If I were Filthy Rich
By GTRacer1972+28 Is the reason the lump sum is so low now on Powerball because the dollar is much weaker now?
Last year if the prize were say $1B the lump sum would be around $500M. Right now the prize is $700M and the lump sum is $316M, less than half. Shouldn't it be at least $350? The Megamillions lump sum is also less than half now.
If that keeps up at a certain point the annuity will make more sense. Because AFTER you get the lump sum you have to pay taxes on the half you get so if it 40% that $316M becomes like $190M. If you have the annuity you're getting like $23M a year. After taxes it's like $13M a year. You wind up with double if you take the annuity, but the idea is if you take the lump sum and invest it properly. I mean it comes out pretty close, $1.4B invested properly over 30 years with the lump sum vs $1.2B taking the annuity and investing yearly. I used 7%, aggressive, compounded interest.
Recent responses
+43 @KKingler I believe a lottery expert talked about how the lottery is only allowed to invest in US Treasury, and due to interest rates, the lump sum gap is getting larger than it previously was.
+17 @revanchist70 The higher the 30 year bond rate is, the less actual cash you need to reach the jackpot amount.
+16 @midncoffey When you say weak dollar I’m taking that as meaning you can’t exchange a dollar for as many euros, pounds, yen, etc than you could earlier. In that case a weak dollar doesn’t matter when it comes to calculating the jackpot from the current lump sum. The jackpot amount is based on interest rates. When interest rates are high the jackpot will be much higher than the lump sum and it will be closer when interest rates are lower. This is because for the annuity the lottery organizers will invest the money in long term investments such as treasury bonds. Since the federal interest rate has been high since 2022 we have seen higher jackpot for the same lump sums.
+16 @BoozieBumpkin It is all interst rates. As they go up the Jackpot goes down.