Lottery Jackpot: Cash or Annuity?

If you won a lottery jackpot, would you take the cash or annuity option? What's the difference? Here's the answer.

Category:

Entertainment

Tags:

• Iowa
• lottery
• jackpot
• prize
• winner
• player
• Powerball
• entertainment
• news

[IALottery]

Great question, 6shades. In regards to the annuity question, that is what annuities are: Investments that provide guaranteed payments over time. There is a lot of information available about annuities either online or from a financial planner if you need further information.

[WireFunds]

Why do lotteries advertise the "annuity" option as the jackpot. Don't you think this is a bit misleading?

[6shades]

this doesnt sound right...... how can you offer winnings that doesnt exist yet? (meaning the intrest) Plus it doesnt make sense that the state would invest on your behalf for free. they stand to gain a profit.

[poetgenius335]

The reason why the jackpot is listed two different amounts is because in reality, these are not 2 values of money. One spread out and bigger to allow for inflation, and one in all one amount. Taking the lump sum assumes to get equal payments over 26 years, you would have to match inflation through wise investments. The real jackpot is always the cash amount thats listed.

[fxmike11]

I basically learned this a while ago, and when it gets up to like 200-300 mil I start to buy some tickets but always realize if (a big if) I do win, it would never be that amount. I still think the cash option is optimal, you can take that money and invest it into something that pays out more than whatever crap interest rate they pay you through the annuity payments. FEH!

[COOLRADIUM]

What I'm writing is all hypothetical. So basically if the Jackpot is, let's say: 1 million bucks. The cash option is 600,000 and the other 400,000 is interest that you never get? They government tax the 600,000 and you walk away with 300,000 bucks. So you went from a 1 mill to 300,000 dollars.That's why USA is so rich. It taxes everything. America is not a country, it's a business entity to me. Uncle Sam, you are no uncle of mine. America is still great tho.

[rpaul247]

In canada if they advertise a 2 mil jackpot that's exactly what you get plus they don't tax lotto winnings. Only here in the US they do this misleading garbage. Plus these guys make a killing in lotto sales(billions) compared to the advertised jackpot which is just a drop in a huge bucket.. So they can more that afford to pay the "advertised" amount lump sum.

[zoso1234]

Wait a minute....if the Jackpot is $300,000,000 then how come you don't get the exact amount??? I think Canada pays out exactly what the jackpot is....something smells fishy to me lol...I will have to google other countries lottery and see what's up?

[StickYaSelf85]

@gemo67 it still gets paid out to your estate or you can designate someone who will receive it in case of your early demise with the state lotto

[StickYaSelf85]

The way things are today, I think I'd just get the lump sum and buy a good safe and some gold bullion for worst-case-scenario security. Bonds aren't as safe as they used to be and you never know what the government may try to pull in the future.

[mamacacanana]

I think if your age 45 and under, pick 26 payments. If your over that, then get the lump sum.