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In response to
"Then you have to consider the marginal propensity to spend vs. save the annuity payments. -- (edited)"
by
znufrii
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redid the model to include state taxes (resulting in an after-tax lump sum payout of ~$472k) and drops the break-even return to ~6.5%
Posted by
znufrii
Jul 30 '24, 18:46
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FV function:
Annuity =fv(B8,20,-(60000*(1-(B6+B7))),0) $1,677,253.33
Lump Sum =fv(B8,20,0,-800000*(1-(B5+B7))) $1,663,160.47
Assumptions:
Average marginal fed tax (lump sum) 35%
Average marginal fed tax (annuity) 22%
Average state tax 6%
Rate of return 6.50%
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