1. What advice can you provide Lisa with respect to longevity risk? Given her circumstances how is she likely to be affected by longevity risk? Given life tables, for how many years on average is Lisa likely to require an income stream?
Your client is Lisa, aged 63. Lisa’s husband looked after all of the couple’s finances and Lisa is now struggling to know how best to manage the finances since her husband died earlier this year. Lisa has 3 children aged 23, 17 and 15. Her husband has left a superannuation balance amounting to $600 000 consisting of a $150 000 tax-free component. Lisa is a relatively low risk investor and thinks that the security of a regular income stream sounds very appealing.
1. What advice can you provide Lisa with respect to longevity risk? Given her circumstances how is she likely to be affected by longevity risk? Given life tables, for how many years on average is Lisa likely to require an income stream?
2. What are the implications if part of the husband’s death benefit superannuation is distributed to their children?
3. Lisa is concerned that she does not have the skills to manage the investment decisions associated with the $600,000 superannuation death benefit. Does this effectively rule out an accountbased pension as option?
4. Based on Lisa’s circumstances would you advise that she commence an account based income stream or a non-account based income stream?
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