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Take the Lum Sum payment or Take the Annunity? 

This is something I've puzzled over.  Which would be a better deal?  I have always assumed that taking the annunity would be the wiser choice, that the total amount would be more than a lum sum even if you invested them. Lets take the recent South Dakota winner for example.  From what i read, the total lottery jackpot was 232 million dollars, If you take the annunity, it's split over 29 years, which is 8 million dollars a year.  If you take the lum sum, you get half, or 116 million dollars.  These numbers are all before taxes. After taxes Annunity is roughly 6 million dollars and the lum sum is 88.5 million dollars.  Assuming your are a tight wad and only spent 2 million dollars total and invest every last penney of the rest, at 8% interest, you would end up with 870 million dollars after 29 years (before figuring less taxes on interest) on your lum sum amount and only 748 million on the annunity (I'm assuming you spread out the 2 million your spend over 29 years).

 So doing the math, I guess you do end up better in the long run investing the lum sum rather than taking the annunity. But even with these numbers, I still feel the annunity is the better choice.  Granted a 8% return is pretty tough to mantain, not to mention the temptation to spend way more the 2 million dollars of your windfall initally.  Assuming your a wise investor, you could have very well lost 1/2 your cash in the Oct. 2008 crash.  I feel strongly that chances are that if I take the annunity, I will not blow the entire amount in 5 years like many of the lottery winners do.   

 As far as most lottery winner blowing there winnings in only 5 years, you have to remember that most lottery players are poor. They are spending $20 or more a week on the lottery, money they really can't afford to spend in the first place.  It's no wonder that the are ill equiped to handle millions of dollars when they couldn't balance there check book when they made only 15k a year.  Money doesn't instantly make you smart, your just a stupid as you were yesterday when you spent the rent money on lottery tickets.

Reading more into the issue, My math is off, Annunity is 30 payments over 29 years, but it would change the overall totals that much. Another thing I just read on Wikipedia is, " The 30 annuity payments are not equal but based on an increasing rate schedule. For example, the first annual gross annuity payment on the base $20 million jackpot would be approximately $267,000 while the final payment would be approximately $834,000."  Give this now information I'm not sure how to figure out the annunity over 30 years, but given that the first payment is so much lower than the final payments, it would hurt the over all numbers for the annunity even more, given that you would miss out on a lot of compounding interest you would get over 30 years of higher payout amounts.