Lottery Annuity Calculator
Compare the lump sum cash option versus annuity payments for any lottery jackpot. This calculator shows the after-tax value of both options and what the lump sum could grow to if invested over 30 years.
Every big lottery winner faces the same choice: take a smaller amount right now or receive the full jackpot spread over 30 years. The lump sum is typically about 60% of the advertised jackpot because the advertised number represents the total of all future annuity payments, which includes interest earned over time.
Consider a $500 million jackpot. The lump sum would be about $300 million. After 37% federal tax and 5% state tax, you take home roughly $174 million. With the annuity, you receive about $16.67 million per year for 30 years, and after taxes each payment nets about $9.67 million, totaling $290 million over three decades.
The annuity looks like $116 million more. But there is a catch: money today is worth more than money in the future because you can invest it. If you invest the $174 million lump sum at 7% annually, after 30 years it would grow to about $1.32 billion, far exceeding the $290 million annuity total.
Of course, earning a consistent 7% return requires discipline and good investment strategy. The annuity provides a guaranteed income stream regardless of market conditions. For someone who might spend or lose a massive windfall, the annuity acts as built-in protection.