Ask Paul: How can I make my compensation payout last till pension age?
I have money coming to me from a compensation claim - it's estimated to be $900,000.
I am 58, single, own my home and car, and have $65,000 in super, and I have no debt.
I won't be able to go back to work due to my injuries. All medical costs for now and the future are covered by the insurance company.
What is the best place for me to put the money to earn an income till I reach 67, and then incorporate the age pension into my living cost?
I like to keep things simple and was thinking of bank investment, but they're not offering that much at the moment.
Because I can't go back to work, this will have to last for a while. - Jim
Jim, $900,000 that is critical for your standard of living for decades is way too complex for me to answer in a few words.
There is so much information an adviser would need to guide you accurately.
Key things are your health and any impact that this may have on your life expectancy, work that may be needed on your home now or in the future to assist you, any dependants and estate planning issues, your annual spending budget, your attitude to risk and a whole lot more!
A good place to start would be your super fund. It is likely to have a member advice service. Or you could go to the Financial Planning Association and look at its adviser referral service. Either way, you need a good, professional adviser. Make sure you understand their fees and ongoing service.
What they should be able to do for you, once they understand your complete situation and future needs, is to map a plan for the future. This will include an investment strategy.
I am really concerned about a "simple" plan leaving all your funds in a bank account. After inflation and tax, this seems like a pretty certain way to have little left in the long term. An adviser will discuss much better options with you, while keeping things simple.
I suspect topping up your super is likely to be a key part of this. Good, low-cost super funds have delivered returns way above a bank account over the long term. The adviser will also assist with a potential aged pension in the years to come.
You have a serious need for professional advice, so start by calling your super fund. Don't hesitate to get a second opinion. This money is absolutely essential to you and its effective management is really important.
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