Annuity vs Lump Sum Calculator

Compare lottery payout options and see which is better for you

Formula:Compare: Annuity Total vs Lump Sum + Investment Growth

Jackpot Details

Enter your lottery winnings scenario

$
%
%
%
%

Payout Comparison

30-year comparison

Recommendation
Take the Lump Sum
Difference: $14,612,454 (72.4%)

Annuity Option

Gross Total:$100,000,000
After Tax Total:$58,000,000
Payment Period:30 years
First Payment (est):$872,983/yr

Lump Sum Option

Gross Amount:$60,000,000
After Tax:$34,800,000
If Invested (30yr):$264,906,475
Receive:Immediately

Total Tax (Lump)

$25,200,000

Effective Tax Rate

42.0%

Investment Growth

$230,106,475

Annuity Years

30 years

Important: This is a simplified comparison. Consult with a financial advisor and tax professional before making this irreversible decision. Consider your spending habits, age, health, and investment experience.

Example Scenarios

Quick-start with common scenarios

Quick Answer

The lump sum is typically 50-60% of the advertised jackpot. For a $100M jackpot: Lump sum = ~$60M gross, ~$38M after 37% federal tax. Annuity = 30 payments over 29 years, ~$63M total after tax. If you can invest at 7%+, lump sum usually wins. If you might overspend, annuity protects you from yourself.

Key Facts

  • Lump sum is typically 50-60% of advertised jackpot
  • Annuity is paid over 29 years (30 payments) for Powerball/Mega Millions
  • Annuity payments increase ~5% annually to keep pace with inflation
  • Federal tax withholds 24%, but top bracket is 37%
  • 9 states have no income tax on lottery winnings
  • Lump sum allows immediate investment but requires discipline
  • Annuity provides guaranteed income but isn't inflation-adjusted enough
  • 70%+ of lottery winners take the lump sum

FAQ

Should I take the lump sum or annuity?

It depends on your financial discipline and investment knowledge. The lump sum is mathematically better if you can earn >5% returns annually. However, many winners go broke because they spend too quickly. The annuity acts as forced savings and protects against poor decisions.

Why is the lump sum so much less than the advertised jackpot?

The advertised jackpot is the total of 30 annual payments. The lump sum is the present value of that money - what the lottery actually has on hand. The annuity amount includes 29 years of investment returns that the lottery earns.

How much will I actually receive after taxes?

For a $100M jackpot with 60% lump sum option: Gross lump sum = $60M. Federal tax (37%) = $22.2M. State tax (varies, ~5%) = $3M. Net = ~$34.8M. Annuity taxes are paid annually on each payment.

Can I change my mind after choosing?

No. Once you select lump sum or annuity, the decision is final and irrevocable. You cannot switch later. Take time to consult with financial advisors and tax professionals before claiming.

What happens to annuity payments if I die?

Annuity payments continue to your estate or designated beneficiaries. They can be inherited but cannot be accelerated to a lump sum. Some states allow selling future payments to a third party at a discount.