Cash vs Annuity Payout
When you win a Mega Millions jackpot, you have the choice to receive your winnings as an annuity over 29 years or as a reduced cash lump sum. With the annuity, each annual payment is 5% bigger than the previous one. If you opt for the cash payout, you receive your winnings in one immediate payment, although it is lower than the advertised total, as it reflects the money available at the time when the jackpot is won. Although the cash payout has been more popular with Mega Millions jackpot winners over the years, the decision is entirely yours.
Here are some advantages of both options:
Mega Millions Cash Payout
- You receive your winnings immediately and have more control of your money. This means that you can spend the winnings on bigger purchases such as a new house, a car or even a boat, without having to save up for a few years or seeking credit.
- Depending on your personal circumstances, health and age, choosing the annuity payout may not be the best option. The cash payout allows you to use the money when and where you want, meaning that you can enjoy the winnings while you can.
- Some professionals say you can earn a higher return than the annuity by investing the cash lump sum. However, this involves a great deal of risk compared with the annuity, which is guaranteed by the lottery. You should consult a financial professional for more information.
Mega Millions Annuity Payout
- Payments are spread out. The first payment is immediate, and the rest of the winnings are paid out over 29 years. This may suit some jackpot winners, as it can help you manage your money better and ensures a steady stream of income.
- You take home a larger amount of money than if you chose the cash payout option.
- Having the winnings paid in installments can reduce the amount that you are subject to pay in taxes. This will depend on your winnings, as you may not be placed in the top tax bracket. You can learn more about Mega Millions Taxes on the dedicated page.
- If the winner of a Mega Millions jackpot dies before receiving the full prize, the remaining annuity payments can be passed on to relatives or an appointed beneficiary.
Winning a Mega Millions jackpot can transform your life and choosing between the cash and annuity payout is a big decision. In general, jackpot winners have 60 days from either the drawing or claim date to decide whether they want to choose the cash or annuity option, depending on the state in which they played. In Texas, players must select at the time of purchasing a ticket how they would like to be paid if they win the jackpot. It is recommended that you consult a financial expert if you win the top prize.
If you would like to learn more about prizes, have a look at the rewards on offer on the Mega Millions Prizes page.