# Any large lottery winners that didn't squander their winnings? **URL:** \ **Category:** Factual Questions\ **Created:** [April 27, 2012, 4:19pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142 "2012-04-27T16:19:24Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [October 25, 2018, 7:06pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/41 "2018-10-25T19:06:15Z")
> [@Ruken](#): > > With the annuity, you’re paying income tax on the investment returns. If you invest it yourself, you can be paying a lower capital gains rate. ??? Yes, you are but you of course pay income tax on the Full amount. Also of course, if you take the full amount, in many states you only get half. ---
**Author:** ![Hari\_Seldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hari_seldon/32/5173_2.png) [@Hari\_Seldon](https://boards.straightdope.com/u/Hari_Seldon)\ **Post date:** [October 25, 2018, 7:19pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/42 "2018-10-25T19:19:32Z")
I don’t think the top tax rate is going to stay at 37%, not with the giant deficits the US is running. When the pendulum swings and an FDR comes in the top rate could well go over 50%. ---
**Author:** ![Pantastic](https://avatars.discourse-cdn.com/v4/letter/p/3bc359/32.png) [@Pantastic](https://boards.straightdope.com/u/Pantastic)\ **Post date:** [October 25, 2018, 8:09pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/43 "2018-10-25T20:09:40Z")
> [@hajario](#): > > No. It takes the $504M and invests it. No, that’s not how it works. If you take the annuity, the fund doesn’t pay income tax on the winnings, it invests the whole amount to make the future payouts, and you pay income tax only when you receive the annuity payments. If you take lump sum, you have to pay income on the lump some and only then can you invest it. ---
**Author:** ![Czarcasm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/czarcasm/32/4050_2.png) [@Czarcasm](https://boards.straightdope.com/u/Czarcasm)\ **Post date:** [October 25, 2018, 8:23pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/44 "2018-10-25T20:23:55Z")
> [@DrDeth](#): > > ??? > > Yes, you are but you of course pay income tax on the Full amount. > > Also of course, if you take the full amount, in many states you only get half. Which states would that be? ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [October 25, 2018, 8:36pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/45 "2018-10-25T20:36:57Z")
> [@Czarcasm](#): > > Which states would that be? California for one. IIRC there are several others. ---
**Author:** ![Czarcasm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/czarcasm/32/4050_2.png) [@Czarcasm](https://boards.straightdope.com/u/Czarcasm)\ **Post date:** [October 25, 2018, 8:40pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/46 "2018-10-25T20:40:32Z")
> [@DrDeth](#): > > California for one. IIRC there are several others. California has a state tax on lottery prizes? ---
**Author:** ![Czarcasm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/czarcasm/32/4050_2.png) [@Czarcasm](https://boards.straightdope.com/u/Czarcasm)\ **Post date:** [October 25, 2018, 8:43pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/47 "2018-10-25T20:43:01Z")
[Lottery jackpot analysis](https://www.usamega.com/powerball-jackpot.asp), state by state, for both Power Ball and Mega Millions. ---
**Author:** ![Jackmannii](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jackmannii/32/311_2.png) [@Jackmannii](https://boards.straightdope.com/u/Jackmannii)\ **Post date:** [October 25, 2018, 8:45pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/48 "2018-10-25T20:45:23Z")
Don’t all annuity recipients win up paying a company to get money sooner, in exchange for a share of the swag? You get that impression from TV ads. 🙂 The failed-lottery-winner meme makes about as much sense as the one dictating that child prodigies are doomed to become miserable failures. It seems that being a child genius more often than not [translates into a successful career](https://www.saturdayeveningpost.com/2016/07/fate-child-prodigies/). ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [October 25, 2018, 9:17pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/49 "2018-10-25T21:17:21Z")
> [@Czarcasm](#): > > California has a state tax on lottery prizes? No. But let us say the prize is 100Million. You can either get half as a lump sum, or the entire amount over 26 years. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [October 25, 2018, 9:20pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/50 "2018-10-25T21:20:41Z")
> [@Czarcasm](#): > > [Lottery jackpot analysis](https://www.usamega.com/powerball-jackpot.asp), state by state, for both Power Ball and Mega Millions. Just as your cite shows, many states “\* if you take the full amount, in many states you only get half.”\* Of course Federal Income tax is always paid, some states have a state tax. ---
**Author:** ![Czarcasm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/czarcasm/32/4050_2.png) [@Czarcasm](https://boards.straightdope.com/u/Czarcasm)\ **Post date:** [October 25, 2018, 9:23pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/51 "2018-10-25T21:23:01Z")
> [@DrDeth](#): > > No. But let us say the prize is 100Million. > > You can either get half as a lump sum, or the entire amount over 26 years. What does that have to do with California? ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [October 25, 2018, 9:25pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/52 "2018-10-25T21:25:45Z")
> [@Czarcasm](#): > > What does that have to do with California? Jesuschristonapogostick. Look, just as you cite shows, in CA, as well as many other, if you take the lump sum, you get less. In CA, their own Lotteries you get half if lump sum or the full amount taken over time. Didnt you read your own cite? ---
**Author:** ![Czarcasm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/czarcasm/32/4050_2.png) [@Czarcasm](https://boards.straightdope.com/u/Czarcasm)\ **Post date:** [October 25, 2018, 9:28pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/53 "2018-10-25T21:28:48Z")
> [@DrDeth](#): > > Jesuschristonapogostick. > > Look, just as you cite shows, in CA, as well as many other, if you take the lump sum, you get less. In CA, their own Lotteries you get half if lump sum or the full amount taken over time. Didnt you read your own cite? My site shows that California doesn’t take _any_ of the lottery winnings-if half is taken, it is taken by the feds. ---
