Wednesday night’s jumbo $1.5 billion Powerball sweepstakes have everybody aching for cash, but the question remains, should you win, is it better to take the annuity or the lump sum cash?
Money management experts have weighed in on the pros and cons of both. A correspondent for “The Upshot” with The New York Times advises to take the annuity, for the sake of tax savings in the end.
Over the years, horror stories have emerged of people either squandering their winnings too quickly, having them stolen entirely, or worse.
According to WCPO News in Cincinnati, Abraham Shakespeare won $30 million from the Florida lottery in April 2009, but he didn’t have a lot of time to spend it. He was reported missing in November and his body was found under a slab of concrete in January 2010 with two .38-caliber gunshot wounds to the chest. A woman was later found guilty of his murder and sentenced to life in prison.
NBC News reported that Billy Bob Harrell Jr. won $31 million from the Texas Lotto in 1997. He then quit his job at Home Depot, purchased a dude ranch and spread his money around to friends, family and to charitable contributions.
Roughly two years later, Harrell reportedly landed himself flat broke and killed himself with his shotgun. Sources say he went to a financial advisor beforehand and said, “Winning the lottery is the worst thing that ever happened to me.”
The New York Daily News reports that Powerball winner David Lee Edwards, a former drug addict and felon, won a $27 million prize in 2001 while living jobless in South Florida.
He wasted no time spending the money – on fast cars, a mansion in Palm Beach, three race horses, a jet, a limo, and on scores of other luxuries, before he and his wife turned back to their life of drugs and crime. It was not long before they were caught by police and back in handcuffs. The Daily News reported he lost all his money and in a few short years was living in a storage unit surrounded by human feces.
So, while the Powerball sure sounds tempting, be careful, and most assuredly, good luck.