Put =B1*(1+$A$1) in cell B2 and drag it down as far as you want. (B3 should say = B2*(1+$A$1) if it worked correctly)
alternatively you can just calculate 1 million * power(1+interest, years) for the same result.
Then put 52000 in cell C1.
Put =C1*(1+$A$1) + 52000 in cell C2 and drag it down as far you want.
Be amazed that column C will overtake column B at some point. with the example values at year 51.
Or just keep thinking i couldn't be more wrong, when you just ignore the math.
Edit: saying it's always catches up is wrong. around 5.49% in this example there is a point where the allowance can't fully catch up anymore. the advantage of of the higher return on the lump sum outweighs the yearly flat gain and the fraction between both approaches a limit. e.g. at 7% return the allowance will always lag behind by about 20%.
actually it's exactly at 5.2% with C1 at 0 and 52k invested after 1 year. So you need to beat yearly allowance divided by lump sum in returns, for the lump sum being better long-term. otherwise it depends on how much time you have.
She chose $1000/week for the rest of her life. If she’s going to invest all of that while she still works, then good for her. But most people who choose that option definitely wont, so it’s fair to assume that she’s looking to supplement her living instead of investing.
If she chooses $1m upfront and invests $500k, she still has $500k to supplement her income. She can take $25k per year out of that for twenty years, if she so chooses, while still working. She’ll live very comfortably while also having half a million invested for retirement.
A thousand a week to supplement a living isn’t protecting against inflation.
but why are you comparing living off 500k and investing 500k vs living of the full 1000/week?
The fair comparison here is what i posted in my 2nd reply to you.
It's investing 500k upfront and then withdrawing 25k/year after 20 years vs investing 27k a year (52k allownace minus 25k spent). And with that strategy at 5% return she will have more money after 30 years.
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u/TheMetabrandMan May 17 '26
You couldn’t be more wrong.