**Author:** ![rat\_avatar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rat_avatar/32/255_2.png) [@rat\_avatar](https://boards.straightdope.com/u/rat_avatar)\ **Post date:** [October 25, 2018, 9:37pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/54 "2018-10-25T21:37:03Z")
> [@DrDeth](#): > > Sure, but the lump sum can be stolen from you in a variety of ways. Conning you, holding a gun to your head until you wire it over, hacking your accounts, etc. And you are a BIG target. > > But altho certainly one payment of the annuity can be stolen that way, it would be REAL hard to do it 30 times. > > And 81 is pretty likely today and wouldn’t you like to have some cash in the sunset years? With the full payout you would be a Ultra-high net-worth individual or UHNWI. While security concerns are there, entire banking divisions and security firms exist to prevent a simple complete theft. UNHWI with around half a billion would have the full force of Morgan Stanley or UBI backing them up if they were the investing type. Sure fraud and kidnapping are still concerns, but you aren’t going to lose everything for having an online checking account password compromised. You have whole sections of these companies with individuals working to make you happy; which simply do not exist in the lower products available to most mortals. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [October 25, 2018, 9:41pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/55 "2018-10-25T21:41:11Z")
> [@Czarcasm](#): > > My site shows that California doesn’t take _any_ of the lottery winnings-if half is taken, it is taken by the feds. \*\*No it doesn’t. \*\* Look, sure, the Feds take 24% (or more), but your cite shows if you take the lump sum, you get $428K before taxes **OR** $750K if you take the annuity. Thus, if you win $750K, you either get all 750K over time or get a reduced amount of only $428K if you take the lump sum. Now that’s a multi-state lottery, so the lump sum amount is 57% of the full amount, but in CA, for their own lotteries- it’s 50% of the full amount if you take the lump sum. Can’t you even read your own cite? It is very clear. Take the lump sum, get only 57% of the full amount. Then taxes. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [October 25, 2018, 9:44pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/56 "2018-10-25T21:44:15Z")
> [@rat\_avatar](#): > > With the full payout you would be a Ultra-high net-worth individual or UHNWI. While security concerns are there, entire banking divisions and security firms exist to prevent a simple complete theft. > > UNHWI with around half a billion would have the full force of Morgan Stanley or UBI backing them up if they were the investing type. > > Sure fraud and kidnapping are still concerns, but you aren’t going to lose everything for having an online checking account password compromised. You have whole sections of these companies with individuals working to make you happy; which simply do not exist in the lower products available to most mortals. Yeah, I know this, I am a certified expert in such things. But we’re not always talking about 500 million, sometimes the grand prize is $12Million. Then you move it to several banks, etc, and then of course you’re no longer a "UNHWI "- which I like to call a “high risk client”. And when Morgan Stanley goes belly up, how much do you have? ---
**Author:** ![rat\_avatar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rat_avatar/32/255_2.png) [@rat\_avatar](https://boards.straightdope.com/u/rat_avatar)\ **Post date:** [October 25, 2018, 10:55pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/57 "2018-10-25T22:55:27Z")
> [@DrDeth](#): > > Yeah, I know this, I am a certified expert in such things. But we’re not always talking about 500 million, sometimes the grand prize is $12Million. Then you move it to several banks, etc, and then of course you’re no longer a "UNHWI "- which I like to call a “high risk client”. > And when Morgan Stanley goes belly up, how much do you have? Well if they fail to segregate client assets from firm assets they are commiting fraud and thus you will have a lot of news. But if they aren’t sweeping checkable deposits funds into money market deposit accounts you had best switch banks with that much money. But yes, you have to diversify because FDIC isn’t going to cut it. But as a certified expert in such thing you probably realize that even if you don’t play the “bad at math tax” and Morgan Stanley goes belly up a lot of people will be suffering. And those people don’t have access to the best agents and products or even enough assets to diversify and recover from. This major investment bank problem isn’t unique to lottery winners but going bankrupt by borrowing against future annuity payments is and is far more likely. ---
**Author:** ![drachillix](https://avatars.discourse-cdn.com/v4/letter/d/48db29/32.png) [@drachillix](https://boards.straightdope.com/u/drachillix)\ **Post date:** [October 25, 2018, 11:29pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/58 "2018-10-25T23:29:43Z")
> [@commasense](#): > > What, no blow? I think the 20 year old hooker covers at least one definition of that. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [October 25, 2018, 11:46pm UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/59 "2018-10-25T23:46:09Z")
> [@DrDeth](#): > > ??? > > Yes, you are but you of course pay income tax on the Full amount. > > Also of course, if you take the full amount, in many states you only get half. What do you mean by “full amount”? You have two options, cash or annuity. The nominal value of the cash option is lower, but there can be tax advantages that should be factored in comparing the net present value of the two options. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [October 26, 2018, 12:12am UTC](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142/60 "2018-10-26T00:12:39Z")
> [@Ruken](#): > > What do you mean by “full amount”? You have two options, cash or annuity. The nominal value of the cash option is lower, but there can be tax advantages that should be factored in comparing the net present value of the two options. When you win the Lottery, they announce a amount. Or when they talk about the big prize. Let us say, $100 Million. If you actually win, you get either the cash value of $57 million, \*or \*the _full amount_ ($100 Million), over time. Indeed, there can be many advantages taking it either way. [Previous page](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142.md?page=2) [Next page](https://boards.straightdope.com/t/any-large-lottery-winners-that-didnt-squander-their-winnings/620142.md?page=4)