Quote:
Originally Posted by Snapolit1
Only reason this story even exists is because of financially unsophisticated people piling on the “same old Mets” for what they believe was an insanely stupid deal. The fact that this becomes a huge story every year is a testament to the degree of financial illiteracy in the country.
They basically gave him an annuity. The same thing state lotteries give you if you hit Powerball or a Vegas casino does if you are lucky enough to hit a massive slot machine. Or a structured settlement in a catastrophic injury law suit. It’s almost like there’s some advantage somewhere to holding on to the money you owe someone.
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A lot of those state lotteries give the winner the option of taking either a lump sum amount today, or spreading the payments out over a number of years as an annuity, like you said. The amount of money the person gets if they take the up front, lump sum, is a LOT less than they eventually get if they elect to take the deferred annuity, due to taxes?
Also, I've read where an estimated 90%+ of Powerball winners elect to take the lump sum option, and then about 70% of them end up broke within 7 years. Talk about financial illiteracy!