What would you choose if you were the one

[Leahized]

The two methods you discuss in detail are good regardless. Since there is an opportunity to take a one time $450 million, I will try to take it. If you pay again after a few years in installments. As far as taxes are concerned, my state ranges from 10% to 30%. However, even if it is accepted in installments, the tax must be paid gradually. So one time tax will be quite convenient without any problem.

On the other hand I am not willing to take advantage of receiving money for 29 years, as that is too long a permanent arrangement. Since there is a plan to invest, it is possible to go ahead with a lump sum. As I have to pay locality based tax in my state, so this may be the best way.

[nara1892]

I don’t see any difference between the two options, especially regarding tax deductions they’re essentially the same. The only difference is the timing of the payments, everyone has their own plans.
If I were in that position, I might choose the installment plan, but one thing I’d consider is whether the payments would still be disbursed even if, for example, I were to pass away at some point in the future. Twenty nine years is a very long time, I’m worried the money might just disappear and my family wouldn’t receive it that’s what I’m thinking. So, personally, I think I’d prefer the lump-sum payment option.

[shawonngp]

I think 450 million dollars is a huge amount of money for anyone; even then, no one can enjoy it alone, because it would take many years to spend, especially since I don't think it would end even if I spent it over a few generations. 450 million is a lot of money even after paying tax, so I definitely want to take it as a lump sum. Then I will invest this money in real-life businesses and can also invest in many assets online; maybe this investment money can be doubled in 29 years. So I don't prefer to take it in installments, because 29 years is too long. Is there any guarantee that you will live that long? What I have won seems useless to me if I cannot enjoy it. After you die, complications can arise with these installments because it's a long-term commitment.

[Mrbluntzy]

I am considering the debasement of USD in this duration of 29 years which can make me consider taking the money in lump sum and invest it into some good long term asset like hold, bitcoin, equity and stock.

Even if USD is going to devalue, I still consider receiving reward yearly because it's more like getting a free money every year and the amount that will be paid per year is around $30k, this money is really big for someone that is not earning up to such amount annually and even if the person is earning up to that amount per annum, they are working for the money but this gambling reward comes without any job being done. This money can even be set aside as a retirement plan if the winner is still in their early 20s or early 30s, therefore it's best to keep receiving the money every year instead of taking just $450 million lump and abandoning the rest for the company.

[gracreavix]

For me, it depends on the individual. What if the installation plan is to protect himself from spending all the money at once. Could be the person has a bad spending habit. Your own angle OP is correct because it serves your need. Others may think differently.
But on a serious note, trusting a company to pay installments plan for decades. Hope the system last good that long. Inflation might eat up the money. But 20 million dollars every year is no small money.

[Jegileman]

With such offer, what first came to my mind is if I’m going for lump sum, which investment can I go into that can give me a very good return on investment with minimal risk? Without thinking of getting any, then I’ll settle for instalment payment because that itself is already an investment that I’ll be receiving in the next 29 years.

The only problem with settling for this option even though it is also a great one is that inflation would continue to reduce the value of the money overtime and may not be as worthy as the amount is now before they finish paying it all. Also in the next 29 years, will they still be existing? This is another thought to think of. The two options are great but I’ll settle for the instalment payment if I don’t have a good investment to invest into if I want to lump sum.

[SuperBitMan]

If you collect the $450 million at once, believe me you are going to spend it on unnecessary things without you even knowing.
Money has control over human especially when you have not seen that kind of money before.
And again, if you collect that huge amount of money, all your family members will depend on you for support and when you start thinking about helping all your family members, the money will be reducing and if you’re not careful, you may end up not doing anything good for yourself.

The best is to collect the money little by little, that way your family members will not disturb you too much, and you will think of a better thing to do when you receive it little by little in order to grow it more.
The money will not control you that much if it is given to you little by little.

[BALIK]

A man in Illinois won a $1.04 billion jackpot a few days ago, now he has to choose how he would receive his money.

After reading your post I was also curious about winner. So I did a little research myself to know who won this huge amount of money. Interestingly I got Illinois law allows any winner who win more than $250k to remain completely anonymous. So we may never know who the real winner is.

