Lotto options pit us against life expectancy

For the past few years, whenever Texans picked their six numbers for the twice-weekly Lotto jackpot, the question that occupied their thoughts was what would they do with all that money.

Now, Lotto players will have to ask themselves another, less thrilling question: How long do I think I'm going to live?

It's a whole new gamble.

Beginning with tonight's $4 million drawing, you must decide in advance if you'd rather have half the winning total immediately - less 28 to 30 percent in taxes, of course - or receive the full amount in annual installments over the next 25 years. If you don't check an option, you'll automatically fall into the 25-payments category.

The 25-year plan will net you more income - provided, that is, you live long enough to cash all 25 checks.

The choice is the Texas Lottery Commission's response to a problem with the old payment system, in which winners received the total in 20 annual installments. If a Lotto winner died in a few years, without collecting all 20 payments, then his or her heirs became liable for the taxes on the entire amount - although it would be several years before they received enough from the inherited jackpot to pay the bill.

It wasn't fair to penalize someone for being the heir of a Lotto winner, and appeals were made to the Lottery Commission for a change in the payment method. The result might not please everyone, but at least it does provide a way to avoid the inheritance hassle.

Paying the full pot up front is not an option for the state because about half that amount comes from interest that Lotto revenue accumulates over the years. That's why winners will have to wait 25 years to get it all.

All of which puts Lotto ticket buyers in the rather disconcerting position of confronting and evaluating their own life expectancy every time they go after the big jackpot. Those in their 20s and 30s are naturally more likely to be around for the next 25 years than people in their 50s and 60s. If you're in your 40s, you might feel as though you're having to bet against yourself.

Of course, if you don't really care what condition you leave your heirs in, you can just take the money and run - or rather, take half the jackpot, minus taxes, and then see if you live long enough to have made the wrong decision.