By going for yearly payouts, the lottery will take the bulk of the money you just won and invest it in a very conservative annuity, which will earn about 4.5%.
That’s a higher rate than you’d get yourself, and your payments will come from that fund.
“So by taking the annuity, it is basically like having the lottery put your money into a high-yield savings account in the first place,” he told the site.
Another key reason to go for the annual payments is to avoid paying the 37% federal tax bill on the full lump sum.
He said: “You get to defer your taxes with the annuity in a way, because you don’t have to pay all of the taxes up front like you do if you take a lump sum and go put it in a high-yield savings account yourself. If you take the money now in a lump sum, you get the tax hit up front.
“From a purely financial standpoint, the advantage of taking the annuity is you don’t have to pay taxes on winnings until you actually receive the money. You’re getting a bunch of money that’s earning money for you and the taxes are deferred. It’s not like it’s tax-free, but you don’t have to pay taxes on that final annuity payment for 30 years.”
So there’s the advice - now all you have to do is win it.