A LOTTERY player ended up scooping a hefty $2 million but only after copying the actions of the person in front of her at the store.
But, the winner’s decision meant thousands of dollars vanished straightaway before walking away with the cash.
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The woman, who is from Michigan, decided to play the Strike It Rich game when she was at the checkouts of a store in Warren, located in the suburbs of Detroit.
She forked out $20 on the scratch-off before going to her car to see if she had won.
The player, 64, scratched the ticket and locked her car windows when she realized she had struck gold, per the Detroit News.
But, she still had a decision to make on how to claim her prize.
The decision on how to receive prizes is a choice Mega Millions and Powerball winners often face.
The player decided to take the lump sum, which meant a whopping $700,000 vanished straightaway.
But, the winner’s prize continued to disappear further.
This is because winners who scoop more than $5,000 have to pay the federal government a rate of 24%.
Then, they must pay a tax of 4.25% to state officials.
Alternatively, winners can receive their prize in staggered payments, known as the annuity.
This is paid out for decades, and each check gradually increases each year.
Financial advisers and lawyers have warned of the risks of taking the lump sum.
Attorney Andrew Stoltmann warned that taking the lump sum is a decision that 90% of winners make.
He explained that it’s the first wrong move most jackpot winners make.
Lottery winnings: lump sum or annuity?
Players who win big on lottery tickets typically have a choice to make: lump sum or annuity?
The two payout methods can impact how much money you get from your prize.
Annuities pay out slowly in increments, often over 30 years.
Lump sums pay all at once but in a smaller amount, as taxes are withheld in one go. That means 24% of your prize goes to Uncle Sam right away. Many states tax winnings as well.
Annuities can provide winners time to set up the financial infrastructure required to take in a life-changing amount of money, but lump sums have the benefit of being taxed only once.
Inflation is also worth considering when making a choice, as payouts do not adjust with the value of a dollar. That means that you’ll likely be getting less valuable money towards the end of an annuity.
Each state and game pays out prizes differently, so it’s best to check with your state’s lottery to confirm payment policies. A financial advisor can also help you weigh the pros and cons of each option.
Experts have varying opinions on whether to take the lump sum or take the annuity.
Stoltmann added that the majority of winners who opt for the lump sum don’t know what to do with the cash.
“It’s a pretty big mistake,” he warned.
Financial adviser Robert Pagliarini echoed the same concerns when it comes to taking the lump sum.
He stressed that the better option is taking the annuity.
Pagliarini explained that players who take the lump sum face pressure not to make mistakes.
He warned that players only have one shot at making their wealth last.
Pagliarini explained the benefits of taking the annuity, which is that winners get a new check every year.
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Top lottery winners in the US
Millions dream of winning the lottery and finding fame and fortune. These are the biggest winners in US lottery history.
- Edwin Castro – $2.04 billion, Powerball, Nov. 8, 2022, in California.
- Theodorus Struyck – $1.765 billion, Powerball, Oct. 11, 2023, in California.
- Unknown winner – $1.602 billion, Mega Millions, Aug. 8, 2023, in Florida.
- Marvin and Mae Acosta from Los Angeles, California, John and Lisa Robinson from Munford, Tennessee, and Maureen Smith and David Kaltschmidt from Melbourne Beach, Florida – $1.586 billion, Powerball, Jan. 13, 2016.
- Unknown winner – $1.537 billion, Mega Millions, Oct. 23, 2018, from South Carolina.
- Unknown winner – he sued the mother of his child to keep his identity hidden – $1.348 billion, Mega Millions, Jan. 13, 2023, from Maine.
- Unknown winner – $1.337 billion, Mega Millions, July 29, 2022, from Illinois.
- Cheng and Duanpen Saephan, and Laiza Liem Chao – $1.326 billion, Powerball, April 7, 2024, from Oregon.
- Yanira Alvarez – $1.08 billion Powerball, July 19, 2023 in California.
- Wolverine FLL Lottery Club – $1.05 billion, Mega Millions, Jan. 22, 2021, from Michigan.
- Unknown winner – $842.4 million Powerball, Jan. 1, 2024, from Michigan.
Remember to gamble responsibly
A responsible gambler is someone who:
- Establishes time and monetary limits before playing
- Only gambles with money they can afford to lose
- Never chase their losses
- Doesn’t gamble if they’re upset, angry, or depressed
If you or someone you know is struggling with gambling addiction, call the National Gambling Helpline at 1-800-522-4700 or visit the National Council on Problem Gambling online.
