But that $1 million is actually an annuity, which pays out about $25,000 over 40 years—before taxes.
With the remaining $1.775 million, he can buy an annuity that yields almost $89,000 - which still beats working.
early 15c., "a yearly allowance, grant payable in annual installments," from Anglo-French and Old French annuité (14c.) or directly from Medieval Latin annuitatem (nominative annuitas), from Latin annus "year" (see annual (adj.)). Meaning "an investment that entitles one to equal annual payments" is from 1690s.
A sum of money payable yearly or at regular intervals.
Note: Many people's retirement funds are set up to be paid in annuities.