Would you pick a £1m lump sum or £1,000 a week for life?

If you won the lottery and had the choice, would you pick a £1million lump sum, or take £1,000 a week for life? 

That was the question posed to nearly 7,000 Britons by pollster YouGov recently, and it is fair to say opinions are divided. 

While the answer may seem obvious to some, Britons are split on what they would choose – as evidenced by the fierce debate it caused on social media website X. 

In YouGov’s survey, some 55 per cent of respondents said they would take the £1million lump sum, while 41 per cent said they would take the weekly £1,000. The rest said they didn’t know. 

Interestingly, 66 per cent of 18 to 24 year-olds said they would opt for £1,000 a week, while only 17 per cent of those aged 65 and over would also choose the weekly payment.

It’s possible they were worried about not living long enough to make £1million week by week, as it would take 1,000 weeks or nearly 19 years of £1,000 payments to build up the £1million.

This is Money investigates what option you should really choose for the best financial outcome with the help of a few savings experts. 

The answers here assume that the money is tax-free, as lottery winnings always are.  

Choice: Some 55% of respondents said they would take the £1million lump sum – which might enable them to immediately jet off on a luxurious holiday

Should you take £1,000 a week?

Pocketing £1,000 a week would set you up with an above average salary. A typical worker would have to be earning more than £71,500 to take that amount home after tax. 

In addition to any other income you already receive, you would have a high amount of disposable income when compared to the British household average which sits around £34,500. 

Unlike the £1million pound lump sum, this will go on for life. While it will take 19 years to reach £1million, you will stand to make more after that. It’s a safe bet that you can be financially comfortable for the rest of your life. 

Whether you would need to keep working would be your choice, but you would need to bear in mind that inflastion would erode the ‘buying power’ of the £1,000 over time as the cost of good and services went up, so you would gradually feel less well-off over time. 

If inflation averages 2.5 per cent over the next 20 years, that sum will only be worth around £609 per week by 2046. 

Another downside is that you won’t be able to make significant cash purchases, such as buying a home outright, without having to wait for several years. 

What about the £1million lump sum? 

This is Money spoke to two financial experts, and both said it makes more financial sense to take the lump sum, whatever age you are.  

James Blower, savings expert says: ‘I’d take the lump sum for several reasons. Firstly, and most obviously, is that there’s always the risk you die and the £1,000 then stops.’

If you’re unlikely to live for 19 more years, it would be unwise to take the weekly £1,000. But even if you do live for a lot longer, the lump sum still works out better.

This is because you would have the opportunity to make hefty returns straight away if you invested the money or put it in an interest-paying savings account. 

‘If invested well, £1m should generate returns greater than £52,000 a year or a 5.2 per cent return, and you still have the lump sum,’ adds Blower. 

He also notes the impact of inflation. ‘The £1,000 a week will have much less purchasing power in future years,’ Blower says. ‘Having the lump sum also enables you to make significant purchases such as putting a deposit down on a house or buy one outright, which the weekly income doesn’t.’ 

Personal finance expert Andrew Hagger agrees. He says the weekly payments would take too long to match £1million when a lump sum could generate a similar income through savings interest alone. 

Even if you put the £1million in an almost risk-free high interest savings account, you could make a similar amount to £1,000 a week, while also keeping £1million to yourself. 

For example, if you use a savings account that returned 5 per cent – you would get £50,000 a year in interest, only slightly lower than the £52,000 you’d make with the weekly payments. Compound interest – earning interest on interest – on the lump sum would mean the pot would grow faster. 

You would pay tax on these earnings, but even if you were in the highest tax band you’d likely still make around £30,000 a year or £576 a week – while also keeping the  £1million. 

Investing the whole sum would probably be unwise, too, as it would be advisable to first make use of tax-free options such as a pension or Isas. 

You’d also pay tax if you invested the money and cashed out through Capital Gains Tax – but would still end up on top because you have your base £1million, unless, of course, your investment lost money.