What to Consider About Lump Sum Lottery Payouts

Selling an annuity settlement

Everyone wishes for a little bit of luck every once in a while. Even though many people may hope that traffic isn’t too bad on their way to work, or that class will get canceled the next day, some aim a little higher. Considering the massive amounts of debt that are facing citizens in the United States, hoping for a pile of money to drop in your lap is not uncommon. Fortunately, the lottery offers the chance for people to do just that.

The lottery is the most widely spread and used form of gambling in America. The easy and cheap cost of entry is affordable enough for anyone to enter. To do so, one must simply travel to the nearest gas station or convenience store and jot down their lucky numbers. From there on, it’s just a matter of waiting.

For those lucky few who do find themselves sitting in a pile of lump sum lottery winnings, there is still work involved in receiving the money. The problem that lottery winners face, is the enormous taxes that coincide with lottery winnings. The government can withhold up to 25% of lottery jackpot winnings, which is a substantial chunk of change from a multi-million dollar prize.

There are essentially two ways to handle an individual’s winnings. They can choose an annuity, or just a lump sum lottery payout. An annuity settlement allows the winner to receive fixed sums of money every year, rather than all at once which will accrue higher taxes. The Mega Millions for example offers a version of lottery annuity wherein they pay the winner one immediate payment, which is then followed by 29 annual payments; each payment is 5% larger than the previous one.

The choice between an annuity or a lump sum lottery payout can be difficult to make in the heat of the moment. Having all of the money at once is tempting, but overall you will receive more from structured settlement annuity payments. If it’s any indication of how large of an impact this can have, consider that about 48% of lotto winners still work after they’ve won.

Take time to weigh your options before taking the lump sum lottery payout. It could mean the difference between working and sitting on a beach for the rest of your life.

Win the Lottery? Congrats! Think Twice, However, Before Leaving Your Job

Lump sum versus annuity

Moving to Tahiti. Buying a Rolls Royce. Spending your summers in the south of France. These are just a few of the images that pop up when we think about winning the lottery. One thought that certainly doesn’t come up that often is the idea of staying at your job after winning. But did you know that a whopping 48% of all lotto winners continue to work? It may be hard to believe but the reality is that winning the lottery, despite its connotations, isn’t what it’s cracked up to be.

Lottery payments are notorious for their gradual and often frustrating allotments. That is, lottery winners usually do not get their winnings all at once. Instead, lottery organizations opt to pay winners gradually. The Mega Millions lottery, for example, shells out lottery payments over a span of 30 years: one initial lump sum and another 29 payments, each one 5% greater than the one before it. For obvious reasons, this can be very frustrating for lottery winners, who want nothing more than to collect their money in peace. Add on the fact that the government — federal, state, and local — takes up to 25% of lottery winnings, lottery winners can become more than flustered. Overall, with the flow of money rather tight (at least at first), lottery winners often have to continue to work before they can live off the fat of the land.

Because of this, many lottery winners turn to annuity settlement deals to get their cash quick. Structured settlement annuities are financial arrangements in which a lottery winner signs over his or her earnings to a company for investing. In return, the company provides their lotto winnings much quicker, either in a lump sum or in a gradual (but more favorable) payment cycle. Structured settlement annuity benefits are massive, which may account for the fact that 92% of people who sell their structured settlements are ultimately happy with their decision.

When you win the lotto, just do yourself a favor: win the lotto the right way with structured settlement annuities.

Three Well-Kept Secrets to Successfully Selling an Annuity

Buy structured settlements

So you’ve received a structured settlement in the form of an annuity. Now what?

An increasingly popular option for people who have won structured settlements is to sell these annuity settlements in exchange for a lump sum, or the total amount of money awarded in the settlement. If you need your annuity money now, it might be your best option to sell this annuity, as early withdrawals from your annuity find can come with a 10% penalty.

But if you’ve tried to look into selling annuities, the process might seem complex, even labyrinthine in nature.

Selling your annuity settlement in exchange for a lump sum doesn’t have to be impossible — or even challenging. Here are three of the best-kept secrets to selling fixed annuities that will help you sell your annuity in no time:

Determine if your annuity is sellable

It’s important to understand that not every annuity is sellable. For example, if your annuity is a structured settlement, you may have to obtain a judge’s approval before you can sell these structured settlement payments for a lump sum, as some states have passed a Structured Settlement Protection Act to protect consumers just like you. It’s also a good idea to determine the resell value of your annuity before searching for buyers.

Don’t say yes to the first offer you receive

While it can be tempting to sell off your annuity to the first buyer you find, it’s better to wait until you’ve met with a reputable annuity buyer who will work with you every step of the way and give you the best offer possible. Understand that no matter what buyer you choose, you won’t receive the full value of your annuity — these buyers need to earn a living somehow.

Understand what form of payment works best for you

When it comes to selling an annuity, there are a variety of different purchasing plans from you to choose from. The straight purchase, partial purchase, split purchases and reverse purchases are all very different options for selling annuities. Determine which of these would work best for you before selling off your settlement.

Have any other questions or comments on how to sell annuity payments? Let us know by simply leaving a comment below this article.