I just read this post on X:
Post: “If someone offered you $1 million of cash or $6,000/mo for life? Take the $6,000/mo for life every time. Absolute no brainer.”
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I was stunned that most people didn’t seem to understand that this is not the best option.
So, which option is better:
- Choosing $1M now, or
- $6,000 per month for life?
To answer this mission-critical question, I ran an analysis. Here it is:
$1M invested starts growing immediately. If you don’t touch it for X years (see chart), you can later withdraw $6k/m and still end up with WAY more money.
The monthly deal looks safe but it’s trading away the compounding engine (the $1M) for a fixed paycheck.
You can also see this graphic for which option is better:
Key takeaways:
- If you start withdrawing immediately ($6k/mo), you’re taking $72k/yr = 7.2% of $1M. With a 7% return, the portfolio eventually depletes (in this simulation: around year ~42).
- If you wait even 5–10 years before starting withdrawals, the account grows enough that the $6k/mo becomes easily sustainable, and you end up with a huge remaining balance while also receiving the same $6k/mo thereafter.
- Compared to the “$6k/month stream” (which leaves you with no asset), the “$1M then withdraw later” strategy produces dramatically higher total value = (cash withdrawn + remaining balance).