LOTTERY WINNER.... Screwed

[MrBill]

Sounds like Neal was a no child left behind math major ... how can a 23 year old not see that 11+ million a year, every year, until he is 43 is a better deal?
What? he thinks he needs the 88 mil to buy beer for his friends? Even after taxes the annuity will net him over $15,000 A DAY for the next 20 years.
Not to mention it would give him time to get a couple brain cells functioning and perhaps, after the first 10 years of being ripped off by every con artiest on the pike, actually have something left in the end.

[Vudak]

Sounds like Neal was a no child left behind math major ... how can a 23 year old not see that 11+ million a year, every year, until he is 43 is a better deal?
What? he thinks he needs the 88 mil to buy beer for his friends? Even after taxes the annuity will net him over $15,000 A DAY for the next 20 years.
Not to mention it would give him time to get a couple brain cells functioning and perhaps, after the first 10 years of being ripped off by every con artiest on the pike, actually have something left in the end.

Do you know if your family gets that if you die? 

[Megalodon]

It's only 44 million after the divorce.

11 million after the lawers take half.

[E25280]

Sounds like Neal was a no child left behind math major ... how can a 23 year old not see that 11+ million a year, every year, until he is 43 is a better deal?
What? he thinks he needs the 88 mil to buy beer for his friends? Even after taxes the annuity will net him over $15,000 A DAY for the next 20 years.
Not to mention it would give him time to get a couple brain cells functioning and perhaps, after the first 10 years of being ripped off by every con artiest on the pike, actually have something left in the end.

Depends on your assumed annual rate of return and what you expect to spend.

For sake of argument, let us suppose he expects to spend $10M per year on all that beer.  Let us also assume that he knows some super-duper Warren Buffet investor type that can net him 12% per year.

Rough math, with the annuity option, he gets $11M and spends $10M, leaving $1M to sit in an account accumulating his 12% interest.  At the end of 20 years, he has accumulated about $72M in his bank account.  Well -- 12% or 72M is less than $9M -- he now is making less money than he spends, and will go broke.

Now, if he takes the $88M up front and earns 12% per year, each year he would earn about $10.5M in interest.  So, he can spend his $10M and his bank account keeps growing.  At the end of the 20 years, then, he has much more than $88M in the bank earning him well over the $10M he wants to spend each year.

I won't even mention the toll inflation has on the value of your future annuity payments . . .

I know this is all "no child left behind math", but the point is that the choice is a lot less certain than you make it out to be.

[MrRiplEy[H]]

Depends on your assumed annual rate of return and what you expect to spend.

For sake of argument, let us suppose he expects to spend $10M per year on all that beer.  Let us also assume that he knows some super-duper Warren Buffet investor type that can net him 12% per year.

Rough math, with the annuity option, he gets $11M and spends $10M, leaving $1M to sit in an account accumulating his 12% interest.  At the end of 20 years, he has accumulated about $72M in his bank account.  Well -- 12% or 72M is less than $9M -- he now is making less money than he spends, and will go broke.

Now, if he takes the $88M up front and earns 12% per year, each year he would earn about $10.5M in interest.  So, he can spend his $10M and his bank account keeps growing.  At the end of the 20 years, then, he has much more than $88M in the bank earning him well over the $10M he wants to spend each year.

I won't even mention the toll inflation has on the value of your future annuity payments . . .

I know this is all "no child left behind math", but the point is that the choice is a lot less certain than you make it out to be.

It's so simple folks - he gets what he gets and he has to spend accordingly.

There's no such thing as a free lunch and if you're going to win _millions_ anyway, it's crazy to complain. Most if any of us will never be that lucky. In Europe the lottery wins are reported after taxes so nobody has to cry about this kind of details.

[Beefcake]

As a man of simple tastes, I doubt I could spend 88 million in my lifetime. Heck if I could win 1 million it would be great, especially since I only make 14k a year. At that rate I could live 70 years off 1 million alone.

[Dago]

Do you know if your family gets that if you die? 

Yes, your estate beneficiaries get the money if you die.

[dev1ant]

He's getting screwed the way this retarded government is going to spend his $144 million contribution.

Either way, he won 88 million on 15 bucks, nothing to cry about.

[Nilsen]

Wow i didnt think id see the day

Winnings on lotteries are tax free in my country. We pay more taxes on EVERYTHING else in society compared to in the US though so SUCK IT UP mr 88milliondollar man 

[moot]

So your glass is always half-empty eh?

The glass is twice too big.

[Skuzzy]

If the winner choses to take his winnings in one lump sum, he gets 1/2 of the total won.  Normally that decision is made at the time the ticket is purchased.  So, he wins $232 million but actually is only going to get $118 million (1/2 of the total).  After taxes are removed, he gets $85 million.  So he paid $33 million in taxes which is only 28%.

Whatever money is left from the lottery is then divided between the state and the lottery commission.  It may not actually be $118 million, as the lottery value is estimated. It could actually be more, but usually it is less than what they estimate.

That is why the 20 year annuity is the other option.  It is to allow the lottery commision time to acrue the money they may not have.  Basically, they are always hoping that players will take the lump sum payment.  It is the only way they can actually make money for the state and themselves.

If every person took the 20 year annuity option, the lottery commision for that state would eventually be bankrupt.

[rpm]

It's only 44 million after the divorce.

He's single.

Pre-nup, pre-nup, pre-nup!

[Tango]

If the winner choses to take his winnings in one lump sum, he gets 1/2 of the total won.  Normally that decision is made at the time the ticket is purchased.  So, he wins $232 million but actually is only going to get $118 million (1/2 of the total).  After taxes are removed, he gets $85 million.  So he paid $33 million in taxes which is only 28%.

Whatever money is left from the lottery is then divided between the state and the lottery commission.  It may not actually be $118 million, as the lottery value is estimated. It could actually be more, but usually it is less than what they estimate.

That is why the 20 year annuity is the other option.  It is to allow the lottery commision time to acrue the money they may not have.  Basically, they are always hoping that players will take the lump sum payment.  It is the only way they can actually make money for the state and themselves.

If every person took the 20 year annuity option, the lottery commision for that state would eventually be bankrupt.

Probably why he took the lump sum.

I also wouldn't say anything about him being stupid about it. Afterall he has 88 million dollars and we don't. 

[Xasthur]

$88 million is plenty.

Bank most of it, live off the interest.

[Tango]

$88 million is plenty.

Bank most of it, live off the interest.

The interest alone would be almost 5 million a year.