Jul 18, 2019
Back in 2000, Major League Baseball player Bobby Bonilla made a deal with the New York Mets to pay him $1.19 million every year from 2011 through 2035 rather than a $5.9 million lump sum to end his contract. The day he gets his annual payment is celebrated every year, but did he make the correct choice for maximizing his money?
Read more about this topic and see the show notes here.
To save you some time, we’ve listed the key topics from this podcast so you can skip ahead to the information you want to hear.
0:15 – Would you take $5.9 million today or a guaranteed $1.19 million/year for 25 years.
1:32 – Using the ‘Rule of 72’ to find out how your lump sum would grow.
2:37 – Bobby Bonilla Day with the New York Mets is a perfect example of this scenario. How Bernie Madoff burned the Mets.
4:16 – Can guaranteed income actually happen?
4:52 – Client example of an annuity running out of money.
5:52 – Doing the math – What would you have to earn to make the lump sum worth it.
7:51 – Here’s how much Bobby Bonilla would have received on the $5.9 million lump sum after 25 years with a 10% or 8% annual return.
9:50 – Working with clients that are able to decide when and if they want to work. Sharing some client examples.