by TheForeverAloneOne
I’ve seen arguments that state allowing the government to invest the money for you for 30 years will return a smaller percentage than if you did it yourself but the counter-argument I’ve seen is that if you let the government do it the starting capital is larger because it isn’t pre-taxed before investment, something that would happen if you did it yourself. Which is the correct answer? Also, if you want to take it to the next level, with the annuity, you get money every year, which you can also invest back into something which would increase your net worth at the end of 30 years. With those taken into consideration, is the cash option still the best option for those who are extremely greedy and want the most they could possibly have after 30 years? If you want to crunch the numbers and do the math, here are the numbers for the next lottery jackpot.
Assuming no state tax:
Cash option (after federal taxes):
$687,724,000
Annuity per year (after federal taxes, per year, listed in order):
1 $18,302,545
2 $19,217,673
3 $20,178,556
4 $21,187,484
5 $22,246,857
6 $23,359,201
7 $24,527,161
8 $25,753,519
9 $27,041,195
10 $28,393,255
11 $29,812,918
12 $31,303,563
13 $32,868,741
14 $34,512,179
15 $36,237,787
16 $38,049,677
17 $39,952,160
18 $41,949,769
19 $44,047,257
20 $46,249,620
21 $48,562,101
22 $50,990,206
23 $53,539,716
24 $56,216,701
25 $59,027,537
26 $61,978,914
27 $65,077,860
28 $68,331,752
29 $71,748,340
30 $75,335,758
Total: $1,216,000,002
So when comparing your final cash option investment after 30 years to the total value of the annuity, you’ll need to factor in how much you’ll have AFTER being taxed again when you “withdraw” from your investment to be a fair comparison to the 1.2 billion dollars.