[Common Sense 101]

NPV... Always take lump sum....

[maro]

When you take taxes into account, her decision may have been rational. Also makes it hard to blow the nest egg on some crazy scheme. Also useful in fending off friends and family who want a slice.

[thesligoduffyflynns]

if only!

🎯💯

🎄 Merry Christmas🎄

[econjack]

Yep. Net Present Value always suggests that. Take the $1M and invest it at 5% and you get $50,000/yr, or $961/week and you still have the $1 million in the bank that you can use as collateral on loans or whatever. Also, if you die next week, your heirs still have the $1 million in the estate. She was not well-advised.

[carcraft]

If you take the lump sum you can invest and increase your intial amount. If you take the annuity and die you may only leave a few grand to those you love.