In a world where the odds are never stacked in your favor, winning the lottery ought to be the challenge. But with so many stipulations, fees, and other factors associated with winning the lottery, the challenge is more akin to survival than anything else. Here are the three stages someone goes through win they win the lottery.
The Win
You’ve just learned that you won the Mega Millions lottery! That means you’ll receive an immediate payment followed by 29 annual lottery payments that each increase by 5%. You won’t have to work again and can just live the rest of your life off of your winnings, right? Although such thoughts could be plausible, the next stage quickly sees an end to this euphoria.
The Aftermath
The federal government immediately holds 25% of the winnings and your state will take away 6-9% for tax purposes. Lottery winners may be charged additional administrative fees that can amount to 2-3% per year. In addition, those who make withdrawals within the first five to seven years will face surrender charges up to 7%. With so many fees, the dream of living off your lottery winnings can quickly diminish.
The Answer
There is nothing wrong with the lottery system as long as you don’t mind waiting 30 years to get your winnings while fees continue to eat away at your already diminutive lottery payments. Most of us tend to mind when our money is compromised, which is why selling your annuity may be the best way to come out on top. Several companies specialize in buying annuity payments, turning lottery payments into a lump sum of cash. Those who receive cash for annuity payments may face a final surrender charge of 10%, but otherwise can free their cash from unnecessary payments and put the money where it belongs — in their pockets!