Posted:
#1
Which would you choose for retirement;
$1 million lump sum
... or ...
$5,000 per month
Go ... 
bigreds daddy
answer this poll question ...
...
Views: 1077
Posts: 15
Posted:
#3
Quote Originally Posted by sports_Network:
This is definitely a no brainer...
$1m lump sum...converted to CD's
let's see, 5k a month, that's 60k a year, you retire at 62; by the time you reach the age of 82 you have your million. what does it matter?
That's a very smart and poignant way of rationalizing this.
However.....
Knowing my stupid degenerate self I would probably piss it all away gambling, or doing something idiotic like buy a Bugatti and then totalling it, or investing in HailFlutie's penny stocks.....
But an extra $5,000 a month, every month?!?!?!
I pissed my "allowance" away by the 12th?
No worries, just 18 more days and I'm baaaaaack in the saddle again!!!!
Posted:
#4
Quote Originally Posted by GimmeMoneyNow:
That's a very smart and poignant way of rationalizing this.
However.....
Knowing my stupid degenerate self
you'd be calling "JG Wentworth" to convert the 5K a month to a lump sum and they'd give you 300K...
If you get million lump sum, you'd have to pay almost half of it in taxes right off the bat. If you get the 5K a month, unless you have a significant other income, you'd pay a lot less than tax.
On the other hand, if you get the lump sum, you could start a business...
. 1 million. 
Posted:
#6
Net present value calculation is another rool for financial decision making. Below are various payouts for different life expectancies assuming 2% annual inflation (or interest) rate, no opportunity cost and $60,000 paid annually.
60 years $2085653. 20 years $981086.
$1 million lump sum is preferred if life expectancy is under 21 years. Also higher inflation rate tends to favor lump sum. However monthly annuity is preferred if life expectancy exceeds 21 years..
60 years $2085653. 20 years $981086.
$1 million lump sum is preferred if life expectancy is under 21 years. Also higher inflation rate tends to favor lump sum. However monthly annuity is preferred if life expectancy exceeds 21 years..
Posted:
#8
Quote Originally Posted by thirdperson:
Net present value calculation is another rool for financial decision making. Below are various payouts for different life expectancies assuming 2% annual inflation (or interest) rate, no opportunity cost and $60,000 paid annually.
60 years $2085653. 20 years $981086.
$1 million lump sum is preferred if life expectancy is under 21 years. Also higher inflation rate tends to favor lump sum. However monthly annuity is preferred if life expectancy exceeds 21 years..
Net present value calculation is another rool for financial decision making. Below are various payouts for different life expectancies assuming 2% annual inflation (or interest) rate, no opportunity cost and $60,000 paid annually.
60 years $2085653. 20 years $981086.
$1 million lump sum is preferred if life expectancy is under 21 years. Also higher inflation rate tends to favor lump sum. However monthly annuity is preferred if life expectancy exceeds 21 years..
This would be the correct answer, which is why the values of $5k per month or $1 million lump sum were used.
Most people retire around 62-65.
Life expectancy avg for folks of those ages is about 20 years.
Thus, under normal conditions both options have similar values.
bigreds daddy
Posted:
#9
Quote Originally Posted by thirdperson:
Net present value calculation is another rool for financial decision making. Below are various payouts for different life expectancies assuming 2% annual inflation (or interest) rate, no opportunity cost and $60,000 paid annually.
60 years $2085653. 20 years $981086.
$1 million lump sum is preferred if life expectancy is under 21 years. Also higher inflation rate tends to favor lump sum. However monthly annuity is preferred if life expectancy exceeds 21 years..
Net present value calculation is another rool for financial decision making. Below are various payouts for different life expectancies assuming 2% annual inflation (or interest) rate, no opportunity cost and $60,000 paid annually.
60 years $2085653. 20 years $981086.
$1 million lump sum is preferred if life expectancy is under 21 years. Also higher inflation rate tends to favor lump sum. However monthly annuity is preferred if life expectancy exceeds 21 years..
Yep, thirdperson nailed it. Age and Health are the two relevant determining factors. This is almost the exact scenario for my disabled 23 year old son. His monthly annuity is slightly higher at $7K a month. Unless his health should rapidly deteriorate Wifey and I decided to just leave it alone.
~~~~~ZOSO~~~~~
Posted:
#10
Quote Originally Posted by thirdperson:
Net present value calculation is another rool for financial decision making. Below are various payouts for different life expectancies assuming 2% annual inflation (or interest) rate, no opportunity cost and $60,000 paid annually.
60 years $2085653. 20 years $981086.
$1 million lump sum is preferred if life expectancy is under 21 years. Also higher inflation rate tends to favor lump sum. However monthly annuity is preferred if life expectancy exceeds 21 years..
Net present value calculation is another rool for financial decision making. Below are various payouts for different life expectancies assuming 2% annual inflation (or interest) rate, no opportunity cost and $60,000 paid annually.
60 years $2085653. 20 years $981086.
$1 million lump sum is preferred if life expectancy is under 21 years. Also higher inflation rate tends to favor lump sum. However monthly annuity is preferred if life expectancy exceeds 21 years..
Your math is 100% correct, except for one factor. You forgot the "GimmeMoney has a million burning a hole in his pocket" quotient.....
Take the square root of that and divide it by the lack of self control and you'll get your answer.....
Anyone ever seen that T.V. show "The Lottery Ruined My Life"?
Yeah, that would be me.....
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