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Lottery Payout Options — Annuity or Lump Sum?

Stan Haithcock
June 30, 2024
Lottery Payout Options — Annuity or Lump Sum?

Hi there. Stan The Annuity Man, America's annuity agent licensed in all 50 states. Today's topic is lottery payout options. Do you take the lump sum, or do you take the annuity payment? Now, I'm going to cover that in a couple of ways, as only Stan The Annuity Man can. I'm going to talk about those people out there who won the lottery, the Powerball, some lottery scratch-off, or something like that in your specific state. And then I'm going to talk about people out there who aren't aware that they've won life's lottery, which means they've worked forever, 20, 30 years. You've accumulated this money. What do you do with that money? How do you create that payout? Or what do you do with that lump sum? We're going to cover all of that today.

‌Winning the Lottery

‌Let's talk about lottery winners. Now, most states have lotteries. I don't know that stat. But I live part-time in Florida, and Florida has had a lottery for a long, long time. One of the sad things about lottery winners is that many of them blow through the money. You have the option of taking that lump sum, whatever the taxes are. They give you the lump sum. You can buy the Bentley, the Lamborghini, the Learjet, and all that stuff, or you can take the payments. Typically, the payments are offered through a life insurance company that has a deal with the state. Normally, it's one of the large ones. And then you get payments for the rest of your life. I don't know the stats, but I do know this. Most people who get the lump sum blow through it over at least one, two, or three generations.

‌That's the sad reality of people who win the lottery. They live a really good life. It's like some of these athletes that you see who blow through their money. If they had just bought an annuity payment, they wouldn't have blown through all the money. But I guess they lived very well during those three years. I would tell you that if you're reading this video and you've won a lottery from your state, please take the payments. I beg you to please take the payments. Why? Because it's handcuffing yourself contractually so you don't blow through all the money. That's the great part of that. And you might say, "Well, wait a minute. I'll take the lump sum and give my master of the universe financial planner the money. They're going to manage the money. I know this guy over here, and we're going to invest in a restaurant. I know this guy over here, and we're going to invest in this business."

‌No, no, no, no, no. When you win the lottery, literally from your state, take the payments. I know all the masters of the universe out there that manage money, that want to manage that money and charge a fee for that, are going, "Shut up, Stan. Shut your mouth, Stan." Listen to me. When you win the lottery, have the payments continue for the rest of your life, or set it up so that your family will also benefit from that. Are we clear, lottery winners out there? First of all, congratulations. But as they say in the golf world, there are no mulligans. You can't make a mistake here. Take the payments. Take the contractually guaranteed income. Please. I am begging you. Now, let's talk about the other side of that ledger: those out there who have won life's lottery.

‌Life's Lottery

‌Life's lottery is very, very hard. How do you win life's lottery? You scrimp, you save, you put money away. You invest the money, and it grows. You work, you contribute to your 401K. You establish an IRA or maybe a Roth IRA as well. And then you get to retirement and have this lump sum, life's lottery. What are you going to do with that? In my opinion, it is the second chapter of your life. Chapter two should be about you. Chapter two should be about you. Altogether now. Chapter two should be about you. Right? Right. And what does that mean? You have no mulligans. You can't put the ball back on the tee and hit it again after you hit it in the lake. You need to set up a lifetime income stream. That's not some annuity sales pitch. However, annuities as a category are the only product type in the financial world that will pay you as long as you are breathing.

‌And you might say, "Well, I'm not going to do that with all the money." I'm not going to let you do that with all the money because the annuity industry doesn't want you to do that with all your money. But at least a portion of the money, at least that income floor. That amount that you need to live on every month that pays the heat and water bill and go on vacation, buy the new car, and all that stuff should be an annuity type payment. Now you're saying to me, "Wait a minute. I hate all annuities. I hate them, Stan." Wait a minute, you already own an annuity. It's called Social Security. If you have a Social Security number and you're getting a Social Security payment, or you're planning on getting that Social Security payment, that is the best inflation lifetime income annuity on the planet.

‌Lovingly Handcuffing

‌Whether you won the lottery, literally, or you won life's lottery, you need to look at establishing lifetime income payments. Lovingly handcuff yourself. Lovingly handcuff you and your beneficiaries for a contractual income stream. Why wouldn't you do that? Don't blow through the money, period. You can structure annuity lifetime income payments so that 100% of any unused money, whether you win the lottery or life's lottery, you can structure it so that 100% of the money will go to your family or your beneficiaries. And the evil annuity company will never keep a penny. Let me repeat it because a lot of people go, "I'd never buy an annuity, Stan. Because when I die, the annuity company keeps the money. That ain't a good deal, Stan. I'm telling you right now." Okay, we don't do that unless you put a gun to our head and sign paperwork that says, "I want an annuity that when I die goes poof."

‌98% of the people who are clients of the annuity man do not do that. They structure it so that as long as you're breathing and, on a respirator, that will pay. But when you die, all of the money that's left in that account will go 100% to the beneficiary. Sounds good? Of course it sounds good. You're transferring the risk to the life insurance company that issues the annuity to pay that lifetime income stream. And they're on the hook. They're on the hook contractually to pay. But they are also contractually obligated for any of that money when we structure it correctly, that it goes to your beneficiaries.

‌So, hey, the lottery, baby. Your life's a lottery. The day-to-day is a lottery. But if you won the lottery, take the payments. If you won life's lottery, create the payments. To quote Jack Nicholson from the movie with Tom Cruise. He's on the thing, "Am I being crystal clear? Yes, I'm being crystal clear." Hopefully, I've been crystal clear on lottery winners. Do you take the lump sum, or do you take the payment? "Take the payment," as Joe Biden might whisper to you. See you next time. My name is Stan The Annuity Man.

Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.

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