Players who win big on lottery tickets typically have a choice to make: lump sum or annuity?
The two payout methods can impact how much money you get from your prize.
Annuities pay out slowly in increments, often over 30 years.
Lump sums pay all at once but in a smaller amount, as taxes are withheld in one go. That means 24% of your prize goes to Uncle Sam right away. Many states tax winnings as well.
Annuities can provide winners time to set up the financial infrastructure required to take in a life-changing amount of money, but lump sums have the benefit of being taxed only once.
Inflation is also worth considering when making a choice, as payouts do not adjust with the value of a dollar. That means that you’ll likely be getting less valuable money towards the end of an annuity.
Each state and game pays out prizes differently, so it’s best to check with your state’s lottery to confirm payment policies. A financial advisor can also help you weigh the pros and cons of each option.
The new Massachusetts millionaire won playing the Bonanza game but walked away with just $6.5 million after a visit to the state’s lottery headquarters.
This anonymous player decided to get a trustee to claim their win.
The ticket was purchased from the sandwich shop Coletti’s Market in Raynham, Massachusetts, around 30 miles from Boston.
A Walmart shopper faced a similar fate when he won $1 million for a single lottery ticket.
Preston Legge lost $300,000 when he went to the Florida Lottery headquarters to claim his scratch-off card win.
Legge bought his lucky ticket at a Walmart store in Orlando, Florida .
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