I think 450 million dollars is a huge amount of money for anyone; even then, no one can enjoy it alone, because it would take many years to spend, especially since I don't think it would end even if I spent it over a few generations. 450 million is a lot of money even after paying tax, so I definitely want to take it as a lump sum.

In fact there are some benefit of opting for installments. You should realize not all people are used to following their own financial discipline. So installment are basically good for those who do not have their own financial discipline and are afraid of going bankrupt if they get huge money at once!

But yes you are right it is much more profitable to keep the power of compounding with lump sum of 450 million than to let the lottery company enjoy the privilege of your huge sum of money for 29 year.

[Merit.s]

Such amount of money will definitely make you spend extravagantly if you take the money at once, because a lot of people will be attracted to you for help and friendship. I don't think, it's safe for me to get the lump sum amount.

I prefer the installmental payment because no one would know that I'm worth $450 million which brings less burden. You can also have enough time to plan what you will use the money for in subsequent years. It like a guarantee that your future is secured unlike, taking the Lump sum.

[len01]

A lump sum payment would be much better for me than receiving the money in installments over 29 years, especially since there’s no guarantee that I’ll even still be alive by then. With a lump sum payment, we could do so many things with the money, especially invest it for our children and our retirement. That would be much better.

There is also a downside to receiving the money in installments. Usually, when someone knows they’re going to keep receiving money for several years, they may not value it as much and may keep spending it on gambling with the mindset of, 'I’ll get more money later anyway if I run out.' That kind of mindset can develop when a gambler suddenly receives a large amount of money.

[Supreme Donvic]

As for me I will collect the $450 million. We are just a visitor in this world, anything can happen at any time and you will leave this world.
I want to enjoy any money I make, so I won't take the money half.
No matter the tax you pay, you will still have good amount of money left with you to start up a very good business that wil give you good return.
The bigger the money, the bigger the investment or the business will be, so I will take the $450 million and start up a very big business for myself and I will also invest in Real estate.

[Pandorak]

For a moment, i considered taking a lump-sum payment of $450 million. With that much money, i could immediately buy everything i’ve ever wanted, no matter what it was. I could also use most of the remainder to invest in Bitcoin, especially since the price is currently discounted.

But after thinking it through, i’d prefer to receive the payment in installments. It’s like a safety net for myself, since i’m new to handling such a large sum, if i were to receive a lump sum payment, i’d never know for sure, the money might run out because i’m too wasteful or i’d blow it all on gambling. If i receive payments in installments, at least when the money i’ve already received runs out, there will still be another payment coming. I’ll learn a lot along the way, which will help me manage the money better, it’s like getting a great opportunity over and over again.

[free-bit.co.in]

I understand that there are too many variables, but if you receive $20 million after tax for 15 years, you have already received more than you would have gotten if you took the lump sum.

I disagree with one part of your calculation.
You assume that the installment will be equal to 34 million each year, maybe you divided 1.04 billion by 30, right?
But in reality, that is not the case. What I understood from the two links you provided, the annuity payments are graduated. That is, they will increase by 5% each year. I calculated myself, and the first year's payment will be about $15.6 million. That is, much less than the average $34 million.

And by the end of the 30th year, it will exceed $64 million.
That means that the winner will receive about $9 million in the first year after taxes. Much less than the $20-21 million you calculated.
So it is a bit hasty to think of top 1% lifestyle in the beginning, although it will definitely be much higher in later years.

[Bluedrem]

If I were given a choice, I would choose the first option because whatever money I can withdraw from there, it will be in cash. But in the second option, although we can get more money, none of us know whether the platform will survive for so long and whether their policies will remain the same for so long. Although if I withdraw money at once, I have to pay a large amount of tax to the government, but I am getting the money in cash, which may be suitable for me. However, if I were given these two options for a stable income, I would choose the second one because then it might be guaranteed.

[Doan9269]

Everything depends on his decision, but I don't think the issue of tax should be a major concerned to him, even though government can as well flag is account for some questionable query he may face, but still yet, I think in situation like this, the best is to see him have alternatives to the payment medium, whereby you can be able to choose to receive his fund in Bitcoin on a non-costodia wallet and that subject who problem, but living the half of the whole money in the hand of the casino sounds ridiculous because policy or management may change and things could get wrong from him being able to claim the remaining fund later.

