What Should You Do If You Win The Lottery?

If you win the lottery should you take the lump sum or the 26 annual installments? You are lying if you say you have not debated this with someone at some point in your life. Well, here’s the answer from Bankrate:

The lump sum payout is, for most winners, the best choice. You know the tax consequences, you know the lump sum payout and you often have the opportunity to invest the proceeds to earn more than you could with the guaranteed return from the annuity payments.

Good to know. Now we just have to concentrate on the numbers… the numbers…

What lottery winners should do
You won the lottery! Now what? [Bankrate]


Edit Your Comment

  1. If I won the lottery, I would definitely hire some midget butlers. (There is a big difference between midget & dwarf.)


  2. lilyHaze says:

    That’s what most people seem to do anyway. It’s actually scary to see what would happen if I (or anyone close to me) won the lottery. Supposedly winning amplifies whatever weaknesses you already have. Someone who likes a lot of alcohol? Prepare to be an alcoholic. Marriage in trouble? Prepare for divorce. etc. etc.

    A lot of the “mega” winners end up being worse off (whether financially or emotionally).

  3. BK88 says:

    Create an LLC or trust so you have less tax money taken out and keep more for yourself!

  4. bonzombiekitty says:

    If I won the lottery, the breakdown would be something like this:

    1. Pay off all my parent’s debts. They worked their arses off to get me and my siblings to where we are today and so they get priority.

    2. Pay off my debts. I’m not in too much debt right now, just a student loan to pay off.

    3. Buy myself a house. Doesn’t have to be anything overly fancy.

    4. Equal amount of money to my brother and sister. Enough to buy a house or something like that.

    5. An equal amount of money to my extended family on my dad’s side. Aunts and uncles get, say, $20 grand each. Cousins get $10 grand or something like that. Amount depends on the amount of money I won. Caveat to that is the money has to be spent on worthwhile things like paying off mortgages, or being used to pay for school. Haven’t seen my mom’s side of the family in ages, so they don’t get anything.

    6. Maybe a little bit of money to closest friends, they know who they are, to help them pay for school and such.

    7. Rest of the money goes into savings and pretty safe investments. Try to live off the interest. Use free time to do volunteer work or something.

  5. The Bigger Unit says:

    @lilyHaze: At least I could be an alcoholic in style dammit! No more Thunderbird….I’d be able to drink something classy like PBR.

  6. VA_White says:

    My officemate and I spent a lot of time at work calculating how much we’d have to win in order to take the lump sum, invest conservatively, and live comfortably the rest of our days.

    I would have to win a prize of $48 million. After taking the lump-sum payout and deducting taxes, what was left would set me up for life.

    He is not as extravagant as I am and would only need about $30 million.

  7. Pelagius says:

    Up next: What to do if you are hit by lightning while being eaten by a shark.

  8. B says:

    First things first: Change your phone number to keep every yahoo you’ve ever known from calling and asking for money.

  9. leadhyena says:

    “Good to know. Now we just have to concentrate on the numbers… the numbers…”

    Come on, the numbers are easy: 4 8 15 16… *gets hit by flying meteor*.

  10. RandomHookup says:


    Don’t worry. If you win the lottery, your momma’s family will find you real quick.

  11. SadSam says:

    If you win the lottery, some good advice from a professional (not me):
    1) Put the winning ticket in a safe deposit box, do not endorse the ticket.
    2) Don’t tell anyone you have won the lottery (except spouse – who is legally entitled to share in winnings, swear spouse to secrecy).
    3) Hire attorney who is familiar with your state’s lottery laws. Attorney will help you claim winnings on time and with the least amount of publicity.
    4) Create trust or LLC depending on what you plan to do with winnings to avoid taxes.
    5) Hire financial planner/accountant.
    6) Travel to state’s lottery office, endorse ticket with name of trust or LLC. Bring your recently hired attorney with you. Decline, with your attorney’s help, any publicity (no photos with that big check) as publicity often leads to fraud, theft, lots of people trying to get your money.
    7) Invest lump sum in investments that you understand and that meet the appropriate risk level for your age, education, income, etc. Consult with financial planner/accountant.
    8) Continue working until you establish how much money you are earning from your investments.
    9) Make no major purchases for 6 mos. to a year (no new house, new car, etc.) again until you establish how much you are earning from your investments and then treat your yearly investment income as your salary and make purchases and budgeting decisions accordingly – don’t by a 1 million dollar house if you can’t afford the mortgage, tax, insurance, etc. payments on 1/3 of your investment income.

