re: 2012 won $5K a week for life, now he's losing everything including his home

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2012 won $5K a week for life, now he's losing everything including his home

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2012 is a person?

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his income stream was already assured

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was it?

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Sucks, but how on earth do you get $260k per year for 13 years and you still owe on your house?

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My house is at 2.5% - even HYSA’s are still a higher return. I could make $500k per year and I’m investing it and not paying the house off.

But the math still doesn’t make sense for this guy. Even if he chucked “only” 60k every year into some sort of investment he should be fine for a few years.

Even at 5% return he’d be able to last 6 years without a lifestyle change after 12 years of receiving payment (pulling ~200k/year).

Cutting the pulldown to $40k or so annually would have him set for life, especially if he did something as simple as man the cash register at Home Depot for a few years until Social Security kicks in.

If his house is so expensive that this isn’t possible, then by now there should be quite some equity in the house to enable downsizing.

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That’s a falacy find me a guaranteed way to do that I’ll dump $500k tomorrow into that account.

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QQQ

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Jet Skis and trailers are not sound investments

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i'm in trouble

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always assumed PCH had some annuity set up that provided the yearly payments for this. So either they were just funding yearly checks or else they were using trusts / annuity but they raided them. Interesting.

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Ponzi scheme?

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I thought almost everyone says to to take the lump sum for this exact reason (lottery jackpots, any sweepstakes prizes from companies, etc.)

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Always, always, always take the lump sum. The annuity wouldn’t be offered by the bank if they weren’t making money off it too.

The rule of 72 clearly shows how much you lose. For the purpose of this discussion, I’ll leave taxes out.

Using round numbers, let’s say the powerball Saturday was $2B and the cash offer was $900m. With a 20 year annuity, you’d receive a total of $2B over 20 years.

The long term nominal return of a S&P 500 index fund is 10%. Let’s say you keep $50m as frick around money and invest the other $850m in an index fund. In 7.2 years you would have $1.7B. In 14.4 years you’d have $3.4B, and in 20 years you’d have $6.04B.

So by taking the annuity, you’d lose out on $4.04B