I'd Take the Lump Sum
By Jim Bauer
@porwest (112717)
United States
July 17, 2022 8:10am CST
As the MegaMillions lottery rolls yet again for an estimated Tuesday jackpot worth $530 million, which is (by my rough estimation) worth $159 million after taxes if you take the lump sum—which I would—it makes me think.
I used to be an advocate for taking the annuity which is paid over 30 years.
Taking the annuity, one would collect roughly $10.6 million a year for 30 years. Certainly, that is more than enough to live very comfortably.
The older I get, though, the more inclined I have become to decide that if I actually won—which is quite an extreme off chance—I would prefer to take the lump sum even though you lose more than half the jackpot by doing it this way.
But 30 years is a long time, right? And not only do I want to enjoy the money as fully as I can, I also look at what my annual interest would roughly be if I just took the lump sum and invested it and decided to work off that.
My income from interest and dividends would be around $9.5 million per year, which is pretty darn close to that $10.6 for the annuity. But at the same time I'd collect the $9.5 million for the rest of my life assuming I never dipped into the $159 million principal as opposed to just 30 years.
If you won a major jackpot like this what would you choose? The 30-year annuity or the lump sum?
9 people like this
7 responses
@lovebuglena (52144)
• Staten Island, New York
17 Jul 22
It’s a tough one. I’d probably want a lump sum, even though you get more if you spread it out over time.
Good luck! Hope you win big!
1 person likes this
@lovebuglena (52144)
• Staten Island, New York
17 Jul 22
@porwest maybe it’s best to just keep those checks coming lol. Always something to look forward to.
1 person likes this
@moffittjc (128824)
• Gainesville, Florida
17 Jul 22
I’ve always been a big proponent of taking the lump sum. Anyone with a little common sense and a savvy for investing can probably earn a better return on that money than what the states can do.
1 person likes this
@porwest (112717)
• United States
17 Jul 22
This is very true. The amount one would potentially make in 30 years investing all of the money from the lump sum would equal $286.2 million, and that's by being conservative. That would bring the total win to $445.2 million. Still not quite to the $530 million, BUT again, it's a conservative investment strategy that would bring that.
If one was savvy, as you pointed out, I bet that person could get the number to $1 billion.
1 person likes this
@moffittjc (128824)
• Gainesville, Florida
19 Jul 22
@porwest At what point is enough enough? I couldn’t spend all that money if I wanted to, whether it was $100m or $1b.
1 person likes this
@porwest (112717)
• United States
20 Jul 22
@moffittjc To me, when it comes to money, there is no such thing as enough.
1 person likes this
@LindaOHio (222288)
• United States
18 Jul 22
I would definitely take the lump sum, especially at our ages. Neither of us will live 30 more years.
@luisga814 (7138)
• Quezon City, Philippines
17 Jul 22
I'm bit confused why there's a 30-year annuity if you've won a lottery in your country? Anyway, in our country, mostly if you've wanted to do a lump sum, it's up to you. However with the lottery agency will give you a financial advise that you can consider of. Either, you can get the half of it then put the remaining half in the bank.
1 person likes this
@Beestring (15373)
• Hong Kong
17 Jul 22
I would take the lump sum and make some investments. 30 years is a very long time. Life is unpredictable.
1 person likes this
