Josh Barro at NY Time’s ever interesting TheUpshot offers some advice to the next Powerball winner(s): take the annuity, not the lump sum.
He makes good points about tax implications that might advantage the annuity. He also notes that the annuity pays out for 30 years, regardless of whether the winner survives that long.
But the strongest part of Barro’s case is that the annuity is a type of precommitment: it makes future, tempting actions difficult or expensive. Blow one year’s $22+ million? No worries; there’s always next year.
What types of precommitment do you see yourself putting into place in 2016… with or without that Powerball windfall?