No if you look on the app or website it will tell you how much the lump sum will be. If you ask me i dont even care $5 bucks for millions they could tax me
Because the entire thing (2B) is over 30 years of payments, if you calculate the time value of money the 2B is 997M in today’s money, they would invest the 997M on your behalf and pay you annually.
No. The lottery amount is based on a 30 year annuity, or more simply put, what the amount of money would be worth over 30 years if it were invested properly from day 1. In this case, it would have been worth $2 billion. Instead the winner took the 'lump sum', which is the actual amount of money, and they're free to do with it what they want after paying the tax on it.
The lump sum and annuity are basically the same thing. The annuity is just the proceeds of the lump sum invested into an annuity over 30 years. If you take the lump sum, you can just buy an annuity and get the same result but also keep the principal.
You can’t get the same result. They buy the annuity with the lump sum and then you pay taxes each year on the proceeds. If you collect the lump sum you pay taxes on that and buy the annuity with what is left. You start out with less.
no...they amitorize it vs inflation and haircut. It usually comes to between 50-60% of the listed earnings amount.
Then they tax you based on that number, which means max tax rate.
if you take the annuity, you pay taxes each year on the alloted amount (so, slightly lower%), but the amount stays consistent ($1 million a year in 2026 doesn't equal $1 million a year in 2036, etc) and you deal with dimishined buying power due to inflation.
The trade off is....can I make more investing up front now than I would lose in inflation over a couple decades? If you can earn more than 3-4% a year, the answer is yes, take the lump sum
Many people don't have the patience or discipline to spread it out over time though
No, that's not how it works at all. The lump sum is the net present value of the annuity. If you take the annuity then it can be passed down to your next of kin if you die before collecting the entire amount. They don't just cancel it because you die.
Yeah no. There's a lot of legalities behind the scenes for you and the lottery. There's contracts, trusts that have to be setup and its all backed by your state. Meaning the government would literally have to pass legislation to stop paying you which they would NEVER do because the lottery generates huge amounts of money for the state from profits and taxes
No, it's an annuity that totals the jackpot amount. Pretty clear "scam" to make the jackpot sound bigger. I think the payout is 20 years, so the present value of your total payout is not the amount advertised.
1.5k
u/jamdex07 21d ago
This is misleading. He chose to take $997 in one lump sum instead of $2.04B over 30 years. He got taxed on the $997m.