jackpot

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So we do all realize that advertised jackpots are annuitized amounts and that the vast majority take the net present value lump sum, which is usually about half the advertised amount, right?
Winner probably got about six hundred million, of which roughly forty percent was taken for taxes give or take state income tax rates.
- Not being from the US I didn’t know that. That takes something from being completely unreasonable to be understandable.
  I can’t believe some fake rich guy on the internet lied to us!
  Still, if they’re not idiots the winner doesn’t have to work again so they’re still good.
  
  That takes something from being completely unreasonable to be understandable.
  Why would taxing a gross income of above a billion US$ by ~66% be "completely unreasonable"? Imo taxes for such incomes should generally be higher if anything.
  
  You can take a lump sum payout or get it paid to you over 20 years. The lump sum is usually around 60% as the other poster said.
- I did not know advertised jackpots were annuitized. Thanks!
- I was with you till the last paragraph. The numbers are already there for you, so I don't know where 6 hundred million came from.
  
  The $1.28 billion is if you take monthly payments over a term of twenty or thirty years.
  Very few people do that.
  Instead, they take an up front lump sum payment.
  That up front payment is the amount the lottery commission would put into interest bearing bonds to pay out over time, getting to the $1.28 billion.
  The lump sum payment is usually about half the amount you would receive if you took payments over time. If this doesn't make sense, it's a tangential discussion on the time value of money and its net present value.
  I got six hundred million by cutting $1.2 billion in half since this is casual Internet discourse, and I consider very rough cocktail napkin math for illustrative purposes to be perfectly acceptable.
  
  Damn I think I would take the monthly payments. I wouldn't complain about ~$3m a month for 30 years. Whatever problems you have that money would resolve would probably be resolved in the first month.
  
  But you didn't need to do back-of-napkin math, at all. He got $433.7 million.
  
  The 433.7 million is after paying taxes on the lump sum.
  Nominal Jackpot: 1.2B
  Lump sum: 600 M
  Taxes on lump sum: 167M
  Post-tax winnings: 433.7M
  
  My point was that the IRS didn't take the eight hundred million stated, but probably closer to two hundred million.
  But we all love to get angry about anything and everything, especially when we think we've scored Internet gotcha points, so enjoy.

38 comments