[Africolo]

A man in Illinois won a $1.04 billion jackpot a few days ago, now he has to choose how he would receive his money.
He could accept a total sum of $450 million at once or receive 30 payments in instalments for the next 29 years.
The lump sum of $450 million sounds nice, but when you consider the taxes, you might be walking home with just over half of that money at the end of the day. I'm not a tax expert, and I don't know the tax regulations of the US or the state, but from my rough reading, you'll have to pay about 40%-42% total in taxes for that amount.

If you receive payment in instalments for 29 years, you would receive about $34 million years. So if you take out a total tax payment of about 40%, you would receive about 20-21 million every year after tax.
So what would you choose if you were the one?
For me, I would choose to receive the payment by instalment. $20 million a year puts me in the top 1% of earners in the world, and I can do whatever investment I want to with that. With a payment like that, I may not even need to touch a penny from the other payments.

The full story here and Here

I think the options are very okay and if I were to be in the man's shoes I will go by the yearly instalments because if all the money is received at once one might run into problems or even squander the money  and this method is actually good for people who can't manage money especially when they win huge amount of money from gambling that they don't struggle to get they tend to spend carelessly.

But the disturbing factor in this instalmental payment is, what if during the process the Man that receives the money dies before he could receive it, how will the scenero look like or who will be receiving the money?, this is a very striking reality on this very situation because if there's no next of kin signed in a document to receive if he dies without receiving then it not a good payment plan as the money will go back to jackpot.

[DanWalker]

It is never that easy. Never. Profits are not so guaranteed,, and you would lose a lot of money trying to invest. You would also spend money on yourself, family and friends. In reality, you won't have over $200 million and still live the kind of life you lived when you were making $40k a year.
But if we are to assume it is that simple and straight foraward as you say, take out 30%- 40% tax fro every profit you make while making your calculations, depending on you live.

Agreed with your 1st part, but when you generate profit by keeping money in US Treasury bonds or investment funds for more than 1 year, it will be considered as long term capital gains. In United States, tax rate for this is max 20%, with maybe a little net investment income tax added.

Even adding Illinois state's 4.95% flat income tax, your total capital gain tax would be closer to 28 to 29% at most. It will never touch your stated 40%! So if you make 7% profit then you will have net return of 5%+ after your tax. It giving you about $14 to $15 million in net cash per year.

[Shadiq]

I would prefer to choose two options considering the situation.

First, talking about the lump sum payment, there are many advantages and I can see only one disadvantage. The advantage is that you can make a lot more money by investing that money, and even protect yourself from inflation by investing in Bitcoin.

The main disadvantage is to control greed, since you won this money from gambling, if you fail to control greed, you will lose that money in just a few days. If you cannot control greed and lose all the money, then you will end up in the same place again. In this case, it would be wise to take the money in installments for 29 years. Even if you lose control of greed, you will have at least 29 years and it may not take more than 4-5 years to correct your mistakes.

If you can control yourself and get out of gambling and get involved in investing, then you can choose a lump sum, if you doubt your ability to control greed, then choose a 29-year installment

[Moreno233]

If I win this amount of money and given these options, I will not forfeit more than I won in order to receive the money in bulk, I will go for annual installments irrespective of the mount that reaches me after tax. This will enable me to invest the money separately and appropriately. If the first installment is mismanaged, I will correct that in subsequent payments and keep making improvements until the funds are carefully invested and prepared for my children even though I will still enjoy it while I live.

[Iranus]

But if we are to assume it is that simple and straight foraward as you say, take out 30%- 40% tax fro every profit you make while making your calculations, depending on you live.

Even adding Illinois state's 4.95% flat income tax, your total capital gain tax would be closer to 28 to 29% at most. It will never touch your stated 40%! So if you make 7% profit then you will have net return of 5%+ after your tax. It giving you about $14 to $15 million in net cash per year.

Is the annuity tax deductible?

You are playing tax gamble on lump sums. But if you choose annuity then your ordinary income tax rate will still apply on $34 million installments per year!
afaik, the highest federal tax bracket on ordinary income each year is 37% and state tax is another 5%? So, exactly 42% tax deducted from the annuity installment will give you just $20 million each year, right?

So if your annuity income is $20 million after tax, and your lump sum in bonds gives you $15 million in after tax net passive income, which is wiser?