Lump Sum or Pension - Charles and Audrey
Charles and Audrey discussed what they should do with the $100,000 available from her superannuation scheme.
Charles thought they should take the lump sum and spend a bit on themselves for a change. Audrey favoured a pension. She knew that women in her family often lived into their eighties and she wanted to make sure she'd have enough to live on should she do the same.
However, Charles persuaded Audrey they deserved an overseas holiday and their first brand new car. So lump sum it was. About $45,000 was spent in the first year and in the second year they lent $20,000 to Audrey's younger brother, who'd lost his job and was buying into a franchise business.
When Charles died five years later the money was all gone and the business brought by Audrey's brother had collapsed. Audrey, now alone, faced a number of years in retirement with very little money. She wished she had insisted that at least half of the $100,000 was taken as a pension. This would have provided her with the security of a regular income ($4-5,000 a year on $50,000) over her lifetime.
