Lottery Winner, Age 60, Does the Math - Takes 20 Year Payout

This lottery winner was smart. At age 60 he did the math and chose to receive his winnings via a 20 year annuity rather than taking it as a one-time lump sum payout.

Pfafftown, NC resident Rusty Hunter has lived in North Carolina all his life. These days, he’s semi-retired, keeping busy as a self-employed handyman.
This week, he became the first winner of $4 million in the lottery’s new $4,000,000 Gold Bullion scratch-off game. No one in state history has won a larger guaranteed instant prize.
“I’m a little more retired now,” Hunter said as he claimed his prize. “To win it – what I won – is like ‘Whoa.’”

Hunter, 60, will receive his $4 million prize in annuity payments of $200,000 for the next 20 years. After depositing his first after-tax check for $136,006, Hunter has already purchased a new Chevy Silverado pick-up truck and shared plans to buy an Airstream trailer. Hunter added that he would like to buy a vacation home in the mountains where he can go hunting and fishing and spend time with his dad.
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Hunter did the right thing. Remember he wants to spend time with his dad, so with good genes like that, chances are Hunter will outlive the 20 year payout period. There are big tax savings in taking a payout of that size over 20 years. The current income tax rate for $200,000 is 28% for a head of household. Had he taken a lump sum payout of approximately $2.8 million, he would have paid nearly 40% in Federal income tax. You always have to consider taxes before you decide how to claim lottery winnings.
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Powerball rolled last night, increasing the jackpot for next Wednesday. The next Mega Millions jackpot is much smaller.

POWERBALL
02/27/2013
$90,000,000 est
Cash Option: $56,100,000

MEGA MILLIONS
02/26/2013
$13,000,000 est
Cash Option: $9,500,000