Realizing that you’re a lottery winner is a notably exciting time. Your first thoughts may involve what you’ll treat yourself to with the winnings, but there is one thing you should consider first, and that is whether to take the lump-sum amount or opt for a lottery annuity. Here, we’ll explore the differences between the two and the benefits you can expect from choosing an annuity.

Lump Sum vs. Annuity

Most lottery organizations will offer you two options to collect on your lottery winnings: a lump sum or a lottery annuity. The lump-sum option provides you with the cash value of your winnings, minus taxes. You can spend the winnings immediately without having to worry about paying additional taxes on the total amount. This may be a fine option if you want to make high-priced investments right away, such as real estate.

In contrast, a lottery annuity is your winnings invested and paid out to you for 30 years. Many lottery winners who want to gain the most money from their win and ensure that they’ll earn a certain amount of money per year will prefer this option. 

Benefits of Lottery Annuities


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Before deciding to accept a lump sum or annuity, It’s important to understand the benefits of choosing the latter. Here are four of them to consider.

More Money

An annuity will provide you with more money than a lump-sum payout because your money becomes invested and will likely continue to earn a profit. Plus, instead of only earning the cash value of the jackpot, you’ll win the entire amount over your annuity terms.

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Protected Assets

In an ideal world, you’d win the lottery and be able to allocate your funds as you please. While this may be the case, you may also come across individuals who contact you because they need money. An annuity is a way to protect your assets because you’re limited in what you can give and can steer clear of this being an issue.

Make Budgeting Easier

A lump-sum payment may give you a lot of money upfront, but the annuity option will allow you to budget better and keep from overspending. A large lottery winning is a big deal, and you want to make sure you’re using your money wisely. An annuity makes that easier to do.

Provide a Steady Stream of Income

Choosing to have your lottery winnings paid out to you over the next 30 years takes the guesswork out of how much money you’ll earn and provide you with the peace of mind knowing that you have a steady stream of income, even if you stop working after winning. In the event of your passing, your beneficiaries may also continue to collect from your annuity, so, in this way, you are providing for your loved ones.

If you’re one of the lucky few who can call yourself a lottery winner, know that you have options on how to collect your funds. Consulting an expert can help shed light on the best decision for you.