It finally happened.
You picked out the winning scratch-off ticket, or your lucky numbers showed up, and you won! Your life is about to change, and all of your dreams are going to come true, right? Well, that could be the case, but it’s not a guarantee.
After all, around 70% of lottery winners end up bankrupt within just a few years.
You can prevent that from happening to you by understanding your options for lottery payments, so you make the right choice for yourself and your family.
Keep reading to learn about the different lottery payout options so you can prepare, even if winning the lottery is still just a daydream for now.
Your first option for how to collect a lottery payment is to take the lump-sum option. Essentially, this means you’ll get a one-time payout for the amount you win (minus federal taxes, of course!). This is an attractive option because you’ll get all your money upfront, so you can start enjoying it.
However, taking the lump sum payment can be a bit of a double-edged sword. If you don’t have the self-control to prevent you from spending it too quickly, you can end up like the 70% of people we mentioned above.
If you do choose the lump sum option, make sure you work with a financial advisor for guidance. They can help you invest some of the money so that over time, you’ll make even more money while still having the freedom to enjoy your earnings.
Your other option is to select the annuity payments option. This means you’ll get a consistent, regular source of income, receiving your lottery winnings over the course of 30 years.
Many people like this option because it provides stability. You’ll know exactly how much money you get in each payout and when you’ll receive it.
However, one downside to annuity payments is that it prevents you from making larger investments. Also, the payout amount is set in stone. This means that if you need more money because of an emergency financial situation, you’re out of luck.
Additionally, if you die before the 30-year payout period ends, then you won’t end up getting all of your winnings.
If you do choose the annuity option and need additional cash fast, however, visit a site like https://www.rightwayfunding.com/lottery-payments to learn more about your options.
What to Consider When Making Your Decision
So, how do you decide which option is right for you? Start by thinking about what means more to you: the ability to make more money from your winnings or the stability of ongoing payments.
Don’t forget to think about taxes. When you choose the lump sum, you’re taxed at the current rate. Annuity payments, however, are taxed at the rate during when you receive the payment.
This is beneficial if rates go down but could hurt you if rates increase.
No matter which option you choose, it’s best to work with a financial advisor. They’ll help you make the best decisions to maximize your winnings.
Make the Right Choice About Lottery Payments
Now that you know more about your options for lottery payments, you’ll feel more prepared for when your numbers finally get called. Until then, spend some time daydreaming about which choice you’d make and how you’d plan to enjoy your windfall.
For more lifestyle advice like this, browse through our other articles before you go!