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Just to remind you, my initial "lump sum vs. annuity" example was not about lottery winners, but people who took buy-outs and early retirements from jobs. I know 3 people who are now working full time in their 70s when they really wish to be retired, because they took an lump sum years ago from a buy-out instead of an annuity, and spent it all. All three blew all the money in a few years and had to go back to work. One seems to have a gambling issue, one seems to have a shopping issue, and the third person, I don't know enough about.
Seems to me if you know that you have little financial discipline, and you know you like gambling or shopping, then you should have gone with the annuity. Only people who are very disciplined and good at investing should have taken the lump sum. I would guess that lottery winners are less likely to be financially disciplined than the general population (or the job buy-out people), since they started out as lottery players. And I agree with the other posters who said that the large percentage of lottery winners take the lump sum, but they're the same large percentage that should have taken the annuity.
If your child had surgery and you had no insurance, there were much better options that putting in on a credit card. If an uninsured child doesn't qualify for Medicaid, any hospital will agree to a payment plan when the only other option for them is to not get paid and send a person to collections. I had a client who was sending a hospital $25 a month for years and years, and they never harassed her or sent her to a collections agent. Putting it on a credit card is just unwise, with the huge interest rates. Then you end doing things like getting a payday loan, with an even higher rate, to keep the electricity on.
Or better yet, maybe it's best to have insurance and an emergency fund in the first place. That's how you plan for crap that happens.
When my nephew was a recent college graduate, he worked at Staples part time while he looked for a real job. One night he had to go to the ER. After three months of paying twenty-five or thirty dollars--they wanted $ 187.50--his account was sent to collections. He tried, but they wouldn't work with him.
Your last point goes hand in hand with the first. People are unsophisticated when it comes to money, especially large windfalls. One point to going with the yearly payments is that doing so gives you time to grow into the fortune. If you do something stupid, it just affects that year's payment. 90% of people would be better served doing the yearly payment.
Unless they're old or not well. I'd take the lump sum. I'd advise any young, healthy person to take the annuity.
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