  12. alhypo says:

    If you don’t understand the time-value of money, find someone who does and ask them what you should do. I’m guessing the lottery has fingered it out so you end up with about the same either way, but in general, money you get now is far more valuable than money you get later.

    However, you should probably never go to one of those business that specialize in converting annuities into lump sums. They have to make a profit and that profit will come out of your pocket. Skip the middle-person and deal only with the lottery agency.

    Now I have to wonder what the probability is of a lotto winner ever reading this post or even visiting this website.

  13. Xerloq says:

    @B: Hire a lawyer and accountant. Have them create a trust. Then put them to work fending off the lawsuits…
    @SadSam: Check the agreement you enter into when you play a lottery. Most contain some clause stating that if you play you agree to let them use your name and likeness for promotional purposes if you win.

  14. dvddesign says:

    I’ve thought it through, and it’s probably one of the reasons I’ve very rarely played the lotto.

    People have bad things happen to them when they win the lottery. As someone said earlier, fraud and weaknesses become very dominant.

    There’s a lot of difference between people who earn their fortune and people who come into money. People who earn that money often are able to acclimate their lives to using that money wisely. It’s often why some of the more wealthy people on the planet rarely fall from grace. As evidenced today, Ms. Hilton has suddenly found herself without money, and will soon be without ANY desirable traits.

    That said, my plan followed SadSam’s pretty closely, but with different starts.

    Personally, I’d never gotten to travel much at all, outside of WDW and Vegas a few times. I’d head overseas for about 6 months or so and just chill. I get by on very small amounts right now and I don’t need a lot of money. As soon as my cash was in a good investment portfolio, I’d vanish. My main reason for doing so is that money tends to bring out the worst in people.

    Keeping a low profile, I’d do some traveling, and let my immediate family know what happened. Only a select few friends would find out what I’ve had happen, because word travels fast. I have more than my share of undesireables in my family, and a good lotto win is the last reason I want to have to see them again. I’d probably help out my sister and parents, and probably a good $10,000 gift to many of my friends and family, but that’s about it.

  15. Dickdogfood says:


    I think in most instances #7 is impossible. I believe the New York and New Jersey state lotteries (and I bet most of the others) require that names of winners are made public as a way to ensure the transparency of lottery operations, and assure the public that real live human beings win these things.

  16. rbb says:

    They say money can’t buy happiness, but I’d sure like to give it a try… ;^)

  17. jrdnjstn78 says:

    I’d tell no one. Not even my kids (they are 8 and 11 anyway).
    I’d pay my dad’s debt’s and buy him a brand new car and repair his house for him. Other then that it’s mine. I’m used to have little money and I’d want this to last. I would not buy a million dollar home, the taxes and utilities alone would be crazy.

  18. jchabotte says:

    I’d hioe John Stamos to stand in as me and accept the big novelty check on my behalf for the publicity photo.. meanwhile I’d be in the background posing as one of the state lotto officials.

  19. DeeJayQueue says:

    I figure that even on a crappy interest bank account, you can put like 5 million in there and live off the interest comfortably for the rest of your life. The rest of the money is just whatever you want to do with it. Invest it if you want to, spend it on hookers and blow if you want to, just don’t touch the 5 million and you’ll never have to flip a burger ever again.

  20. DeeJayQueue says:

    incidentally, I’d pay off my debts as well as those of my family, key friends, and significant other, buy a nice modest house and a couple of nice cars, then start a business or 2.

  21. revmatty says:

    30 million? Are you kidding? That’s some fancy lifestyle (assuming a take home of 10 million after lump sum and taxes). I figure if I could take home $4 million I could live a slightly nicer lifestyle than I have now (e.g. get a nice biodiesel station wagon), put my kids through college, and generally do what I want with my time quite easily. This is based on figuring I’d take out 3% annually and the remainder of the growth would be reinvested.

  22. lilyHaze says:

    IF I were to ever win the lottery (really difficult as I don’t even play), I would be like the other posters (pay off immediate family’s debts, buy a house, etc). I actually don’t need a lot of money to accomplish this ($1M after taxes would be more than enough). My parents regularly play the lottery in group pools.

