Tiny
Senior Associate
Joined: Dec 29, 2010 21:22:34 GMT -5
Posts: 13,367
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Post by Tiny on Jan 24, 2018 17:54:17 GMT -5
I suspect the $390 lump sum is after taxes... I bet the total amount is $500K (which is 25K for 20 years).
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phil5185
Junior Associate
Joined: Dec 26, 2010 15:45:49 GMT -5
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Post by phil5185 on Jan 24, 2018 17:55:21 GMT -5
Remember, bonuses don't actually get "taxed" at 39%, that's just the withholding rate - your real tax bill depends on income, tax status, etc. Her highest rate is 33%, that's on her top $200k. The first $191k is taxed at the 10%, 15%, 25%, 28% steps. And her SS cost will be $7886.
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Deleted
Joined: Apr 28, 2024 19:23:16 GMT -5
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Post by Deleted on Jan 24, 2018 18:17:48 GMT -5
No social security tax on lottery winnings. One news site found that 70 percent of people who win a lottery or get a big windfall actually end up broke in a few years. That is the most probable result here since there is no evidence of ability to take care of a house and all of the expenses that includes like property taxes, insurance, maintenance, utilities. A person with no experience whatsoever in managing money or actually supporting themselves should probably take the yearly payments.
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Lizard Queen
Senior Associate
103/2024
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Post by Lizard Queen on Jan 24, 2018 18:33:18 GMT -5
I suspect the $390 lump sum is after taxes... I bet the total amount is $500K (which is 25K for 20 years). Nope, its $390k less taxes. Just read a story about another winner on the game's website.
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Tiny
Senior Associate
Joined: Dec 29, 2010 21:22:34 GMT -5
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Post by Tiny on Jan 24, 2018 18:38:38 GMT -5
I suspect the $390 lump sum is after taxes... I bet the total amount is $500K (which is 25K for 20 years). Nope, its $390k less taxes. Just read a story about another winner on the game's website. Good to know. And it makes the winner's dream of buying a house (and car) that much more of a potentially bad idea.
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Bonny
Junior Associate
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Post by Bonny on Jan 24, 2018 19:29:25 GMT -5
I think that she made the right choice - but that she is GOING to make a mistake. Lottery officials claim that many winners pay the tax, buy a new house, buy a new car, maybe 2 or 3 more new cars for family members - and then save that remaining few $1000 "for their future". And on average, they are broke in 7 years. She should make a small down payment on a house, a small down payment on a car, pay the approx $100,000 taxes, and invest the remaining $250,000 lump in a growth fund. And draw small amounts from the growth fund as required. She is 50 and has no paying job as a full time care-giver for her mom. Doubt she can qualify for anything unless she takes the $25k option.
A financially savvy person in her position would take the lump sum option, pay the taxes, invest the rest in a 50-50 fund, live on an 4% withdrawal rate until she's eligible for SS. She should rent a small apartment within walking distance of her mom.
Alternatively if she has marketable job skills that pay higher than a caregiver, get a job and pay someone for mom's caregiving if mom has no resources.
I think it's doubtful this situation will end well.
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haapai
Junior Associate
Character
Joined: Dec 20, 2010 20:40:06 GMT -5
Posts: 5,886
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Post by haapai on Jan 24, 2018 20:05:52 GMT -5
I think that she made the right choice - but that she is GOING to make a mistake. Lottery officials claim that many winners pay the tax, buy a new house, buy a new car, maybe 2 or 3 more new cars for family members - and then save that remaining few $1000 "for their future". And on average, they are broke in 7 years. She should make a small down payment on a house, a small down payment on a car, pay the approx $100,000 taxes, and invest the remaining $250,000 lump in a growth fund. And draw small amounts from the growth fund as required. She is 50 and has no paying job as a full time care-giver for her mom. Doubt she can qualify for anything unless she takes the $25k option.
A financially savvy person in her position would take the lump sum option, pay the taxes, invest the rest in a 50-50 fund, live on an 4% withdrawal rate until she's eligible for SS. She should rent a small apartment within walking distance of her mom.
Alternatively if she has marketable job skills that pay higher than a caregiver, get a job and pay someone for mom's caregiving if mom has no resources.
I think it's doubtful this situation will end well.
You can bet your sweet bippy that this situation will not end well. The statements that the winner has made publicly are exactly the kind of statements that one could only hope were part of a sting to bring bottom-dwellers into the spotlight. They seen calculated to attract exploiters and low-life, but I have little hope that they are part of a sting. We live in a pretty sick world where someone, even the most desperately underpaid journalist is willing to publicize the name,hometown, and winnings of such an obvious mark.
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Deleted
Joined: Apr 28, 2024 19:23:16 GMT -5
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Post by Deleted on Jan 24, 2018 21:20:30 GMT -5
Sew eye guest eye yam confused.....
Conventional wisdom says you should take $40K a year from $1M nest egg in order for it to last in retirement (4% rule). But some of you on here suggest investing the $390K so you can generate (from my interpretation meaning "take out") more than $25K a year. What happened to the 4% rule?
I have about $75k of my own money invested into rentals. I net $40k a year on them (before taxes). That is why I am saying I can generate a lot more than $25k a year if I were to take the lump-sum payment. Holy crap. That's a lot of rent. That's after all maintenance and other costs of the properties? How many houses?
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Miss Tequila
Distinguished Associate
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Post by Miss Tequila on Jan 24, 2018 21:52:47 GMT -5
I have about $75k of my own money invested into rentals. I net $40k a year on them (before taxes). That is why I am saying I can generate a lot more than $25k a year if I were to take the lump-sum payment. Holy crap. That's a lot of rent. That's after all maintenance and other costs of the properties? How many houses? 10 units. I have the benefit of living in a low cost housing area where we still get decent rents. I buy fixer uppers and turn them into very nice, blue collar units. I rent them and then pull the bulk of my money out with a no-fee mortgage. In some cases I was able to pull out 100% of my costs. Yes, that is my net cash flow on average. I try to use the banks money as much as possible. People tell me they don’t want the hassle of dealing with tenants. I say good because that keeps my competition out of my way!lol In some areas my business plan won’t work. And eventually I might get a property manager which would eat into some profit. But my goal is for the units to pay off the debt while I’m working and then help support my retirement
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Deleted
Joined: Apr 28, 2024 19:23:16 GMT -5
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Post by Deleted on Jan 24, 2018 22:16:12 GMT -5
Yeah, I could never be a landlord. I'd have to have a property manager for sure to deal with the tenants, because they would just piss me off constantly. But there's no way I'd get that kind of rent here anyhow. Everyone that can pay that for housing already owns. The majority of the renters in this city are college kids and I definitely wouldn't want to rent to them.
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jeffreymo
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Post by jeffreymo on Jan 25, 2018 2:32:57 GMT -5
Remember, bonuses don't actually get "taxed" at 39%, that's just the withholding rate - your real tax bill depends on income, tax status, etc. Her highest rate is 33%, that's on her top $200k. The first $191k is taxed at the 10%, 15%, 25%, 28% steps. And her SS cost will be $7886. Correct but at the new 2018 tax rates, plus MI state tax of 4.25%. Also this income would not be subject to SS tax.
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