Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I would guess that the great majority of folks that win the lottery are in not-so-good a place, financially. A lump sum gives them some hope of resolving that and a lot more. Maybe people just want it all now, in case they don't survive the full payout schedule.
You took the words right out of my mouth!!
For many people, $5-600,000, in a lump sum, could easily get them back on track, so they'd have an easier time, going forward. But then there's someone like me, who's almost 70. Why would I consider a 25 year payout??
I followed this thread for a few days before it occurred to me that my sister & I had both acquired a million dollars when mom died last year. It made no real difference in my life, other than keeping score. It made a big difference in my sister's life. I have been so intent on the duties of successor trustee that I never gave the additional money much thought.
My story of a lifetime of hard work, perseverance, and saving & investing would be the last thing a casino would want to talk about. I find it interesting that the vast majority of lottery winners take a much smaller lump sum rather than a 26-year annuity. No ability to delay gratification, I guess.
This assumes that there’s a material difference in actual terms. I’d assume you understand the difference between present and future values for money.
When you take the lump sum, you of course get hit with the tax bill in the top bracket. However, you have to consider that the number is lower because a calculation was done to get the money to its present value. You get that money TODAY to invest. I’d much rather have the money today to invest than wait and get it in a trickle of years, each at a certain time value. I’d assume I can do better with the present value of the money than the government could.
For a variety of personal and financial reasons, I would take the lump sum of a lottery winnings.
The problem isn’t the lump sum versus the stream of payments. The problem is financial incompetence and access.
Last edited by Thatsright19; 06-01-2021 at 11:15 AM..
For many people, $5-600,000, in a lump sum, could easily get them back on track, so they'd have an easier time, going forward. But then there's someone like me, who's almost 70. Why would I consider a 25 year payout??
Yeah, I'm 68. People in my family live to pretty ripe ages on average but I would not count on being able to enjoy that money even if I did live till age 93. Except that I don't buy lottery tickets.
Today I was in the grocery store behind a lady who appeared to have a simple order except that I had to stand and play Sudoku on my phone while the clerk and a manager tried to figure out why she didn't get $4 off the dog food she bought despite having the coupon loaded onto her card. "When you're retired and living on Social Security you have to make every dollar count", she said.
Except that she has to care for and feed a dog. And she stopped at the lottery machine on her way out. Yep- a tax on the poor.
....The problem isn’t the lump sum versus the stream of payments. The problem is financial incompetence and access.
Bingo!!
Quote:
Originally Posted by athena53
And she stopped at the lottery machine on her way out. Yep- a tax on the poor.
Sadly, too many poor people made poor decisions all their lives, and that's why they're poor. Now, they're looking for a lucky windfall, to bail them out.....
Yeah, $1 million definitely wasn't enough to retire, even decades ago. However, get some decent financial investments, continue working and saving, splurge a little bit, and it's a good start.
Lets be clear $1M is still alot of money... does it instantly make you rich yes but not wealthy. Even if you net $600k after taxes most people can pay off all debt including their mortgage. This will give you the financial freedom to make appropriate choices on investments, starting a business, and perhaps taking some incremental risks.
Being debt free does alot to your retirement age profile along with your ability to save.
Depending on your age, where you live, and your lifestyle it could be a lot of money or it could help make your life better. I live in a 1.3M house that's 35 years old. One could buy a brand new condo with a 1M but forget a house.
A million is a nice start for a 25 year old who graduated but even better for a 65 year old retired person with a government pension.
Some introverts on CD could never spend a million. They have such minimalistic lifestyles it would barely make a dent.
Seriously.
Late 60’s here.
When I started trying to figure out what we would need to retire - WITHOUT factoring in my pension nor our inheritance - $1.2 million was the figure I landed on.
We retired (2.5 years ago) just under that in our portfolio - but it’s grown to meet that.
Pension plus inheritance triples that number. And we own our home outright.
We have kept our spending to pre-retirement levels. We’re never going to need all that money.
it’s because many get by on very little while they’re working, so it’s not an adjustment to get by on very little in retirement. Tons of people have their paid off house and get by on social security and they never had expensive hobbies or things before anyways.
Yeah, $1 million definitely wasn't enough to retire, even decades ago. However, get some decent financial investments, continue working and saving, splurge a little bit, and it's a good start.
$1 million was absolutely enough to retire on decades ago. Even today it is enough if you are retirement age and careful with spending.
It would even be enough if you are young if you have a paid for house already and no other debts to live off for rest of life as long as you are not living a luxurious lifestyle. Probably would have to be a modest and somewhat frugal lifestyle to live off $1 million and never have to work another job if you are single even if you are young. Now if you are young and have a family and kids at a young age, $1 million is a great cushion and gives you lots of options, but probably not enough to never have to work especially if you want to send your kids to college and give them some of the wealth even with careful spending.
Same is true even 20 years ago. Now 40 years ago and beyond it could fund a luxury retirement and 50+ years ago, would be able to live off off luxury lifestyle at even a young age without having to ever work again even with a family to support.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Yep- a tax on the poor.
