Take The Cash Or Lifetime Annuity?

Take The Cash Or Lifetime Annuity?

If You Win The Lottery, Here's What Suze Orman Suggests You Do: Take The Cash Or Lifetime Annuity?

Ivy Grace  Wed, July 24, 2024  Benzinga

Unfortunately, winning the lottery is just a dream for most people. While the odds may not technically be in your favor, it's fun to fantasize about what you'd do if you found yourself winning millions – or, in some cases, hundreds of millions.

Podcast host and finance expert Suze Orman has offered some advice for lottery winners over the years, emphasizing the importance of making informed decisions about managing sudden wealth. One of the most commonly debated and hardest decisions is choosing between a lump sum or a structured settlement.

In 2022, Speaking at the National Structured Settlements Trade Association’s annual conference, Orman covered the benefits of structured settlements for lottery winners. She explained, “If you win a lottery, it’s no different from getting a large inheritance. All that money’s gone within a few years. Why is that? Because they don’t know how to structure their finances to last forever."

Orman understands that not everyone’s a financial whiz. While her advice changes depending on your money know-how, she suggests a structured settlement or annuity for those new to managing large amounts of money. This approach doles out your windfall in steady chunks, stopping winners from blowing it all in a blink – a common lottery winner woe.

Lottery winners don't have the best track record, statistically speaking. According to the Certified Financial Planner Board of Standards, nearly one-third of lottery winners eventually go bankrupt within three to five years.

For financial matters, Orman suggests taking a lump sum. In a 2019 CNBC article, she advised, “If you feel capable of investing it, if you feel capable of managing it, and you want to do that, take the lump sum.” That way, you’re in control of your own money.

If you're fortunate enough to win an exceptionally large jackpot in the hundreds of millions, Orman leans toward recommending an annuity in this case, too. This strategy aims to prevent the risk of spending the entire amount too quickly. Annuities often get a lot of backlash but can be the right choice in some situations.

TO READ MORE:  https://www.yahoo.com/news/finance/news/win-lottery-heres-suze-orman-190013691.html