We all like to play the lottery and get that top prize so we can start paying off debts and getting our new houses, cars, and luxury toys. But there is one type of lottery at your lottery retailer that is designed for long-term wealth rather than instant wealth, and that is the Cash for Life type of lottery
The Cash for Life type of lottery, be it a draw lottery or a scratch ticket lottery, is designed to provide an annuity amount per year over the course of at least twenty years. This prize structure is designed to provide a steady influx of money each year for the life of the winner.
How Cash for Life Works
As an example, if you win one thousand dollars per week, you get paid $52, 000 each year. If you win one thousand dollars per day, you get a yearly payment of $365,000 per year. This is better than working for a living and making far less per year for more wear and tear on your body and your mind.
The advantages of selecting the annuity amounts provide many positive perks for both young and senior winners:
You can’t blow your prize money all at once. Since you only get a portion of the winnings per year, there is no way you can burn through the entire amount at once. If you do burn through the year’s payment, you will only have to wait until the next year rolls around for when you get your next payment.
As long as you budget your money properly during each year, you can live a very comfortable lifestyle as you no longer need to go to work or spend money on gas to commute.
Some of your yearly Cash for Life payments can be put into a high-interest savings or investment accounts to build up even more money each year to increase your net worth. This is called living off the interest and not on the principal.
For younger winners, the payments are for life so if you live to eighty or ninety, you will get paid a whopping amount of money over those many decades.
If you are older, ill, or die at a young age, there is no need to worry. The payments are guaranteed for the rest of the minimum twenty-year term and are paid out to your spouse or beneficiary.
The disadvantages of the cash for life annuity and not taking the lump sum are:
You don’t have the entire lottery win to spend on a new house and new car or take an around the world vacation. You are limited to only a small amount of money per year. Large purchases will need to be budgeted via a loan or other method.
Since your yearly annuity amount is small, you cannot call yourself a millionaire. Even though you will get millions of dollars over the long term, until the funds in your bank are over a million, you technically are not a millionaire until that time.
Who says you are going to live for the next twenty years and beyond? You could die tomorrow by any number of means. The annuity prevents you from fully enjoying your entire windfall.
Cash for Life lotteries are actually very popular with players and although some winners do opt to take the lump sum, most go for the actual “cash for life” yearly annuity. As long as your heart beats and your lungs take in oxygen, your yearly amount is guaranteed to be deposited into your bank account.