Some consumers who get a cash windfall from a retirement plan or lawsuit settlement find a way to hang on to the money, but many blow all of the cash quickly.
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The analysts based the data on results from a web-based survey of about 1,069 U.S. adults ages 18 and older.
The sample included three types of people:
Adults ages 50 to 75 who had received a lump sum of at least $25,000 from a defined benefit pension plan. Some withdrew the value in the form of a lump sum, and some receive monthly annuity payments of $500 or more.
Adults ages 50 to 75 who had a defined contribution plan balance of at least $25,000 when they retired. Some withdrew part or all of the balance, and some receive monthly annuity payments or $500 or more.
Adults ages 18 to 75 who had received a lawsuit settlement of $25,000 or more, and who had been given a choice of receiving the settlement as a lump sum or as an annuity.
The MetLife analysts found that 62% percent of the lump-sum recipients surveyed said they still have at least some of the cash.
Another 17% of the survey participants claimed that they did not know what had happened to the money.
About 14% said they had spent all of the cash in less than five years.
About half of all of the consumers surveyed said that, within the first year of receiving the large sum of cash, they had spent some of the cash on what they might have seen as good investments in themselves or their children: 27% used the money to pay down debt, 20% used the money to repair or improve their homes, and 4% used the money to pay for education.
About 12% said they had used a significant amount of the lump-sum cash to pay for vacations, and 1% said they had used a significant amount to pay for boats, jewelry or other luxury items.
--- Read Single Premium Deferred Annuities: One Size Does Not Fit All on ThinkAdvisor.