For those who don't know:

When you win games like the Powerball and Megamillions, you should get the lump sum. It's more financially and mathematically sound to do so. The lump sum right away is much less than the total amount of the 30 year annuity, but the annuity takes 30 years to reach that amount, and the lump can easily end up worth more than the annuity would be in that same 30 year period. If you die before 30 years, the rest is paid to your estate. If you live longer, it stops at 30 years, and you have more time to enjoy it.

So to keep it simple, lump sums are better than annuities. Especially for huge amounts like big Powerball and Megamillions jackpots. A single annuity check is enough to change your life, and you can have so much more.

But what about smaller amounts? Where they may be life changing but much much much smaller scale?

Here's what I'm talking about: There are some games that are something like "lucky 4 life" or whatever.

Basically, the top prize is like $1,000 a day, for the rest of your life, for example (I've seen a 5k/day before). You can choose to get the lump sum for 7 million, or you can get the annuity of $365,000 every year ($1000 * 365 days) for the REST OF YOUR LIFE. The annuity runs at least 20 years, so if you die before they pay the 20th (or 21st?) check, the rest is paid to your estate. But if you live much much longer than another 20 years, you continue to get paid in perpetuity until you die, unlike the larger jackpots which are limited to 30 yrs.

There's also a lower prize, something like $1,000 a week for life. Options would be $1 million lump sum, or $52,000 for the REST OF YOUR LIFE, 20 years minimum. Same concept as above.

Understand that, also unlike the disparity between lump sum and annuity amounts in the larger games' jackpots, the 20 year annuity period and the lump sum basically equal each other. So basically, do you want 7 million now or spread out over 20 years? (Except in this case you can get even more than 20 years.)

Now, mathematically speaking, you should still be able to make the lump sum end up with greater amounts than the annuity ever will (whether you live for another 20 years or 100 years). Money in your hand is more valuable than that same money tomorrow, and compounding bigger returns the earlier you start is simply how it's supposed to work. But there's a higher degree of risk and potential to lose everything. And being smaller jackpots, your living expenses are taking a bigger bite out of it, making it grow more slowly. Should still be enough, but it's not inconsequential.

Meanwhile, you're GUARANTEED $365k (or whatever your prize is) every year, forever, until you die. A big part of the reason you invest to get more is to provide yourself security for your future. But with a lifetime annuity, that security is built-in automatically, and anything else you are able to add on top (and you should be able to) is just icing on the cake. That guaranteed security cannot be discounted, and imo might have even greater non tangible value than the lump sum amounts.

And of course, I assume you're in a much lower tax bracket at 365k/52k than you are at 7mil/1mil, so there's that.

So my question to you is, instead of the massive games' lump sum vs 30 year annuity:

Would you choose a small lump sum or a LIFETIME annuity?

Let me know if there's anything else I'm not thinking of.