the tickets. Am I supposed to specify?
Yup, Mega Millions. The clerk asked me before I could tell him. I usually say cash value option when purchasing tickets to be sure.
I'm surprised the math geeks haven't called out Yonkers. The article math is OK. They should be comparing a stream of $50K payments to a one time $500K (not a $1m payment 20 yrs out). The editor was sloppy with the wording, but the calculator was OK. The other tid bit from the article is that unless you pre-select the annual payments, you're probably taxed on the lump sum amount in yr one. That kind of forces your decision unless you've got lots of free cash flow! (and I guess that's why the diligent clerks are asking beforehand). I know two people who've won the lotto (none family ). One was invited to an office pool at a temp place she was working. They won a couple mill, and her share was about $120K -- not bad for a week's assignment! The other won a house worth just over $2m -- which she sold and lived happily ever after.