One Half BEELION DOLLAHSFollow

Personally, I'd rather take the lump sum on a big number like this. If I won something like a few million dollars or less, I'd probably do the annuity so I'd get more of it and I'd be less likely to spend it all faster than I should.

Eh, the annual option is more $ and it's not like you're going to spend more than what you get without trying pretty hard.

No it doesn't. The remaining money goes to your estate.

Unless you somehow decide that the first thing you're going to do after winning hundreds of millions of dollars is not go to a lawyer and fine tune all the details.

Heh, I actually had this discussion with my wife.

Me> I hope you realize the first person I call should this ticket win is a lawyer.
Her> Ha, a divorce lawyer, right?
Me> No, he's second.

According to the lottery official I heard on the radio, if you went lump sum you would be looking at about 35-40ish percent after taxes. So around $250-$300 million cash.

Aside from the reasons others have listed, if you take it in annual sums, the interest on the pool of money itself is being earned by the government, and not you (plus inflation is working against you). If you were to take that entire lump sum amount (which looks to be about 1/3rd less than the full amount), and invest it in a diversified portfolio, you will have increased that amount by far more than +50% (in real dollars) over 20 years. Even just the inflation effect is going to make that 20th payment worth about half what it would have been worth if you'd gotten it on day one.

And of course, that's ignoring the possibility of the lottery system going bankrupt, state canceling additional payouts, seizing profits, taxes going up dramatically, war, revolution, zombie apocalypse, etc which might cause you to not get that money.

If you can manage to blow through that much money in 4-5 years, you deserve to be broke.

Plenty of people have done it off of 100-150 million. Scams, charities, high risk investments are common ways. The average person has no idea how to manage that kind of money.

Except that it doesn't. They can borrow against the annuity, then go bankrupt just as easily. I somewhat assumed that the choice is for someone who is actually trying to maximize the value of the prize. If the person is going to just blow through the money anyway, then the entire question is pretty moot. They're more likely to blow through their yearly payout, then have to borrow money against future years if they've limited the amount of money they actually physically have available to them.

If we assume someone who's going to be responsible with the money, not blow it all, and perhaps even invest a decent portion of it, then anyone who's still got money coming to them after 20 years, will have a lot more money if they took the lump sum and used it intelligently.

I could have sworn that someone told me if you got the annuity, there's no way it could be willed to anyone if you die. I was lied to, and now someone has to die.

Is the sole reason for this comment human psychology? Because from a strictly financial perspective, you're better off taking the lump sum. As of the last time I checked the site, the annuity payment totaled $640 million after 20 years, versus $462 million cash. If you take the cash payment it takes only a 1.64%~ interest rate to equal the annuity payment. Inflation alone will beat that out.

Winning ticket was in Baltimore, apparently.