Lump sum...because of inflation. Money now is worth way more in real terms than it will be worth years from now thanks to inflation despite the tax implications.

Great breakdown here on StraightDope - http://www.straightdope.com/columns/read/2149/if-i-win-the-lottery-should-i-ask-for-a-lump-sum-or-an-annuity -

It really comes down to the interest rate implied in the annuity. If, for example, a lump sum payout can be saved/reinvested (after taxes) at a rate greater than that implied by the annuity, then you'd go lump sum. There a lot factors that weigh in - how old are you, how long are the payments, what is your tax rate...

But first, I suggest, win the lottery.

Most Powerball lottery winners take a lump sum payment.

The primary financial considerations should focus on the effective return on investment from the annuity and tax implications.

While annuity payments might have a lower total tax by having more of the total winnings at a lower tax bracket (e.g., income under $350,000 or so is at a lower tax bracket), there's a significant risk of future increases in income tax rates.

But there are also other considerations, such as the degree of financial sophistication of the winner. Some winners end of spending all their winnings on friends, family and charities in the first year and then have nothing left. An annuity prevents them from doing this, so that they still have money coming in each year even if they've lacked the fiscal discipline to limit their spending.

Incidentally, the odds of winning the Powerball are about 1 in 195 million. Since the cash payout is about half of the annuity total, that means the cost of a ticket would exceed the expected value when the jackpot is more than about $390 million.

I once saw a bumper sticker that said "Lotteries are a tax on people who can't do math." Much as it's fun to play occasionally, if you want to "win the lottery", don't play it. Save and invest the money you would use to play the lottery.

Having said that, I'll play along with the premise of the original question. I always say that even though the lump sum seems to be the right answer for most folks, I think it would be more "fun" to take the annual payments. It would be like having a six or seven figure salary for 20 years. If you saved half of it, you'd be able to retire no problem, but still live like a king with the other half.

Good point about hiring a financial planner. WIth that much money, you'd be dumb not to.

Frankly, for that amount of money, I'd suggest hiring a fee-only financial planner to help you with scenario planning. Financial mistakes can be magnified exponentially when the amount of money involved increases.

www.napfa.org is a great place to start.

yearly payments...if you get a lump some they will tax the heck out of you. now with the yearly payments you will recieve most of the money you have won.(paying less in tax)

I agree with Ari, Sam, and Walt, but especially with Walt.