Big publicity cheques are part of the razzmatazz of lottery jackpot wins. But we set out to find out if people really want such a large lump sum in one go.
The answer is quite illuminating for both lottery operators and financial advisers keen to attract clients from across the generations.
Lotteries are sold on the dream of a big payout. So the recent case of a Canadian who scooped a six-figure lottery prize and opted to take a regular income instead made interesting reading.
Charlie Lagarde won the lottery on her 18th birthday. After consulting a financial adviser, she turned down the offer of C$1 million (around £575,000) in favour of C$1,000 (£575) a week for the rest of her life.
Some people leaving comments on the news report praised her prudence and foresight. Others believed she could have generated far more by taking the lump sum and investing it. Still others took the view that ‘life is short, spend it while you can’.
What would you do? Well, the answer seems to depend on which generation you belong to.
We asked people of all ages how they would prefer to take a prize – £1 million up front, £1,000 a week for life, or a combination of the two – and found a distinct difference in attitude depending on age.
More than half (53%) of ‘baby boomers’ aged from 55 upwards said they would like the £1 million compared with just 37% of ‘millennials’ aged 18 to 34. Millennials were nearly four times as likely to want the regular income (19%) as baby boomers (5%).
The results seem to reflect the competing money priorities of the different generations. Younger people live in a world of significant financial challenges such as student debt, high house prices and uncertain job prospects in the ‘gig’ economy. It is perhaps no wonder they would value the stability and independence offered by a source of regular income.
By contrast, many of the baby boomers have already put in place their financial plans. For them, the prize would be the icing on the cake rather than the cake itself. Only one in 10 of those who said they would take the lump sum said they needed it, compared with one in four (24%) of the millennials.
The age 55+ group were more likely than average to say they would use the winnings to help friends and families. Those aged 35 to 54 favoured paying off loans and mortgages, while the 18-to-34 group saw the lump sum as a chance to buy a property.
Fewer in the older group (53%) than the younger group (63%) said they would be likely to seek advice or guidance. However, those that would were more likely to consult a professional adviser than research on the internet or ask friends and family.
Although Lagarde had the choice of either/or, we offered a third option of taking a bit of both: a £500,000 lump sum and £500 a week for life. This was popular with all ages, with 42% of baby boomers and 44% of millennials choosing it as their preferred option.
There is an underlying message for financial planners keen to attract younger workers as their clients of the future. Many appear to value safety and certainty more than gambling on the long shot.
Even so, given a choice between capital lump sums and regular income, people across all ages seem to consider how they can achieve a bit of both.
We all like the idea of having the money to splash out on a car or holiday. But we also know the importance of building up our financial security to provide a regular, guaranteed income that allows us to pay the bills and keep a roof over our head.
Stephen Lowe is group communications director at Just Group