    I’ve never thought about this in detail. But I would love some $ to take time off and travel the world.

  23. theblackdog says:

    Remember that one guy who won one of the highest
    Powerball winnings? I remember that he went all crazy about keeping lots of money around, and he was at some bar, and his SUV got broken into. The thieves made off with almost 500 grand, what an idiot for keeping that much cash around.

    I’d pay off my debts, buy a decent house, pay my parents debts, and help with financial aid for my brothers who are in college. I’d also take the time to do some traveling around the world to visit the places I wanted to see. Beyond that I’d invest some money, but I’d be one of those who would continue to work.

  24. Chaosium says:

    @theblackdog: That guy had a LOT of problems.


  25. LatherRinseRepeat says:

    Definitely take the lump sum. A dollar now will not be worth the same 10, 20, 30 years later. So cash out your winnings and invest it. As long as your investment stays ahead of inflation and cost of living, you should be ok.

    And I have to agree with the other comments about the trust and LLC. I don’t remember what state it was, but someone hit the lottery jackpot. But the winner didn’t come forward right away, and was “missing” for weeks. Finally, the winner came forward. When he was asked why he didn’t claim the jackpot right away, he responded by saying that he was busy with his lawyers completing the paperwork for an LLC.

    So if you hit the lottery, take your time and plan things out.

  26. ivieso says:

    Since some of you put what you would do if you won the lottery, I will put mines:

    1) party
    2) girls
    3) get fat
    4) more girls
    5) go to work on monday
    6) repeat 1-5 again

  27. Wormfather says:

    I dont know if I want to win, this one dude, well, he had a terrace fall while he was on it and then he bought the fast place that he worked at and then a meteor hit it. The bad luck just kept comming and comming, eventually, he plane crash landed on an island and he got stuck. If that wasnt bad enough he fell in love with a girl and she got murdered.

    Now this was a fictional character on LOST, but still, too scary.

  28. zaky says:

    Gawd, you all are humanitarians. I’d buy a yacht.

  29. Snakeophelia says:

    Funny, my mother and I had this conversation just recently – only it was about pensions, not lottery winnings. The outcome was the same, though. She insists (having done this herself) that taking a lump sum from your company when you retire is preferable to a pension paid out monthly, because you can invest that money and get a lot more out of it. I’ll have to choose which to do in about 25 years, and I’m already thinking about it.

    But if you’re someone who can’t manage or save money, then a lump sum of any kind spells disaster.

  30. Grrrrrrr, now with two buns made of bacon. says:

    I would definitely take the lump sum. I’m pretty sure I could invest the lump sum and get a much better rate of return than I could get from the annuity. The real trick would be not to go hog-wild buying toys and thereby depleting the principal. I would definitely have it put into a trust as well.

    I also read somewhere that if you croak, that’s the end of the annuity and if there’s still a payout left, too bad…your loved ones won’t get the rest.

    Not that I’m going to spend too much time worrying about this.

    One thing I wish somebody could explain, however, is why bad things with astronomical odds always seem to happen…you know, like your plane crashes into a mountain, and you’re chased down the mountain by a Yeti..you fall into a stream filled with piranhas, you go over a waterfall and survive but end up dropping onto the deck of a boat that happens to be chartered by 432 bored IRS agents looking for somebody to audit. I could see that happening to me, so why can’t I win the lottery?

  31. FreakyStyley says:

    True story: I was less than an hour away from the $365 million Powerball in Lincoln, NE in 2006. My plan:

    1. House in Nebraska, Vegas, and a penthouse in London.
    2. Skybox at Memorial Stadium in Lincoln
    3. Season tickets to Arsenal soccer in London
    4. One supercar, one daily driver (<$70K)
    5. $1 million to each parent and sibling
    6. One huge party
    7. Invest the rest.

  32. Uriel says:

    If I won the lottery, I’d send my family away…far far away…

  33. Cowboys_fan says:

    Not sure what I’d do, I can only pray for such a dilemma.

  34. Cowboys_fan says:

    I like the lady who won the lottery twice, now in a trailer park, saying how she would do it different if she won again. Sorry, you already got a second chance loser.

