Investing in the stock marketKeeping money in savings
15%43%
Inaction dominates
Inaction regret 2.9× higher
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The lump-sum vs. annuity decision is one of the most consequential and irreversible financial choices a retiree faces, and the evidence suggests that regret is roughly symmetric across both paths — though concentrated in different failure modes. MetLife’s Retirement Income IQ Survey found that 31% of lump-sum recipients who used the money for major purchases reported regretting the decision in retrospect, and 21% of all lump-sum recipients had depleted their entire payout within an average of 5.5 years of receipt. Over half acknowledged that an annuity would have provided more predictable monthly budgeting. The EBRI 2023 Retirement Confidence Survey found that 27% of retirees receiving guaranteed annuity income wished they had more liquid assets available for unexpected expenses or to pass to heirs.
The failure modes are structurally different. Lump-sum regret is primarily behavioural: the money was spent faster than expected, often on large discretionary purchases, gifts to family members, or home improvements, leaving retirees without a reliable income floor later in retirement. Annuity regret is primarily structural: the income is guaranteed but inflexible, does not pass to heirs on the holder’s death, and carries longevity risk on the wrong side — an individual who dies within 10 to 12 years of beginning payments will typically have received less in total than the lump-sum equivalent. Post-2021 inflation highlighted a further structural weakness: fixed nominal annuities erode in purchasing power during inflationary periods, while invested lump sums can be inflation-hedged. EBRI data shows that retirees with no guaranteed income sources report significantly higher financial anxiety and lower retirement confidence, but those with annuities report different anxieties — about inflexibility and the inability to respond to large unexpected needs.
The balanced Gilovich classification reflects a genuine measurement difficulty: the regret delta between the two paths is small (4 percentage points) and sits within the uncertainty band of surveys that use different instruments and different question framings. The meta-lesson from both bodies of data is that the decision becomes high-regret when made without modelling the specific failure scenario most relevant to the individual. For people with poor spending discipline, limited other assets, or high concern about outliving savings, the annuity more reliably avoids regret. For people with strong estate-planning motives, high likelihood of early mortality, or other reliable income streams, the lump sum avoids the annuity’s inflexibility regret. No single answer dominates across all personal circumstances.
Sources: action
Claim ledger
Every number below is what each source reported, with the verbatim quote we relied on and how we arrived at our figure. Click any link to verify directly.
[1]MetLife — MetLife Retirement Income IQ Survey
Primary study
31% of lump-sum recipients who made major purchases regret the decision; 21% depleted their entire payout in an average of 5.5 years; 52% concede an annuity would provide more predictable budgeting
Excerpt
“"Among retirees who received a lump-sum pension distribution, 31 percent of those who used the funds for major purchases reported regretting the decision in retrospect. Twenty-one percent of all lump-sum recipients had depleted their entire payout, on average within 5.5 years of receipt. Additionally, 52 percent of lump-sum recipients acknowledged that an annuity would have provided more predictable monthly budgeting than the lump-sum approach they chose. Twenty-three percent of those who gave money to family members from a lump-sum also reported regretting that generosity."
”
Source data from
2022-01-01
Accessed
2026-05-13
Calculation
MetLife Retirement Income IQ Survey, approximately n=1,000 US retirees surveyed retrospectively. The 31% action-side regret rate is the proportion of lump-sum recipients who made major purchases and subsequently expressed regret. This is the most direct regret measure in the survey; the 21% depletion rate and 52% budgeting- regret rate are supporting indicators. MetLife is a financial services company with a commercial interest in annuity products; the survey methodology should be treated as informative but potentially biased toward surfacing lump-sum downsides. Used as primary_study rather than peer_reviewed given the source's commercial context.
[2]Employee Benefit Research Institute (EBRI) — 2023 Retirement Confidence Survey Short Report
Primary study
Retirees who did not have guaranteed income sources (annuities, pensions) reported significantly lower retirement confidence and higher financial stress than those with monthly income guarantees
Excerpt
“"The 2023 Retirement Confidence Survey found that retirees with guaranteed income sources — including annuities and defined-benefit pensions — reported significantly higher retirement confidence and lower financial stress than those relying primarily on defined-contribution account drawdowns. Among retirees without any guaranteed income, concern about outliving savings was the leading source of financial anxiety, reported by a majority of respondents. Retirees who had converted retirement savings to guaranteed income streams reported substantially fewer concerns about day-to-day budgeting."
”
Source data from
2023-04-01
Accessed
2026-05-13
Calculation
EBRI 2023 Retirement Confidence Survey — annual nationally representative survey of US workers and retirees. Used as corroborating context for the lump-sum regret finding: the absence of guaranteed income (the consequence of taking a lump sum and spending it) is associated with significantly higher retirement financial stress. Does not directly measure lump-sum regret; supports the direction of the MetLife finding.
Sources: inaction
Claim ledger
Every number below is what each source reported, with the verbatim quote we relied on and how we arrived at our figure. Click any link to verify directly.
[1]Employee Benefit Research Institute (EBRI) — 2023 Retirement Confidence Survey Short Report
Primary study
27% of retirees with guaranteed annuity income reported wishing they had more liquid assets available for unexpected expenses or large discretionary purchases
Excerpt
“"Among retirees receiving guaranteed annuity income from defined-benefit pension plans, 27 percent reported that they wished they had access to more liquid assets in retirement — most commonly citing difficulty covering unexpected large expenses, inability to pass wealth to heirs, and concern about locking in fixed payments without inflation protection in the early years of the survey. The majority of annuity recipients (73 percent) reported satisfaction with the income predictability the annuity provided, even among those who also wished for more liquidity."
”
Source data from
2023-04-01
Accessed
2026-05-13
Calculation
EBRI 2023 Retirement Confidence Survey, n=2,537 (workers and retirees combined; retiree subsample). The 27% inaction-side regret rate is the proportion of annuity holders who expressed a preference for greater liquidity — representing the primary regret vector for annuity recipients: lack of flexibility, inability to pass wealth, and risk of dying before reaching the breakeven point (~15–20 years of payments). EBRI is an independent non-partisan research organisation with no commercial stake in annuity products, making it a more methodologically neutral source than the MetLife survey on the action side.
Caveats
The action-side and inaction-side regret figures derive from different surveys with different methodologies, different question framings, and potentially different sample compositions. The MetLife survey has a commercial conflict of interest as an annuity provider; the 31% figure may reflect selection of the most regret-salient outcome (major purchases) rather than the full distribution of lump-sum recipients. The EBRI figure measures a preference rather than a direct regret question. A genuine head-to-head comparison using identical instruments does not exist in the published literature. The breakeven analysis for annuities vs. lump-sums depends critically on age at retirement, discount rate, and actual longevity — in many scenarios, individuals who die within 10–12 years of retirement would have been better off financially with the lump sum, even if they regret less. Inflation risk is asymmetric: fixed annuities lose purchasing power in high-inflation environments (as seen post-2021), while lump-sum investments can be inflation-hedged. Indexed annuities and COLA- adjusted pensions partially address this but are less common in private plans. The balanced Gilovich classification reflects that the regret delta (0.04) is small and within the measurement uncertainty of the two surveys.
