What Really Happens When You Win the Lottery?


Cash in structured settlement payments

So you’ve won the lottery, and life is just as great and care-free as you’ve always imagined it would be, right?

Actually, this couldn’t be further from the truth — and as any lottery winner will tell you, no matter how big your lottery winnings may be, life can be just as stressful as before.

First, lottery winners have to decide how they’d like to receive their winnings: either all at once in a lottery lump sum payout, or over a long period of time (usually around 25 years) in lottery annuity payments.

The first option allows complete control over your money, although the taxes with this option are astoundingly high. The second annuity settlement option has lower taxes, but the value of the money depreciates over time and the recipient isn’t allowed to retrieve any more of the money than whatever is awarded in regular payments, meaning that he or she relinquishes control over the winnings.

Most people end up choosing annuity settlements, figuring that the payments will be a little bit like paychecks and will support them financially over the years. But as the majority of lottery winners have already discovered, this option gets pretty annoying after a while.

A lot of lottery winners actually end up struggling with debt even more so than before they won. Without experience handling this amount of money before, it’s easy to forget that it won’t last indefinitely — and it’s just as easy to start spending it instead of saving it.

Ultimately, many lottery annuity recipients end up selling lottery payments in exchange for a lump sum of cash, whether because they struggle to pay off debts they have accrued or because they realize that there’s a better way to invest their money — be it in the stock market, in real estate, or just in a university degree.

Winning the lottery is still a pretty exciting thing, and many people do manage their winnings just fine on their own. But for the rest of us, selling lottery payments is a reasonable third option for a payment plan — and it’s often the best option available.

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