Did you know that when a big lottery is won, there is often more than one way for that prize to be paid out to the player. A lotto jackpot can amount to a huge amount of money, so many lottery draws have the option of either taking the prize as a lump sum, or having it paid it installments. There are reasons to choose either one of these options, but many people decide to take the lump sum and receive all of their prize money at once. The question is, what are the advantages of taking a lump sum prize? Is it better to have payments made in a different way?
Potential Prize Payment Options
If players win a prize playing the lottery, what they do with the money will depend on how much they win. When matching a couple of numbers wins a player a small prize, they might use the money to top up their lottery account and buy more tickets. Players could also withdraw the money from their account - on Lotto247, this requires a minimum of €12.
When winning a larger prize, and especially when landing the jackpot, players will have more options for what to do with their money. Many lotteries offer the option of receiving the prize money as either a lump sum or in regular payments. What's the difference between them and which one should players choose?
There's one major advantage of choosing to have a lotto prize paid out in installments, and that's how it helps players to manage their money. Those who are worried about having a huge amount of money to manage might prefer to have a series of payments so that they are not tempted to spend all of the money at once. Suddenly being rich can be both exciting and frightening - and a lot of winners have made the mistake of spending all their money quickly.
Taking the lump sum can mean receiving less money overall. However, there are benefits to taking a lump sum when winning the lotto too. Firstly, the winner has full control over their money straight away. They can decide what to do with it, and get financial advice to help them work out how to make it last and even grow their funds. With an annuity that gives the winner regular payments, they can't choose when they get their money or how much it is. When choosing a lump sum, the winner knows what they're going to get and when they will receive it. Another benefit is taxes: winners often lose less to taxes when taking a lump sum.
Lump Sum Lottery Winners
Most lottery winners opt to take a lump sum when they win the lottery. To many, it is simply the most attractive option, and the one that makes the most sense to them. Many lotto winners over the years have taken lump sum payments for their lottery wins. One example is the winner of the second largest Mega Millions jackpot ever. They decided to take $878 million in cash, instead of $1.537 billion paid to them over 30 annual payments.