If you won the lottery and you could choose how to take your winnings, would you choose £1 million today or £1,000 every week for the rest of your life?

Our quick online poll revealed that more than half of us (57%) would go for the cool £1 million today rather than the regular £1,000 income. Interestingly, it only occurred to 3% of us that taking financial advice or consulting a partner before making a decision might be in order!

It’s a fun question but it’s remarkably similar to one that many of us will actually need to consider when we retire. While the amounts involved for most pension savers may not approach the realms of a lottery win, there comes a point for every saver when they must decide – annuity, income drawdown or cash?

For the lottery question, age is an influential factor: in our poll, younger people were more likely to choose the regular income while everyone over 60 opted for the £1 million. However, the pension saver has other concerns, namely:

  • if I choose an annuity, will I lose my hard-saved money by dying too soon, or
  • if I choose drawdown or cash, will I run out of money before I die?


Either way, it’s about taking a punt on how long you might live and, ultimately, that’s what makes thinking about pensions unpalatable.


A bird in the hand…

In our poll, when faced with a large amount of money, fewer people appeared willing to bet on their own health and longevity (that they’d stay alive longer than the 19¼ years break-even point). Crucially, even if they’re hoping to live longer than 19¼ years, more people were willing to give up £1,000 for every week they might live beyond that – potentially a substantial amount, even an extra £1 million or more.


The fear of missing out on money, should we expire before reaching the £1 million point, seems a greater driver than our desire to end up with substantially more than that, even though the regular £1,000 option requires no investment risk or any personal effort – apart from staying alive, of course!

Getting a large amount of money immediately is undoubtedly very seductive and the instant gratification of taking the money now will more likely win over delayed gratification. It feels that 20 years into the future is just too far away for a lot of us to wait to be glad about a decision we make today.

The stuff of hopes and dreams

For both the lottery winner and the pension saver, there are clearly more factors at play than age and the total cash sum. Some of these will include financial control, career, business acumen, personal circumstances and lifestyle dreams. Importantly, an immediate large sum of money seems intrinsically connected with our life goals and ultimate happiness.

And that’s why the decisions faced by pension savers are so hard. The here and now is easy to understand while a long way into the future is… well, a long way off.

In the real world, pension savers can’t help but add their life’s hopes, fears and dreams into the mix. When our heads need to be driving the decision process, our poor, anguished hearts will keep getting in the way.

So, when telling members about their retirement options, we need to bear in mind that the decision, while important, is just a by-product of the real question – how long do you think you’ll live? And to get people to go near that vexing question, it needs to feel as exciting as ‘if you won the lottery…?’