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£1 million windfall would see people give up the day job for good

Press release: 04/01/2013

  • Nearly a quarter (24%) of Brits hoping for a windfall to fund their retirement, with 3.6 million people betting on lottery luck

A lump sum of £1 million would be considered the magic amount to allow people to give up their day job for good, and live in financial comfort for the rest of their lives. According to research from retirement specialist LV= the £1 million figure to stop working is consistent across different age groups, with the only exception of over 55s who say they would give up work for good if they came into £500,000.

Before putting the rest of their windfall into savings, nearly half (48%) say they would buy a property, and 37% would go on holiday or travel the world. Nearly a third (31%) say they would clear outstanding debts such as loans and credit cards, and a similar number (30%) would give a sizeable sum away to friends, family or charity. 18% also said they would buy a new car. With all this spending there could be little left in the pot to live on.

Fingers crossed for retirement…

In reality, receiving a windfall is currently how many of us hope to fund our retirement, with nine million Brits (24%) yet to retire relying on some form of windfall to finance life after work.

One in ten (3.6 million) people say they hope to win the lottery to fund their retirement, with 7% of people relying on an inheritance, and one in 20 (5%) hoping their home will increase substantially in value so they can use the equity.

Those on higher incomes and, in theory more able to save, are in fact nearly twice as reliant on a windfall to fund their retirement as those on lower incomes. 37% of people earning more than £40,000 a year are looking to a windfall to secure their financial future, versus 23% earning under £40,000. Even 15% of those closest to retirement (55 and over) say they are banking on a windfall of some kind to fund their twilight years.

People say they would need £23,132 each year to live comfortably in retirement, with those in their 20s saying they would need £25,785 a year in retirement to live a contented life.

Ray Chinn, LV= Head of Pensions and Investments, said: “£1 million seems to be the magic number that people would give up the day job for at any age, but reality takes a little more financial planning than keeping your fingers crossed. 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. With odds of 14 million to one for winning the National Lottery, and 76 million to one for the EuroMillions, unfortunately it probably won’t be you.

“Despite over two-thirds of people (70%) expecting to have an underfunded or severely underfunded savings pot by the time they retire, or simply having no idea what they’ll have, people are failing to put a plan in place. Although retirement planning can seem daunting, you can improve your financial prospects for retirement by taking matters into your own hands. Seeking professional financial advice about savings and funding retirement will have a huge impact on how comfortably people can live before and in retirement.”

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Notes to editors

All figures taken from omnibus research carried out by Opinium Research on behalf of LV=. An online poll of 2,012 nationally representative sample of UK adults, age 18+. Of those, 1541 are not yet retired. Conducted between 7 and 10 December 2012.

[1] - Based on 1,170 pre retirees who are relying on a windfall / 2012 UK adults = 18%. Based on adult population of UK being 49.9 million (source ONS 2012) 49,969,000 x 0.18 = 9 million.

[2] - 49,969,000 UK adults x 7.31% relying on lottery to fund retirement = 3,652,734


LV=

LV= employs 5,800 people and serves over 5.5 million customers with a range of financial products. We are the UK’s largest friendly society and a leading financial mutual.

When we started in 1843 our goal was to give financial security to more than just a privileged few and for many decades we were most commonly associated with providing a method of saving to people of modest means. Today we follow a similar purpose, helping people to protect and provide for the things they love, although on a much larger scale and through a wide range of financial services including insurance, investment and retirement products.

We offer our services direct to consumers, as well as through IFAs and brokers, and through strategic partnerships with organisations such as ASDA, Nationwide Building Society and a range of trade unions.

Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. LVFS is a member of the ABI, the AFM and ILAG. Registered address: County Gates, Bournemouth BH1 2NF.