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Lotterys are usually paid out in annuities where you would get that amount over a period of 10-30 years. However, they also give a lump sum amount which is usually ~half the stated amount and after taxes you could expect to receive 1/3 the stated amount.
Still, it's generally best to take the lump sum unless you have very bad self control and would blow through the money.
Statistics show it's literally best NOT to take the lump sum and that most people have no self control.
most people have no self control.
Most people who gamble have no self control.
Interesting... The fact that they're eligible to win the jackpot makes them statistically unable to handle it ...
Feels similar to the Plato quote "those who seek power are unworthy of that power".
Give me the winning lottery ticket and I'll show you how it's supposed to be done.
The issue is the mathematically best outcome in a vacuum does not take into account the fact that gambling has a negative expected value, and anyone participating in it was already more likely to be really bad with money. There can be a mathematically ideal outcome that is different than the statistically best outcome in real life situations. Probably anyone considering this the mathematically ideal option will work best, but the average gambler the statistically best is.
As i said
unless you have very bad self control and would blow through the money.
Which is why you can work with a financial advisor and other wealth management strategies to set yourself up for success.
But yes, lots of people have lack of self control but if you're going to throw around big words like statistics then show those receipts. And i mean actual studies not an article pulling numbers out of their ass.
Statistically, people may tend to blow their lottery winnings and end up broke if they take the lump sum.
Financially, the lump sum is the better option because if it's well invested, it will grow faster than the full payout over the term of the full payout. It turns out that if you have near unlimited money for the best financial advisors, you will make a lot of money.
Most people are stupid and don't understand that even before you claim the ticket that you need to hire and consult with lawyers and financial advisors.
it’s generally best to take the lump sum
Why? I would assume it's the other way round.
The lump sum will grow to be worth more than the annuity over the same period if properly invested
if properly invested
Ah yes, the thing nobody is ever actually taught nor follows.
plenty of people do, they just don't have 400 million to do it with
like my brother used the cheapo student loans here in sweden to just chuck a bunch of money into low-risk index funds (i think that's the term) and he's gotten 2000 bucks from that for basically 0 effort.
now imagine doing that with millions of dollars
Or... you know... it gets fucking wasted and scammed out of peoples hands because they have no idea to handle big money.
It's just down to generally investing the lump sum you can outperform the annuity option. If you search "lottery lump sum vs annuity" you'll get a lot of results. Here's one
He'd get 14 million dollars a year for 30 years assuming the total payout was the same. I get that advice for people who are looking at a 100k payout. But at some point it's just irrelevant. His first year alone would be a respectable total payout.
Such a joke. While I personally believe everyone should pay their fair share... Winning lotto or winning at the casino ect, should not be taxed.
However if you use that money and make more money with it you should be properly taxed.
I think if they only advertised the post-tax number, there wouldn't really be a problem. Like, "hey, the jackpot is some amount, and after tax you could win 400 million"—that would be fine. As it is, they're kinda just building resentment for taxes in general by making your final winnings seem so disappointing, even though it's still 400 million.
It's always on the consumer to pay all taxes for some reason. Even with sales tax. I didn't make a sale why am I the one paying the tax?
Hey, now. We don’t want to charge business taxes! That’s anti-business! We’re anti- people in this country. Businesses are tax exempt because they’re the real citizens. Those gross, floppy pEoPlE are what we use to make money for businesses!
God, I hate sales tax. "This thing is $1.99? No it isn't."
But the amount is also variable as it's not a lump sum..
If you take lump sum and not the 30 year annuity, you take about a 50% hair cut off the prize money alone.
Hmm...
I mean, they could advertise the 30-year annuity as a separate number, then. There are still ways to make this work. I'm just saying, not framing taxes as if they were a punishment would make the whole thing much less annoying.
Not taxing the winnings at all, or just taxing them before they get into the pot, might be the easiest solution, I guess. My only contention with that is, well, now we're just edging into the fact that I don't really like lotteries. Certainly not on this scale.
I violently disagree with you.
Gambling and playing lottery is a method to take a risk and get essentially free money by doing nothing, other than taking the risk. Personally I think anything like this gambling related should be taxed up the wazoo. Definitely more than 50%. And that taxed amount should ideally go back to fund things like schools and stuff good for everyone.
Final note, if you ain't happy with 400M free money, you cray cray.
In my country the lottery is taxed at the collection step, so the money divided and advertised is already after taxes. I think that makes more sense, you collect the money and the law specifically distributes this taxed money for specific budgets and the winnings advertised are the real one.
The US effectively does both: the lotteries are run by the states and total prizes are much less than total ticket sales, generating net revenue for the state. Winnings are taxed like other income, meaning there are federal taxes and in many states state taxes.
Or the winning amount should represent the money you get after tax just like in every other country.
I personally think the tickets should be hella taxed, not the winnings. However lotteries are immoral ASF anyways and should probably be banned so 🤷♀️
They should hold onto the lottery ticket and borrow against its value.
Instead of taking out the lump sum, you can have it paid in installments, they probably asked for lump sum, thus they get a much lower value.
Then you can do the math of whether or not it's worth it to receive monthly payment or taking out the lump sum, paying off all your debts, then putting it into S&P 500 and drawing down 4% a year and never run out of money.
At 400 million, that's what, 16 million a year? Never have to work again a day in their life, can spend 365 days a week in a 5- star hotel at a 1000-2000 dollar a night a 250 thousand car every year and haven't even spent 1/16 of his yearly liquidation.
Thanks for your comment. People keep forgetting that even a couple of million would be enough for you to never work a single day in your life and have a nice middle class life. 400m is just the equivalent of 200 "comfortable middle class lives, forever"
We don't forget that, the comments are pointing to the fact that any rich person that got 2 billion through investments would end up paying less, no one is saying that 400 millions are not enough.
424 millions is still a mighty respectable amount
80% taxes how does that work?
suddenly germany feels like a tax haven :D
It doesn't. Just headline gore.
Lottery payouts typically have two options: lump sum at half the value of the winnings or a 30 year annuity at the full value. So this headline assumes lump sum reward and cuts the face value on that alone, then does a bunch of other hand waving to get you down the next 58%.
News journals that are owned/advertised by anti-tax republicans love to run out the "lottery was taxed too high" story, specifically targeting people who fancy themselves future lottery winners. It's all bullshit.
That's insane. In Europe when you'd win 1 billion € you get 1 billion €, no taxes, no lump sum reward.
Its a moot point because you're never going to win the lottery.
It's not taxes... well not all of it. The lotto advertises its prize as the sum total of a 30 year annuity. Currently Powerball has an estimated Jackpot of 163 Million. You can take the lump sum up front though. At present that lump sum is 73.9 million. After you get that, then you get taxed on it, reducing it to probably something like 40-50 million.
That seems incredibly scammy to me. They're pretending the prize is double what it actually is and then claim even more of that back as taxes. If the actual prize money is only 20% of what you're advertising that's dishonest at best.
Where I am lottery winnings are tax-free and without an insane hidden 50% "claimed your winnings" fee. What they advertise is what you get if you win.
That seems incredibly scammy to me
Of course it does, it's the lottery
The US doesn't advertise taxes included generally whereas other countries do. Americans don't expect tax to be included on any price or income advertised. There are people who say we should change that, but we're stuck in the 1800's in so many ways.
Best. Billionaire. Ever.
Why does he look like lil bow wow