Why do most people take the cash option instead of annuity payments after winning the lotto?

Question

Why do most people take the cash option instead of annuity payments after winning the lotto?

Answer 1

Most people want it all want it now.  Some people feel they may not live the 20 years it takes to draw all their payments.  I wonder how many luck winners have blown all that cash and are back to being broke! lol

Answer 2

"Cash option" advantages:

1. You know the value of the dollar today.  You don't know the value of the dollar 20 years from now.  Proper investments can ensure that your lump sum can be worth more than the static payments from the jackpot total.

2. You get killed in a freak accident.  If you take the annuity option,  your spouse, kids, parents, or other family members cannot claim the remainder of the prize money.  It simply "vanishes" into someone elses' pocket who you don't care about.  If you take the cash option, you can will the money to someone who matters to you if you die prematurely since the money is already in your hands.

Answer 3

Hi,

I'm a lottery retailer & from my experience, most lottery players play the lotto because they want "quick money" now...it's that type of mindset...

And from my experience, I think that's why they prefer the cash option over the payment option...

Surprisingly, some older players like to choose the payment option...maybe because it will give them incentive to live longer...

BJ

http://www.LotteryMethod.com

http://www.LotteryDiscussion.com

Answer 4

because there greedy and they want all of it at once no matter how much they will be getting.

Answer 5

The interest paid on the annuity is usually pretty low, like 3.5% annually.  Most lotteries are financed through US Bonds..which are low risk and lower return.  So most people think they can invest the money themselves and get a better return.

*Just to clarify, most lotteries continue paying annuities to the designated beneficiary or the estate of the winner(should the winner die).  The funds do not vanish as was suggested in another answer.