[mywittyname]

> Because you are taking an asset class that can be converted into shares/bonds which has a higher expected returns than an annuity because it can compound.

The annuity can compound too, if you treat it like you would any other 6% dividend and reinvest it.

Once you see that, the two become almost functionally equivalent. It comes down to a liquid million dollars with market returns or an illiquid million dollars with a guaranteed 6% return.

Which is better comes down to luck. If its 2006 and stocks are at all-time highs, then the 5% guaranteed will definitely return more over 10 years, and maybe over 20 and 30 years. If it's 2009 and stocks have cratered, the liquid million in the market wins handily.

The liquid million has a slight edge in expected value, as 7% > 6%. But when you consider the 6% is a lower bound and the 7% is an average, it becomes clear that there are situations where the guaranteed income stream could win.