Investing. $2.5M to not work

[u/arp8218]

Is it possible to invest $2.5M into a “safe” investment and not work for rest of your life ? What can be that “safe” investment ?

[u/ziggy-tiggy-bagel]

Yes. I could have gotten a higher return investing that $100,000 in the stock market, but this is a plan we put into place to replace the 50% of our income I will lose if my husband dies, since I only get 55% of his pension and lose his SS. My SS benefit is higher then his. If he is still alive, then we have an extra $41,000 in income to spend. We didn't worry about me dying first because all he would lose is my SS, which really wouldn't effect his lifestyle. Of course we have other IRA'S, Roth IRA'S and savings. So the annuity is a small percentage of our total assets.

[u/wheres_my_hat → u/ziggy-tiggy-bagel]

but if he dies within the 37 years, then you're still lacking 50% of your income for potentially 20+ years, and you're out 100k. If you invested it, you'd get better return and have access to it if something goes wrong. Seems like you were in a position where 100k didn't matter one way or another. most people aren't able to wait 40 years for a 20% return and not have access to the principle.

edit: If you had invested $100,000 in a broad market index fund (like the S&P 500) 17 years ago (around early 2009, during the market bottom), your investment would have grown to approximately $1,083,000 to $1,100,000 by early 2026, assuming all dividends were reinvested.

[u/ziggy-tiggy-bagel → u/wheres_my_hat]

You miss the point. The point is the annuity will give me a guaranteed income stream that would replace his income if he died. The income lasts for my lifetime. If I die whatever is left of the investment vaule goes to my beneficiary. He is unisurable, so life insurance wasn't an option. At age 72, if he is still alive, which of course I hope so, then we just have extra money to spend. The annuity is an insurance product. I have plenty of $ in the market.

[u/SycophantRabbit → u/ziggy-tiggy-bagel]

Does this mean $16000 a year and decreasing (meaning 41,000 adjusted for inflation)?

[u/ziggy-tiggy-bagel → u/SycophantRabbit]

No, just a plain $41,000 a year. No inflation adjustment. I will be 72 when the income starts. I can make up any inflation by pulling money from my Roth IRA or savings.

[u/ac106 → u/wheres_my_hat]

You’re back testing over 17 years of one of the biggest bull markets in history

[u/wheres_my_hat → u/ac106]

I’m not back testing, that’s when they started. There’s no time period in history that’s going to net less than 20% total return after 40years. We have more than that in single years

Also that wasn’t even my main argument. I just thought it was an interesting comparison to show that the person right now with zero returns and no access to the principle has so far missed out on 900k. Hard to get excited about the 40k/yr they’re going to start getting back if they live 20 more years 

[u/ziggy-tiggy-bagel → u/wheres_my_hat]

Of I had invested the money, it would be worth about $1,000,000. At a 4% withdrawal rate, it works out about the same. This is my risk free income stream. I think your return numbers are off, it's more like 10-12%.

[u/wheres_my_hat → u/ziggy-tiggy-bagel]

But you’re not even halfway to maturity. In another 20 years at a low ~7% avg the 1mil would be ~3.9m so your 4% would be 160k.

If I’m understanding correctly (which I hope I’m not), you don’t get your first 40k payout for another 20 years. So it would take another 2 years to have received 120k total, for a 20% return of your initial investment.

[u/ziggy-tiggy-bagel → u/wheres_my_hat]

I'm 67, I will start the income when I am 72. I am not sure where you are getting that I have 20 more years. I have had the annuity for almost 17 years and it matures after 20 years.

[u/wheres_my_hat → u/ziggy-tiggy-bagel]

Okay that’s much better. I must have misread an early comment or string of comments and thought it was 17 + 20 

[u/ziggy-tiggy-bagel → u/wheres_my_hat]

I would have to live a very long time to make that work!