Dear Powerball Winner: Ignore the Upshot and Take the Lump Sum
policytensor.substack.com
The Upshot’s advice to the Powerball winner is to forgo the lump sum and take the annuity. The lump sum payout is $930 million before taxes, while the certain annuity pays you (or to your estate if you die) $22.6 million every year for the next 30 years. That is equivalent to holding an ultra-safe asset with an annualized investment return of 2.843%. That’s around the yield on a 30-year US government bond, so it’s not bad given the tax advantages. The latter is one reason Josh Barro of the Upshot offers in support of the annuity; the other being to protect yourself from yourself. Now, if you are confident that you can control your urge to spend it all away and you are not utterly obsessed with capital preservation, I will show how you can do much, much, much better.
Dear Powerball Winner: Ignore the Upshot and Take the Lump Sum
Dear Powerball Winner: Ignore the Upshot and…
Dear Powerball Winner: Ignore the Upshot and Take the Lump Sum
The Upshot’s advice to the Powerball winner is to forgo the lump sum and take the annuity. The lump sum payout is $930 million before taxes, while the certain annuity pays you (or to your estate if you die) $22.6 million every year for the next 30 years. That is equivalent to holding an ultra-safe asset with an annualized investment return of 2.843%. That’s around the yield on a 30-year US government bond, so it’s not bad given the tax advantages. The latter is one reason Josh Barro of the Upshot offers in support of the annuity; the other being to protect yourself from yourself. Now, if you are confident that you can control your urge to spend it all away and you are not utterly obsessed with capital preservation, I will show how you can do much, much, much better.