What to do with pension lump sum

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Elev8r

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My parents are set to retire soon and both will be receiving lump sums from their pension funds. It's a few hundred grand each, more money than they know what to do with.

Neither of them have any debt and both will be receiving annuities that are not quite what they currently earn. One will be getting ~80% of their gross, the other ~60% perhaps (I'm doing quite a bit of guesswork here though, not too sure of the actual figures). They don't have any issues making it to the end of the month at present.

There are a few things around the house that need fixing, and my mom has been pining after a Mini for the past few years. Not too sure if that would be a good idea, although she has driven the same car since 2001.

I thought they could supplement their annuities with other monthly income derived from the lump sums, but I'm not sure (and it would seem, neither are they) of specifically where to put the money in order to make that happen.

So, suggestions?
Thanks!
 
Some thoughts :-

Considering the doomsday picture painted about Eskom in the news lately (http://www.timeslive.co.za/local/2014/11/25/eskom-south-africa-living-on-the-edge-lynne-brown) maybe they might consider instead of buying a new car, they should have a look at reducing their reliance on electricty.

A gas stove top, solar heating, maybe a few solar panels to power basic items such as a fridge and TV so that it reduces their monthly expenditure on utilities. That will lessen their monthly expenses and also provide the basic comforts during load shedding. (Which I believe is going to increase)

However, they should not over-capitilize on their energy saving solutions considering their age.

No use in spending a bucket of money that would only pay for itself over 20 years.
 
It is dangerous to ask these type of financial questions on a forum - rather let them go to a reputable financial planner.
 
lexor said:
It is dangerous to ask these type of financial questions on a forum - rather let them go to a reputable financial planner.
Click to expand...

I agree with this totally. I retired a few years ago, and I engaged the services of a qualified Financial adviser to provide me with informed advise.

I have diversified investment portfolios to spread risk, and I am happy to say that I have not had to lower my standards of living, and although I enjoy the same activities & spending patterns as I did while I was working (and earning a salary) my net worth has actually increased thanks to good advice from my Financial Adviser/Planner
 
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Elev8r said:
Neither of them have any debt and both will be receiving annuities that are not quite what they currently earn. One will be getting ~80% of their gross, the other ~60% perhaps (I'm doing quite a bit of guesswork here though, not too sure of the actual figures).
Click to expand...

Are those annuities inflation protected. If not, they have a big problem.
Are they joint and last survivor annuities. If not the drop in household income following the 1st death could be challenging.
 
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