Most posters here understand real return quite well, and the various terms are pretty much interchangeable. However, I agree to some extent, COLA and after inflation or real are not quite the same, since the gov't determines the COLA, and can game it to some extent. But for the most part they all mean the same thing.
Since I am assuming you are talking real return, 7% is just fine. If you are living off of a 4% SWR (after inflation), that 3% also adds up over time. It may not buy you a seat on Virgin Galactic, but it beats the 0% after inflation you'll be making on the pension.
That's called a personal choice. Do what makes you happy.
That's interesting. I guess all my military friends need to be giving back that money they've been getting since their late 30s or 40s.
If the numbers bore you out, the poll wouldn't be tied. Obviously two people can look at the same numbers and come to different conclusions, based on their interest in investing, appetite for risk, trust in the gov't's numbers, etc. As far as picking stocks, that's not necessary. There's indexing, asset allocation, etc for other methods of matching (not necessarily beating) the market gains. But stock picking works fine too, if that's your interest and method. And when you get tired of it you can take the $2M and buy SPIA with COLA, and still be where you would have been in the first place, although possibly with some money left over due to that compounding 3% over the 10-20-30 years.
I'm not advising any of this, just pointing out that there are different strokes for different folks, and no way at this point to know which is better. You pays your money and you takes your chance.