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# lucky for life cash option after taxes

## The best option between \$25,000 a year for life or the lump sum

Lucky For Life Lottery

COMMERCE TOWNSHIP, MI – 31 year old Donovan Yaldo just won the Michigan Lottery’s Lucky For Life drawing, and ended up choosing the lump sum. Did he make the right choice?

Yaldo, who is from Commerce Township, matched the five white balls drawn on August 31, 2015 to win the prize. He bought the winning ticket at the Shell gas and convenient store on East Long Lake Road in Troy.

The winning Lucky For Life ticket purchased by 31 year old Donovan Yaldo, of Commerce Township. He won \$25,000 a year for life and chose to take the lump sum of \$390,00

Yaldo decided to go with the one-time lump sum cash payment of \$390,000. He could have chosen payments of \$25,000 a year for 20 years or for life, whichever was greater.

MLive asked you to vote in our poll on which option you thought was better. Here are your results:

61% – \$25,000 for life
39% – \$390,000 lump sum

According to Jeffrey Fratarcangeli, Managing Principal at Fratarcangeli Wealth Management of Birmingham, the \$25,000 for life is NOT the better option in the long run.

Obviously, everyone’s financial situation’s are different, but here is what Jeffrey concludes.

“Assuming an individual receives \$25,000 a year for life and that individual is currently age 31 and lived to age 70, they would receive \$975,000 in total over 39 years.”

“If that same person took the \$390,000 lump sum and invested it over 39 years at a growth rate of 8%, withdrawing \$25,000 per year, they would accumulate \$1,871,435.”

“So, they would have received \$975,000 in money withdrawn plus the accumulated value of \$1,871,435.”

“That would total \$2,846,435. It certainly appears that taking the lump sum might be in someone’s best interest.”

So, it looks like Yaldo made the right decision, assuming he lives a long, healthy life and invests his money wisely.

Either way, the decision is a good “problem” to have.

For \$2, the Lucky For Life lottery gives players a chance to win prizes ranging from \$3 to a lifetime of cash. The top prize is \$1,000 a day for life. Players must match all five winning numbers ranging from 1 to 48, plus one Lucky Ball. Players who match all five winning numbers, but not the Lucky Ball, win \$25,000 a year for life.

Edward Pevos is the Mlive entertainment reporter for Detroit and Southeast Michigan. You can follow him on Twitter @PaparazzoPevos

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The best option between \$25,000 a year for life or the lump sum Lucky For Life Lottery COMMERCE TOWNSHIP, MI – 31 year old Donovan Yaldo just won the Michigan Lottery’s Lucky For Life

## ialottery blog

### March 26, 2018

#### Tell Me About The Taxes On The ‘For Life’ Prizes In Lucky for Life

A woman named Kris recently sent us a question on Facebook asking about how the taxes work in the Lucky for Life game for its top two prizes: \$1,000 a day for life and \$25,000 a year for life.

You likely already know that Lucky for Life is a \$2 lotto game with drawings twice a week, on Mondays and Thursdays. The game’s top two prize levels are described as “lasting as long as you do,” meaning that they are truly for life. The minimum guaranteed payout for those two prize levels is 20 years, and there is a lump-sum option for players who want that rather than lifetime annuity payments.

If you were to win at either of the game’s top two prize levels here in Iowa and you chose to receive your prize in annuity payments for life, you would receive your winnings in annual payments. Federal and state withholding would apply to each payment. (The current federal withholding rate is 24 percent, while the state withholding rate is 5 percent.)

So, for the game’s top prize of \$1,000 a day for life, you would receive an annual payment after withholding of \$259,150. And for the game’s second prize of \$25,000 a year for life, you would receive an annual payment of \$17,750 per year after withholding.

Four Iowa Lottery players so far have won the game’s prize of \$25,000 a year for life. We’re still waiting for our first top-prize winner in Lucky for Life!

And don’t forget: There are eight other ways to win in Lucky for Life, so be sure to check your ticket after each drawing.