Yes, the basic scenario that you paint is the "laziest" and is virtually risk free. From my school economics I remember this investment being referred to as the "opportunity cost" of any other activity. Ie if one found another investement which paid 6% instead of the banks 5% one would have to decide whether the increased risk and/or work is worth the extra 1%. It is something that has stuck with me and I always tend to look at investments (or even expenses) in this way naturally.
You are talking of "consuming" the asset over time which makes sense. Of course, if you manage to live to 120 then things may get a bit tight! I doubt if the X-gens and Y-gens are going to be able to afford to pay us BBs any sort of pension. Don't forget to allow for inflation too. If your interest income is 5% and inflation is 5% then you are effectivel consuming your asset just by spending the 5%. Whilst $100,000 may seem like a good income now, it wont seem so good in 40 years time. (What was the average income in 1960?)
Re some of the other comments in this thread. There are, of course many other considerations outside the basic numbers exercise. Ridge raised the philanthropic aspect. This is certainly a consideration as the hypothetical couple have no children. Personally, the annuity thing probably wouldnt appeal to me anyway as it tends to lock one in "forever" and forever is a long time. Many things can change in 40 or 50 years. Perhaps the cardigan and slipper wearing, conservative Ridge is right after all - diversification (sorry Ridge just getting you back for the oysters/redwine jibe)
Nobody has mentioned Government bonds. Are such beasts still available? I seem to recall some 20 years or so ago when bank terms deposits peaked up around 14% (?) there were various 10 and 15 year Government bonds available paying 10% to 12% which would have probably turned out to be a good investment over their term. They would certainly qualify as lazy and low risk.
