18 Sep 3 Reasons to Sell Your Lottery Payments for Cash Now
Perhaps the biggest decision you’ll be faced with after winning any sort of lottery jackpot will be taking a lump sum versus annuity style lottery payments. This should be an individual decision based on your specific situation. Many times people elect for the annual lottery payments only to realize they could actually benefit themselves in the long run with cash on hand. Especially if you’ll be one of the almost half (48%) of lottery winners that continue working, you don’t need a long-term income to live off of. You may be better served selling lottery payments and using the money to your immediate advantage. Here are three arguments for such.
1.) Control Your Money: The way a lottery jackpot, such as the Mega Millions, is paid out is by one immediate payment and 29 subsequent annual payments. These payouts grow by about 5% every year. This is good for a slow, consistent income that’s perfect for someone living on a fixed-income. If you’re still young and in the workforce you can maximize your earning potential by taking control of these funds in totality. It’s said you have to have money to make money, and there’s a lot of truth in that. Stocks, bonds, CDs, business ventures; there are countless ways to invest money, each with risks and benefits. Consult a financial adviser and determine the right options for you.
2.) Taxes: One of the reasons people shy away from selling a lottery annuity is because of the tax ramifications. The government can withhold up to 25% of lottery winnings. That would be $25,000 for a $100,000 jackpot. Many times that can scare people away when they hear or see a large number like that. What they don’t realize is that they will end up giving the same, if not more, away every year. It will just be smaller portions at a time. Getting it all out of the way up front allows you to see exactly how much you truly have and can influence your investment choices.
3.) Treat Yourself: Finally, the last and most self-serving reason to sell your lottery payments is so you can be selfish for once. The majority of people spend their whole lives working day and night to provide for themselves and their family. If you’ve been fortunate enough to stumble upon random wealth you owe it to yourself to do or buy something you’ve wanted for awhile. This doesn’t mean go crazy and blow the entire check on beachfront property, but you should allow yourself a portion of the amount to spend on personal enjoyment. There’s no guarantees you’ll ever have the opportunity to do so again, and time is fleeting.