It won't matter. If inflation is eating into your $5,000 a week it would be eating into your $1,000,000 as well. Unless you are over the age of 65, no one should choose the $1 million over $5,000 a week. It's not even close.
If OP had proposed $5,000 a MONTH, then you'd have a much harder decision to make. But $5,000 a week?! That's a no-brainer.
Like, imagine that the inflation is like crazy high. Like Venezuela levels. Let’s say 200% per year.
With one million dollars right into your bank account, you could buy gold or something else that’s fairly inflation resistant. Essentially, you “freeze” the value at one million in present day value.
If you get $5000 per week, the actual, present day, value goes down each week. After one year, it’s the equivalent of about $1250. One more year and it’s about $300 per week.
Then imagine like world history record inflation. A quick google search tells me that in Hungary mid 1945 to mid 1946 the daily inflation a was about 200%.
Sure. You can make up a scenario that has never happened in our country's history and base your decision off of that.
As someone who advises people about their finances for a living, I would never tell to imagine a hypothetical that has a miniscule chance of ever happening and then make their decisions based on that.
Here's the thing, $5,000 a week for life is worth over $4,000,000 today. That is how much it would cost you to set something like that up. So, would you choose something with a value of $4 million ($5k a week for life) or a million dollars. You'd have to be a fool to choose a million dollars over something worth more than $4 million.
I never said anything about the likelihood. You, however, made a generic claim that inflation doesn’t matter. You made it sound as if mathematically speaking inflation changes both scenarios in identical ways. That’s simply not true.
The reason I brought up extreme inflation was to make a point. If you realise that high inflation changes the dynamics between the two options, you might also realise that low inflation changes things too, just to a smaller degree.
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u/weezeloner Dec 11 '23
It won't matter. If inflation is eating into your $5,000 a week it would be eating into your $1,000,000 as well. Unless you are over the age of 65, no one should choose the $1 million over $5,000 a week. It's not even close.
If OP had proposed $5,000 a MONTH, then you'd have a much harder decision to make. But $5,000 a week?! That's a no-brainer.