  35. Wormfather says:

    I’d go the Shawn Kemp route and start investing in children.


  36. Greasy Thumb Guzik says:

    In Illinois, #6 is difficult as the bastards running the lottery have printed on the back that you agree to their PR machine & photo as a condition of winning.
    1. I would research religions to find out which ones consider photos wrong & tell them I’m of that religion.
    2. Sit on the ticket until a major news story comes up & takes all the local news people away. Go to the lottery office at the last minute that day. They can’t refuse you & there won’t be enough time to get any reporters there. They can’t make you wait for reporters.
    3. Swear constantly!
    Call any reporters every filthy name in the book!
    No TV station will air the audio & without that, there won’t be much coverage
    If they ask what you’re going to do with the money, say you’re going to piss it away as fast as possible in Vegas on gambling & whores!
    4. Go to a good costume shop & get a makeover.
    Guys: Get a full ZZ Top like beard. Girls: Do the same, make like you’re the bearded lady at the circus.
    Back to the serious ideas:
    5. Travel across state to another town & rent a PO Box for the official address. By staying in state, that simplifies the first year’s tax return.
    While the state is required to give out your name & city, they don’t give out your address.
    6. Change your phone number before you go. Turn your old number into a fax only line. But don’t bother to put any paper in the fax. Set the machine to pick up on either zero rings [if possible] or the first ring. Turn off the ringer so you never hear it!
    7. Have your lawyer go to court and file a John Doe lawsuit against the lottery about using your photo or making you answer questions from the media.
    Winning Lotto doesn’t make you a public figure, no matter what the amount!

  37. dotorg greg says:

    being a foul-mouthed pr*ck doesn’t diminish the attention paid to a lottery winner, it only turns him into a bigger jerk constantly seeking a bigger stage.

    Mark Cuban won the lottery, and look what happened to him.

  38. TheSeeker says:

    read this story of the winner of the 8 Million Pound UK Lottey.


    “…As a lottery winner vows to Spend, Spend,Spend, the Mail tracks down the woman who coined that phrase – pools winner Viv Nicholson. Five husbands later, she’s a Jehovah’s Witness living on £87 a week.

    But to those old enough to remember, any mention of her ill-starred intention to “spend, spend, spend” – trumpeted to the world almost half a century ago – will probably bring to mind an extrovert working-class girl who won a fortune on the football pools, only to blow the lot.

    Within just a few years, Viv’s fame and fortune had morphed into tragedy and then penury. Even so, she remains a hubristic symbol of the consumer culture that exploded in the Sixties and has now reached almost every corner of British society.

    And she hasn’t actually changed that much. She still likes what she calls “spiffing clothes” and the £70 bottles of the perfume that she splashes on her neck after her de rigeur two baths a day (“My father used to say I would wash myself away”)…

    …After the win, she ordered dresses from Harrods, bought a pink Chevrolet and then swopped it for a different luxury car every six months. Keith bought a racehorse and the children were sent to boarding school.

    “We travelled all over the States and Europe,” Viv remembers, adding: “I haven’t had a holiday now for five years.”

    She even managed to meet Hollywood star Mae West.

    Of course, the Nicholsons’ life changed in other ways. People used to sit outside the bungalow chanting for money, for example.

    “They said they’d go away if I gave them a tenner,” she says, laughing. “I remember one woman jumping on to my car in the middle of the street and demanding that I pay for her to go home to Italy. It was crazy.”

    And head-spinning. There were problems with old friends, neighbours and even family. Some of those who resented Viv’s good luck and ‘wild’ behaviour resolutely shunned her.

    Her fierce temper didn’t help. “Keith hated it. I used to throw things at him when I lost my rag.”

    About half of the money had gone when Keith was killed at the wheel of his powder-blue Jaguar in 1965, after skidding across the A1 and crashing down an embankment.

    The taxman took most of what was left – “even his watch” – and the widow was eventually reduced to singing Big Spender in a Manchester strip club, though she was fired when she refused to take off her underwear…”

  39. JustAGuy2 says:


    $4MM, are you kidding? Using a secure investment, and after taxes, that’s $130k/year – in NYC, that won’t even let you rent a nice 1-bedroom.

  40. swalve says:

    “Mark Cuban won the lottery, and look what happened to him.”

