--- In vpFREE@yahoogroups.com, Jean-Baptiste Queru <jbqueru@g...>
wrote:
Well, I'm not a financial expert, but I can see a few reasons why
the
lump sum might not be such a good idea. I don't know if they are all
actually valid, but that's the kind of thing I'd want to research
if I
was given the choice:
-local taxes. I'd have to page CA state income taxes on a lump sum,
whereas I might be able to move somewhere else where there is no
state
income tax. That's a 9% difference right away.
You can establish residentcy in Nevada before the the end of the year
& ca cant touch it, (they lost a case in Supreme Court few years ago
trying to tax retirees that moved, Supreme Court ruled not a resident
at end of tax year ,no state tax owed. )
************************************************
-I'm not convinced that I can find a safe, stable and guaranteed
investment that works as well as the annuities.
-I'm very much hoping not to die in the next 25 years, and I'd
definitely research insurance policies against the risk that the
annuities might stop flowing in.
********************************************8**
They are invested in goverment bonds mostly, PIMCO is used a lot.
I am 51 & i hope not to die ether!!!
Annuties are an insurance policy, usally also backed by large
banks,Citicorp for one, but it is a good idea to check
-On jackpots such that the annuities would be a couple hundred
thousand dollars per year (which is the case of $9M over 25 years),
the tax differences between a lump sum and annuities isn't
necessarily
negligible, especially if the annuities are the primary or only form
of taxable income (the bracketing on federal income tax can save up
to
···
$25K a year).
Running very rough numbers, assuming a choice between 25 times $360K
($9M total) or $4.5M immediately,
************************************************************
for 4.5 mill to double in 25years only takes 2.9 percent a year if
left fully invested
************************************************
assuming that I find tax-free
investments, factoring in the 9%
I'd have to pay in CA income tax,
************************************************
Already figured out how to avoid
********************************************
approximately 7% in tax savings thanks to bracketing, putting in 2%
in
insurance premiums (pulled out of thin air),
****************************************************
insurance more than likely not needed
*****************************************************
I figure that I'd have to
be able to get a tax-free investment return of about 9% - not
necessarily an easy task. Of course, the evolution of inflation and
interest rates adds quite a number of variables to the mix.
*****************************************************
With AMT any investment MIGHT be taxed , if you mean after taxes 9%
would tough , but possible, stocks do grow tax free (except divedens)
until you sell
You would have no inflation protection with an annuity, some
goverment bonds with inflation protection built in ( TIPS?) are now
yeilding 4% or better,
*******************************
Of course, that's the kind of decision for which it's a good idea to
pay a few thousand dollars to see a couple of financial advisors and
work out a real plan.
JBQ
******************************************
& know enuf to ask the right ?'s as you have demonstrated ,
No flames intended as you made many good points that must be
considered such as taxes.
****************************************************
On 7/22/05, larsonsm <larsonsm@y...> wrote:
> Why would you say that most people should not take the lump sum?
I would because of my age & i want to be in control of my destiny,
BUT not everybody would
M J
