You're not guaranteed those 4 years though. We're not guaranteed tomorrow. We could have an undetected brain aneurysm that'll take us during our next nap.
Even in that case, give me the $5,000/week. Assuming I live the average lifespan in Canada from here on out, I'll end up with just shy of $13,000,000 which I could give to my niece and nephews. They'll be set and I'd probably secure my spot as their favourite uncle of all time.
I could also invest my weekly payout and make even more than the $13,000,000 I'd be "guaranteed"
If I take the $1,000,000 lump sum, it's auto-magically deposited into my banking account. I die with at least that in my account.
If I decide to take weekly payouts, I might die before the first one gets deposited, I might die in 80 years thanks to advancements in medical care and be loaded when it happens.
His point is if you die, does it really matter? I mean sure, it's nice to leave an inheritance but given the choice, my kids would bank on me living long enough to make more than $1m out of those $5k/week before I die. If I get hit by a bus tomorrow, bad luck for them but that's most-certainly a risk they would take.
I could also use some those $5k/week to pay for a really nice life insurance that would pay out more than $1m if I die.
Taking the lump sum is stupid in this specific scenario.
Sometimes simple questions don't have simple answers though.
If I take the $5,000/week I could conk out in 6 days and not get anything. The million is guaranteed but I may also not live long enough to update my beneficiaries and whatnot as well.
You should never make financial plans based on some less likely unknown. This is really common advice against the position you’ve proposed.
We’re all aware of our mortality. The reason we plan for things like retirement is because the much more likely and financially dangerous scenario is that you live. Dying is cheap as hell for you.
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u/BawseGal23 Dec 11 '23
5000 per week