    No, he worked and built multiple businesses that were wildly successful AND he knew when the top of the market was for those businesses and sold them then.

  41. gvarsub says:

    All you people suggesting to get a lawyer… here’s a better idea: take out the money in 20s and give the money to your friendly local drug dealer for safekeeping. At least this way, you get to keep your shirt.
    Sure not all lawyers are crooks, but quite a few are capable and willing to steal all you got in a perfectly legal way. (unfortunately I learnt this the hard way)

  42. dohtem says:

    @ivieso: Heh, for a minute there I thought you said “fat girls.”

    You don’t need a winning lottery ticket for that. ;)

  43. Rusted says:

    I’d disappear into the woods and hang out with Sasquatch.

  44. sharonlives says:


    Yeah but if you’re making that $130K a year doing nothing, then you don’t have to live in NYC do you? $130K is chump change for NYC, but it’s really a lot of money for most other places.

  45. I’d probably pay off every debt I had along with my parents and granparents’ debts first, then buy a new Mac, and get a trust fund for each of my children, enough to get them through college with a few luxuries. Tithing is important to me, so I’d give 10% to my church, and there’s a certain charitable orginazation that I’ve made it a habit to give 5% to, so that would go there. For the rest I’d hire a money broker. I have a hard time thinking about puttin my money in only one bank, being that the FDIC insures only $100,000 per depositor.

  46. bnosach says:

    @Greasy Thumb Guzik: Looks like you’ve done some research. The most precise strategy I’ve ever read :) Well done. Now only the numbers…

  47. IRSistherootofallevil says:

    Let’s see…..pay for college, grad school, whatever, pay for my sister thru grad school, buy a few condos in Manhattan (maybe I’ll go buy a building), rent them out for like $5k a month or some other absurd amount (I’d pay cash so after property tax and maintenance it’s pure income) and put the rest in a swiss bank account and spend my life buying and selling companies (and real estate).

  48. Havok154 says:

    My goal has been to turn my closet into a fridge with a tall doggie door. I’d then buy a penguin to fetch me soda and beer. Other then that, I’d pay off both my parents and my debt, then invest the rest.

  49. shades_of_blue says:

    I’d take the lump sum and invest it in 12month CDs, depending on the amount awarded after taxes; it could cover my life expenses into the grave, without depreciating the total sum awarded. IE 5% CD, from 2million solid investment = 100k annually Good enough for me to live ‘comfortably’.

    I’m probably thinking too small, with my investment strategy, but it’s still better than blowing the whole wad like most tend to do.

    Is it legal to move a sum that large into an international bank, to avoid interest tax fees? Because that’d be another part of my ‘lottery dream’.

  50. strathmeyer says:

    This should also help (safe besides being on rotten.com): [www.rotten.com]

  51. JustAGuy2 says:


    Except for taxes. After tax, it’s $70k/month.

  52. bhweller says:

    I understand the time value of money, but taking the lump sum is the real problem for most people. Sure you could theoretically make more if you take the lump sum and invest. THEORETICALLY is the key word here. 99% of people do not have the self discipline, emotional stability, or expertise to do this.

    If you hire lawyers and planners they will not/cannot stop you from blowing your money or having it stolen from you. The lawyers and planners might even scam you themselves. Even if you get perfect advice, you still must follow that advice for the rest of your life without fail, which is practically impossible for the average person.

    If you take the annuity and never cash it in, the worst that can happen to you financially is that you get yourself into some short term trouble. The main thing is that nobody should have any chance of totally cleaning you out. If you take a lump sum, you accept the chance that you could be totally ruined by some unforeseen event or your own weaknesses.

    I won a bunch of money playing poker and it only took about 1 1/2 yrs for it to be sucked out of me by corrupt people that I trusted so I know what I am saying here.

    What is better:
    1. $30 million now, a chance of going totally broke, and a chance of having $50 million in 10 years. Also you must work and worry to keep your investments good for the rest of your life.
    2. $1 million per year allowance for 30 years, which for the average person is the rest of their natural life.

    Don’t forget that you can live on less than your annual allowance and still do some investing if you choose.

    I would live on the allowance and travel the world until I got good and tired of it. Then I would focus on small business investing, funding small scientific research groups, and charity.