QUESTION:
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At 62 I have just "retired", and my prospects of working again are low. I have been offered on my defined benefit super of $900,000, a lifetime pension of $80,000 unindexed. If I die before my wife she would get a 50 per cent pension.
My wife and I have two accumulation funds totalling $700,000 that we could convert to allocated pensions which would ‘top up’ my lifetime pension as it loses value due to inflation. However, I’m still undecided over the lifetime pension as I can get few details from the super fund. Seems good in the short term but inflation really hits it as the years go on.
Our other option is to convert all the $1.6 million into allocated pensions. What is your view on an unindexed lifetime pension of $80,000 with a back-up of an allocated pension, or should we look seriously at just an allocated pension.
ANSWER:
There is no easy option – factors to consider include your confidence and skill in handling money, and whether leaving an estate to your beneficiaries is important to you. On the face of it, holding $1.6 million in cash is a good option, but I strongly suggest you talk to a good adviser and canvass all your options.