How To Spend It - Powerballs, Annuities and Retirement

With lotteries and power ball winnings reaching jackpots bigger than ever, we all love to daydream how we might spend our millions. If we actually won.

To have such problems would be nice. For some, it could involve traveling the world, or buying a private island, along with a number of other toys.

But theres one question any lottery winner must ask themselves - do I take the lump sum now, or choose the annuity option and have a steady stream of payments for the years to come?

To put it simply, and this isnt a simple topic, if you take a lump sum you will get less than if you accept an annuity payment. But at the same time, you want to understand the time value of money and consider that a dollar today is worth less in the future. A good example of this is to consider that a house may have cost a few thousand around 1960, and maybe fifty thousand or so in the 80s, and now its probably close to 500 thousand in many cities these days.

So, do you want the value of your winnings to deteriorate while accepting payments, or take a lump sum and invest that money so it will work for you? While each case is different and you should consult directly with your own financial expert, for me its the latter.

You cant win if you dont play your numbers, and apparently there is a science to buying a winning ticket . Personally, I still believe its more luck than anything.

Should you actually hold a winning ticket, its also wise to speak with a financial advisor in order to make sure your new found wealth will last you. Knowing the right questions to ask can have everything to do with setting yourself up for success. Then all you have to do is figure out how to spend your lump sum or annuity .

I know that if I did win the power ball, I would indulge in a few toys and some travel. Id probably skip the whole buying an island thing and see if I cant put the money to better use.

You might like to know that I've done some calculations and it seems that your chances of winning the lottery are almost identical whether you choose to play or not. Another equally interesting fact is that if you were lucky enough to win the lottery, the chances of meeting the love of your life (if not already involved) increase exponentially, but youll have to give that one further thought as to its legitimacy.