Third of Brits would use windfall to pay off debts

By UK CreditCards.com

What would you do with an extra £1m?

Researchers working on behalf of retirement specialist LV= surveyed more than 2,000 adults to see what they would do with such a sum. The findings reveal an interesting mix of priorities, with some channelling the money into future financial security and others using it to treat themselves and their families.

£1m the "magic number"
£1m appears to be the magic amount that people would need to receive in order to give up working, according to LV='s research. The poll, conducted by Opinium Research and published in January 2013, revealed that people in almost all age groups view £1m as the figure to stop working for good. However, respondents in the over-55 age group generally said they would quit their jobs if they received a £500,000 windfall. money-wish

What would people do with £1m?
When asked what they would do with a large lump sum, almost a third (31%) of respondents said they would use some of the money to pay back their outstanding credit card and loan debts. Meanwhile, about half said the first thing they would do would be to buy a property. Just under two-fifths (37%) admitted they would go on a holiday or take off on a round-the-world trip, while 18% would buy a new car and 30% would give a large amount to family members, friends or charity.

One in four need windfall to fund retirement
While the study involves a hypothetical sum of money that most people can only dream of, the LV= research suggests that most Brits actually do hope to receive a windfall in order to fund their retirement. Almost a quarter of respondents admitted they are relying on some type of one-off lump sum to finance their later years, with one in 10 hoping to win the lottery for this reason and 7% depending on an inheritance. This means that millions of Britons are pinning their future financial comfort on something that will probably never happen.

Surprisingly, it's those with higher incomes who are relying the most on a windfall. Among those earning more than £40,000 a year, 37% say they'll need a sudden infusion of extra cash to protect their financial future, while just 23% of those earning less than £40,000 say so.

"Reality takes a little more financial planning than keeping your fingers crossed," said Ray Chinn, head of pensions and investments at LV=, in a statement. "It's shocking that such a high number of people are actually hoping for a lottery miracle to fund their life when they stop working."

Because the odds of winning are 14m to 1 for the National Lottery, and 76m to 1 for the EuroMillions, the winner "probably won't be you," Chinn warned.

See related: Millions lack household budget, Half of Brits at edge of credit gap

Published: 16 January 2013