200k vs 1m

[Malfatron]

I will take the million in ones, so i can have all the toilet paper i need

[Whicker]

28 minutes ago, N4L said:

Yeah, I guess @Whicker is 75?? 

Putting the 'have to work until you are 80' aspect aside. I think this shows how little people understand the time value of money. 

It's a comparison between 800k now (difference between two options) or the right to be able to earn money in future years. Even if you were making 100k a year at your job after taxes, and saved 100% of it, it would take 10 years to catch up. 

800000    100000
840000    205000
882000    315250
926100    431012.5
972405    552563.125
1021025.25    680191.2813
1072076.513    814200.8453
1125680.338    954910.8876
1181964.355    1102656.432
1241062.573    1257789.254
1303115.701    1420678.716

The last line ^ is year 11. Both columns assume 5% interest per year. 

10 years to catch up with making 100k after taxes and paying living expenses. SO, there are some people out there who could potentially say they would rather take the 200k and have it actually make sense financially (other than "I like my job" line) but those are people who are already in the 1% to where 200k doesn't change much of their life so they would probably go option C which is take neither. People in the 1% don't want to be forced to work until they are 80 as the question is posed, and 1m without being able to work again is a net negative as well (for them). 

So, unless you are making tons of money, have a career that could grow into a 400k+ a year job and you're under 35, you would be wise to take the 1m then go to a part of the globe where that money goes a lot farther, and proceed to ride off into the sunset 

200k to be forced to work the rest of my life? I actually wouldn't take that deal even if there wasn't 1m on the table. Life is too short

It actually changes things dramatically, because 1m would be 500k in California after tax, where the 250k would be like 140k after tax (I think). Instead of 800k difference it's a 360kish difference which greatly alters the math 

So let's just assume it's 1m net 

I feel like your missing the other 200k’s. Unless I’m missing something. 

The “future earnings” aspect is null to me because as you pointed out, it would take a good job and a long time to make a difference. 

For someone who is technically unemployed (or self employed and choose my own hours if you prefer) like myself, then it seems like a no brainer to take the yearly output to do nothing rather than the lump sum to do nothing.

Like I feel like taking the 200k per year and moving to a cheaper part of the globe is way smarter. You never have to worry about making it last your life because you know another income is coming 

[Daniel]

200k easily. I like my job just fine, and I can always just take fewer cases and do semi-retirement.

Plus, I would be very surprised if I made it to 80 anyway.

[Ty21]

I like my job but I wouldn’t be able to do it at 80 lol. Or maybe even 50 

[N4L]

10 hours ago, Whicker said:

I feel like your missing the other 200k’s. Unless I’m missing something. 

Its baked into my numbers. 800k is the difference between the two scenarios which is why it was the number used in my analysis. 

I could have used 1m and 200k as starting points and it would have been the same essentially

 

[Whicker]

5 minutes ago, N4L said:

Its baked into my numbers. 800k is the difference between the two scenarios which is why it was the number used in my analysis. 

I could have used 1m and 200k as starting points and it would have been the same essentially

 

See this is where you have me confused. 800k is only the difference for the first year. I don’t understand where, in your scenario, the other 200k’s just disappear to. Unless I’m missing something major, assuming we’re being as simplistic as possible with taxes/expenses, you’re going to get 5 payments of 200k in 5 years which would be the same amount as the 1mil. If we’re including the income from your job, it’d be more. 

[N4L]

12 minutes ago, Whicker said:

See this is where you have me confused. 800k is only the difference for the first year. I don’t understand where, in your scenario, the other 200k’s just disappear to. Unless I’m missing something major, assuming we’re being as simplistic as possible with taxes/expenses, you’re going to get 5 payments of 200k in 5 years which would be the same amount as the 1mil. If we’re including the income from your job, it’d be more. 

Ahhhh I just went back and read it again. I didn't realize it was 200k per year... That makes so much more sense lol 

[D82]

I would definitely need to switch to an all-riding route at some point...but I’d take the $200,000. 50 more years would have me earning $10,000,000 in that span...and earning $200,000 a year or roughly $16,000 a month? Yeah, I could live quite comfortably.

[MossyMoss]

i'll take the annual 200k, love my job now and its going to great earning that much.

[buddy_z34]

On 3/14/2020 at 10:22 AM, Glen said:

Question is simple.

If given the option would you rather take 1 million dollars cash now but never be able to work again, or would you take 200k a year but be forced to work the same job you're currently at till you're 80 years old?

Would I have to pay taxes on either payment of monies?? 

[buddy_z34]

On 3/14/2020 at 10:22 AM, Glen said:

Question is simple.

If given the option would you rather take 1 million dollars cash now but never be able to work again, or would you take 200k a year but be forced to work the same job you're currently at till you're 80 years old?

On 2nd thought having to pay taxes on either payment doesnt really matter. I'll take the 200k per year. You never said I had to stay as a full time employee at my current job.