If I win the lottery…

[purpleshoes]

Powerball jackpot is $1 Billion tonight. No April fooling!

$483.8 million, if you prefer a cash payout.

On last night's late local news, the weather girl and the sports guy got into an argument about whether you should take the yearly payout or the lump sum. It was surprisingly entertaining. The anchor was sitting between them, laughing, but finally reminded them that they were on the air and out of time.

Because of the Rule of 72, I'd choose lump sum. I've got money invested in a mutual fund with an average return of just a hair over 12% over the last 25 years.

[LucasShade]

I've always said I'd take the lump sum.

First thing I'd do if I won? Buy some land and have a house built.....in another state.

[Pornhubby]

Here’s the crazy thing about the lump sum. Studies have shown that people who take the lump sum often spend the money in five years or less. I don’t know if this is due to lack of financial sophistication, lack of discipline, or just being bad with money.

But, being older, I would always take the lump sum for the following reasons.

First, I am older. The payout rates are painfully slow and marginally increase over time. I some of them last for 30 years. So I would have to live to be 93 years to get it all.

Second, the marginal tax rate for high earners (in USA) is 37% right now. That could very well increase in the future.

Third, even a market index fund pays a higher ROR than an annuity.

Create a trust or LLC. Don’t tell anyone you won. Stay under the radar, and enjoy that sweet moolah.

[Shiela_M]

I think a big problem with lottery winners, is they dont just spend, spend, spend, they always want to donate to charities. That's what most people say. "If I win I'm gonna donate to this charity and that charity"

Then tax time happens, and then more money disappears, and the next thing they know, they're driving a Lamborghini around town collecting job applications.

I have two dog charities I know will be financial set. I wont donate ridiculous amounts, but I'll make sure their bills are paid at the very least. I think I get a second phone with a number only my family and friends will know. I'll keep my current phone number going that I hope would be the one everybody looking for handouts would call.

Now that my bestie is having a baby, I'd drop $1M into a college fund or something. An account the kid can't touch until he/she is 18, and I wont tell him/her about it until his/her highschool graduation.

[MintJulie]

Now that my bestie is having a baby, I'd drop $1M into a college fund or something. An account the kid can't touch until he/she is 18, and I wont tell him/her about it until his/her highschool graduation.

There are 6 kids on our block, ages 10 years down to 8 months. They would all get their college paid for.  When I told Dan that a couple years ago he said that's the best thing he has ever heard.  He and his wife struggled in the kid's early years to save for higher education.  It would take such a burden off these younger parents to not have to worry about saving for college.

Oh and I'm team #LumpSum

[msslave]

Very noble choices Shiela and Jules.

As I never buy a lottery ticket ( voluntary tax ) I don't give it much thought. Ya never know when someone might gift me me one tho'.

So at my age and physical condition lump sum me baby.

There will be a happy wild life area where I've spent so many wonderful hours taking photos. Then there's a couple educational centers one for Eagles and one for owls. My sisters will each get a million each.

Leave enough to be comfortable our last few years and that will take care of a lump sum.

[Shiela_M]

Oh and I'm team #LumpSum

Oh yes, Ditto.
 Definitely Lump Sum me. Never know what will happen tomorrow,  so give me all you got today!!

[Pornhubby]

Oh and I'm team #LumpSum

Oh yes, Ditto.
 Definitely Lump Sum me. Never know what will happen tomorrow,  so give me all you got today!!

I have my two kids. My three foster kids. And my five semi-foster kids. So ten kids to pamper. It will be good.

[ObiDongKenobi]

The UK lottery is significantly different. Lumpsum only but not taxed and a much lower jackpot.  In The USA are there lower level prizes or is it jackpot only?

[Pornhubby]

The UK lottery is significantly different. Lumpsum only but not taxed and a much lower jackpot.  In The USA are there lower level prizes or is it jackpot only?

There are numerous different prizes other than the jackpot. You can win as little as $2 (power ball only) up to $1 million (all 5 regular numbers, but not the power ball).  There is also a “multiplier option” (costs $1) that multiplies non-jackpot prizes up to ten times the prize amount. So if you win a $1000 prize with a 3x multiplier  award (determined by drawing also), you would win $3000. The million dollar prizes only double. The jackpot prize is not eligible for multiplier.

Confusing? It is.

[ObiDongKenobi]

The UK also has a single number win.  The draw is twice a week and capped at 5 rollovers.  After 5 rollovers only something like £5M is rolled over and the rest distributed to lower level prizes.