One of life’s greatest joys, a fantasy held by many, is the idea of winning big in the lottery. How many of us have used a ‘winning the lottery’ scheme as a wistful notion for running from all our financial problems? Indeed, it seems like it would be a dream come true but the truth of what it’s like to win the lottery is far from ideal. A downside that not many people talk about are lottery payments, the concept of getting cash in structured settlement payments rather than at once in a lump sum. There is an answer in the form of selling a structured settlement, but how and why would such an option help?
1) Selling Lottery Payments Saves Money
It may not come as a huge surprise, but there are lots of ways in which a lottery winner can lose their total earnings from following by the preexisting structured settlements. For one, the lottery has to withhold about 25% for federal tax, depending on your situation and where you live, and another 6 to 9% for state taxes. This already takes out a big of your total earnings, but the practice of receiving the money in small lottery payments can lead to blowing the amount on small expenses at once rather than a potentially big, worthwhile investment like a house or college.
2) Selling Your Annuity Insures a Quicker Payoff
There are few things slower than the course of lottery payments. Mega Millions issues one immediate payment, followed by 29 annual payments that increase by 5%. While an increase is never bad, waiting 30 years for a payoff isn’t exactly the lottery winning ideal that most people fantasize about. The annuity payout schedule for Powerball follows this same 30 year pattern rather than offering a lottery lump sum payout. Even for a big amount of money, who wants to wait that long?
3) Selling Lottery Payments Is a Decision You’ll Feel Confident About
You would not be alone at all in choosing to sell off your lottery payments to get cash for annuity now, rather than waiting forever. By 2013 there were 34,800,000 individual deferred annuity contracts, the total of which exceeded $2,580,000,000 in all. It’s perhaps no surprise then that 92% of lottery winners that sell their payments end up being happy with their decision to do so. This is clearly a choice that many people in the same situation have made to their own benefit.
If you’re wanting more from your lottery winnings than what is being offered to you by the lottery itself, making the choice to sell your structured settlements might be just the answer you’re looking for.