I thought about winning 10 million the other day and how I might keep myself from spending it all at once. Namely, what kind of account would throw off enough interest that I could live on the interest (or payments) for the rest of my life. An annuity account, I mean.
I had an annuity account once, for $100,000. That account disbursed $2,000 a year, for tax purposes. By that accounting, if I put 3 million into such an account, it would generate $60,000 a year (10% or so of which I suppose I'd have to pay in tax), which would be more than enough for me to live on. Then I could put the other 7 million into a retirement account to sit and grow even larger for a later time.
Of course, upon reflection it seems silly to divide the money like that; what am I going to do then that I wouldn't be better off doing now? (I'm thinking travel and physically demanding things like hikes and biking and jumping off of cliffs into water.) So maybe I should reverse the two and take 7 million now and put 3 million away, where it'll grow into another 7 million (provided I don't touch it for another 20 years).
But like I say, I'd probably be better off doing the 3/7 split with the majority going into lockdown; I'd probably be too tempted to blow all the money on things that I wouldn't be happy with afterwards. Maybe split it five and five and do the annuity thing with the option to pull larger amounts out at any time.
The question is how long can I live on 3 or 5 million? How long will it last if I'm just given free reign? When I have money, I tend to spend it; that's how I am. So maybe it's better having less (but more than I'm used to) so that I feel rich but don't go crazy with the spending. I don't need a new car or anything (although I could afford a monthly payment with $3,000 a month), so I'd be just fine with a small amount each year and the problem to work out what to do with myself (rather than rot on the couch in front of the television).
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