If you are among the few people lucky enough to win the lottery, there are several options when it comes to how you receive your money. You can also change your mind if you decide your current option isn’t meeting your financial needs.

If you chose to receive your lottery or casino jackpot prize via annuity payments, the expert advisors at Peachtree Financial Solutions can help turn your future payments into cash. Our team will present a range of intricate, innovative, and personalized strategies that will put your winnings to the absolute best purpose.

While both the lump sum and annuity approaches guarantee a lottery payout, each option comes with its own distinct drawbacks and advantages. So, which is ultimately better? That is a question that only you and your financial advisor(s) can accurately and faithfully answer.*

In other words, the unique situation in which you find yourself, as well as your particular wants and needs, should be the final arbiter when it comes to deciding between sticking with receiving payments from your annuity or selling future payments for a lump sum payout.

Lump Sum Payouts

Fund accessibility and investments are essential considerations in the “lump sum vs. annuity” debate. Are you in immediate need of money to pay off debts or address immediate bills? Then a lump sum payment may be your only viable option. Additionally, skilled and prudent investors will often opt for a lump sum payout in order to put those assets to work in high-yield areas such as real estate and stocks.

These kinds of investments often generate higher returns than those earned by the accumulation of interest on an annuity. You and your financial advisor can invest and reinvest the funds from your lump sum payout in any number of ways over the years.

Annuity Payment Streams

In contrast, choosing to keep your annuity payments in place allows you to continue or elevate your overall expenditures and standard of living while ensuring that you have a steady stream of income over the next several decades. Annuities also offer winners significant tax benefits and ultimately yield total payments that are far closer to the full, pretax jackpot figure since federal and state governments will tax that payment based on the prevailing rates at the time you won.

However, annuities are quite inflexible. Once you agree to an annuity, you will be unable to change its payout terms to give you increased access to your winnings. If a family emergency or another unexpected problem places you in dire need of immediate funds, you may be able to negotiate the sale of your lottery annuity, but you will likely incur significant financial loss.

The Tax Implications of Your Lottery Payout Options

By providing annual payments over extensive periods of time, the annuity option gives winners the opportunity to both break up and put off the majority of their tax burden. As a winner receives each annuity payment over the years, federal and state governments will tax that payment based on the prevailing rates at the time.

For this reason, people who choose the annuity option for tax purposes are often predicting that future tax rates will be lower than those at the time of their big win. Of course, betting on this reduction in tax rates involves a tremendous amount of uncertainty.

If taxation is your only concern and tax rates are relatively low when you hit the jackpot, you may want to sell your future lottery payments to receive a single lump sum payment. After paying taxes, winners can spend or invest the remaining money in any way that they see fit.

The Flexible Lottery Payout Options of Peachtree Financial Solutions

For lottery winners who opt to receive winnings in the form of an annuity, Peachtree Financial Solutions offers tax deferred options that blend the steady, guaranteed income of annuity with the versatile control of a lump sum payout. These tax deferred options even allow you to decide when and how often your annuity payments occur.

Peachtree Financial Solutions also allows cash prize winners to combine the annuity and lump sum approaches with a customized program that offers the best of both. While state lotteries ask winners to make an “all or nothing” choice, Peachtree Financial can help you sell a percentage of your prize payments to deliver a substantial lump sum immediately to you while still allowing you to receive ongoing, long-term annuity payments.

To learn more about Peachtree Financial Solutions’ uniquely flexible lottery payout options, visit the dedicated Lottery Winnings and Payouts page of the official Peachtree website. You can also contact a friendly and knowledgeable Peachtree representative by calling 1 (800) 370-4063. Let us show you how we can tailor a lottery payout solution to meet your specific needs.

*Peachtree does not provide legal, tax, or financial advice; please consult with appropriate independent professionals for such advice.