It’s standard in the USA for jackpot payments to be offered as yearly payments over 25 years, or a lump sum if you prefer. Of course, the lump sum option is significantly smaller than the headline jackpot amount.
It seems the majority choose to take a lump sum. Which is not really surprising – when you win big you normally have some big bills to clear, big toys to buy and just want a bit of a cash-splash before you settle down and be sensible with the rest.
But the lump sum is not always an option. Particularly with scratch-off tickets where the prize may be described as ‘cash for life’ or similar, and if you examine the small print may only be available as 25 annual payments of $x.
I’ve often wondered what it felt like to win the big prize only to then let reality hit home and realise it’s going to take you 25 years to receive it all. After reading about ‘The Herman Avenue Super 7teen’ I have a much better idea.
This syndicate of 17 teachers shared a win of over $1 Million back in 1987. The dreams we all have about ‘what we’d do when we win the lottery’ leapt to the front of their minds… the cars, the new house, the boat. Only for those dreams to disappear like a rat up a drainpipe, when the realisation hit that they would only be getting one twenty-fifth of the prize now.
Suddenly it felt like they were saving up for their dreams. You could still get the boat, but it would be a finance deal. And more debt is not quite so appealing when you’ve hit the jackpot.
It certainly wasn’t all bad for the 17 teachers. They went back to work. But as one of the members of the group said, they ended up with a nice little bonus every year. Which has only just ended now, 25 years later.