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There's a pretty good argument for taking the annuity here: http://www.nytimes.com/2016/01/13/u...column-region®ion=top-news&WT.nav=top-news
Sure there is a strong argument to take the annuity for tax purposes. But if you are going to make $460 million after taxes with the lump sum, do you really care? It is more money than you will ever spend.
My biggest fear is that if you take the annuity is the money protected?
What if 15-20 years from now the U.S. government goes bankrupt or there is another Great Depression? Will that money go away?
What if the federal income tax rate skyrockets to 60-70% for the highest tax bracket in ten years?
The government will invest them in US bonds and those could be worthless in an economic disaster. If you have all the money, you would have probably parked the money off shore if there was pending doom with the U.S. economy.
Also, the U.S. bonds will lose some of their value if the interest rates rise significantly.
And don't forget that Illinois has already put a moratorium on paying out lottery winnings over a certain amount because of their economic crisis. What happens if you show up to get your year's annuity payment and they tell you that they are not paying out any money until they get their own house in order and tells you to come back in a few years?
I can buy several nice houses, a yacht, tons of cars, etc. and invest the rest and live like a king for the rest of my life with the cash out.
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