xx Jackpot Investment Calculator

(Updated for 2024 Tax Rates )

Which is better: Taking the Annuity or Lump Sum Cash payout of the xx lottery?

If you win the lottery, one of the first decisions you need to make is whether to receive a Lump Sum Cash Payout or the 30 year payment Annuity. Most players take the cash, which can be significantly lower than the annuity.

Rather than selecting either option emotionally, we are presenting this tool to help you make the best financial decision. This is done by evaluating both options side by side, comparing the amount of money you would receive after taxes. We deduct an amount for your living expenses spending, invest the remainder at an assumed rate of return, and deduct the taxes on your capital gain earning. This is repeated every year throughout the annuity period. Lastly, we compare the compounded ending values. The one which has the most amount of money is the best option.

As you will see, there is no clear cut answer for all scenerios. In times of very low interest rates, the Cash Option is typically best. This is because you can invest your winnings (lets say in a 60-40 Target Date Fund) and earn an average return of 5% annually. You risk market fluctuations that can lead to losses, but over the long period, you should be okay. Comparitively, when interest rates are high, the cash option will be much lower than the Annuity. During those times, you should take the Annuity because you will have more money and will not have to worry about market risks.


This xx Jackpot Investment Calculator contains three tables below. The table T1 is the lottery information input screen. There, you can change the annuity and cash payouts, yield and ratio, as well as the federal and state tax rates. Once you enter your data and either move the cursor or hit return, the corresponding payout structure and tax summary tables will be updated automatically. The table on the left T3 illustrates each of the individual annuity cash payments. And, the table T2 on the bottom right shows the tax implications based on both federal and state rates.

T1: xx Investment Input

Name Value Hold Num
Annuity 0
Cash 1
Yield 2
Ratio 3
Fed Tax 0.00 4
State Tax 0.00 5
Spend/Yr (in 000s) 6
Invest ROR (Annual) 7
CapGain Tax (Fed+State) 8

This section allows you to enter the Annuity, Cash, Yield, Ratio, Yearly Spend Withdrawl, Investment Rate of Return, and Total Capital Gain Tax Rate for yearly capital gains. These are shown in green.

Detailed Help for Table T1

T2: xx Investment Summary
Name Annuity Cash Diff Pct
Gross 0.00 0.00 0.00 0.00
FedTax 0.00 0.00 0.00 0.00
StateTax 0.00 0.00 0.00 0.00
Net 0.00 0.00 0.00 0.00
Spend Tot 0.00 0.00 0.00 0.00
End Value 0.00 0.00 0.00 0.00
Take

The Investment Summary Table shows you: How much money you will receive and pay (depending on whether you opt to take the Cash or Annuity payouts); Taxes paid; Total Spending withdrawl for 30 years; and the Ending value of your Portfolio after 30 years. The last line, labeled "Take", shows our recommendation of which payout option you should select based on the above assumptions.

Table T2 Detailed Help

T3: xx Investment Details
Google Vis - cashflow payments

Table T3 above compares the yearly investment results of the xx Annuity against the Cash Options. The first 7 columns represent the Annuity Option. The next 5 columns Each line shows:

  • Annuity Value - beginning account value
  • Receive - Annuity payment after taxes
  • Spend - amount you deduct from Annuity and use for living expenses
  • Invest - total remaining and invested for the year
  • Gains - amount you investment returned for the year
  • Tax - additional yearly tax on the capital gains
  • Cash Val - beginning amount is equal to the amount you receive from taking Cash Option
  • CSpend - amount you deduct from Cash Value for living expenses
  • CInvest - amount of Cash Value you invest for the year
  • CGains - amount of interest, dividends, and capital gains you earn
  • CTax - amount of additional tax you will pay on you Cash Value capital gains
  • Diff - the difference between the Annuity Value and the Cash Val columns.
At the bottom of the table, the Annuity Value, Cash Val, and Diff columns are totaled.

The Annuity Value and Cash Value amounts indicate how much money you would have after 30 years.

G1: xx Annuity End
RIGHT Pie Graphs - Percents - TOP
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G2: xx Annuity vs Cash Investment Growth
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The Mega Millions, Powerball, and Super Lotto Plus annuity payments are not constant. They increase a certain percentage each year to adjust for inflation.

However, the Lotto Texas payments are all the same. That is why the graph G2 shows straight lines for each payment.
Whether you take the Annuity or Cash is a matter of preference. Originally, we believed the Annuity is best. But, in very low interest rate environments (less than 2 percent), we now think taking Cash is best.