We got an interesting email this week that raises a question I’ll bet lots of people have asked through the years. So here’s the question and our answer to it in case you’ve wondered the same thing.
A man named Dave from north-central Iowa sent us this email:
“Was just wondering what percentage of people take their Powerball jackpots in one lump-sum or 30-year payouts? You lose so much of the money by taking the lump sum (although I’m sure the government likes it that way, that way they get the money quicker and can blow it)! To me, the 30-year payout would be the best pension there is!”
You know, back when Powerball® started in 1992, the only option for claiming a jackpot prize was to take annuitized payments over time. But lotteries heard from players over time who said they’d prefer to also have a lump-sum payment option, too, and that was added to the game in November 1997. Our Mega Millions® game also offers both the cash and annuity options for those who claim jackpots in it.
Through the years, more and more jackpot winners have chosen the lump-sum option. The vast majority of winners choose that option today, but it is the winner’s choice. We’re happy to make both options available.
And just to clarify, you don’t “lose” money when you choose the lump-sum option rather than annuity payments over time. It’s just that the interest money you would have earned with your payments through the years does not exist because you chose to take the winnings in one payment up front. Here’s a quick video from us that explains it in more detail: http://www.youtube.com/watch?v=0D2_3_qbjf0