When it comes time to payout lottery winnings, you’ll find that the governments and companies that run these lotteries prefer to do things their own way. That isn’t to say that there aren’t some industry standards, though. For example, just about any winnings you earn likely won’t be paid to you in one lump sum. It will instead be transferred to you via piecemeal payments known as “annuity.”
Most annuities are paid out over a long term basis. Two of the most common forms of annuity favored today are the 25-year term, which pays the awarded amount to the winner over the course of a quarter-century, and the “until death” term, which is exactly what it sounds like. Some terms offer to payout the awarded amount every year until a person’s death.
That’s all fine and great, if you’re already financially sound and can afford to budget yourself accordingly. Most people who play the lottery are not typically wealthy individuals, so an annuity payment which is “sliced up” over a long period of time may cause as many headaches as it remedies.
Those looking to immediately better themselves and make important real-world decisions with their winnings may find structured payments to be almost entirely helpless when it comes to making advances. Those looking to purchase a new vehicle, home, put themselves through school, travel, reduce debt, pay off medical bills, or start a business might feel better served by a lump sum payment. The average cost of starting a business is about $30,000, as concluded by a study fielded by the Kauffmann foundation.
In 2010, the cost of a new home was (on average) $272,900, further demonstrating why smaller, piecemeal payments from a settlement or financial award like the lottery may not do you much good right off the bat. It may be prudent in these cases to contact an organization who will payout lottery winnings up front. Essentially, they purchase the terms of your payout from you, and give you access to a huge amount of the money straight away. These companies are okay with waiting ten, twenty, sometimes thirty years or more to receive the full payout, so you don’t have to. Truly, these services are emerging as one of today’s most viable ways to reduce debt, make purchases, and save money for yourself.