Advice needed to keep SMSFs on track
New research appears to have confirmed the reality that the higher account balances held by self-managed superannuation fund (SMSF) trustees generally lead to them succeeding in having a more comfortable retirement.
But even in the SMSF sector, there existed a growing number of trustees who were unlikely to reach their objective with respect to retirement incomes adequacy.
The research, undertaken by Accurium on behalf of the SMSF Association, has drawn from a database of more than 65,000 SMSFs (about 130,000 trustees) who were either transitioning to or were in retirement and revealed that despite the lower than average investment returns in the 2015 financial year compared to the average returns over the last five years, most trustees could be reasonably confident of affording a comfortable retirement.
"The majority of SMSF trustees could be reasonably confident, with an 80 per cent probability, of entering retirement being able to afford a comfortable standard of living, which is defined as a couple spending $58,922 a year at age 65," the report said.
However the report analysis said this find came with an important caveat — the proportion of SMSF trustees who were not in this position had increased from 25 per cent to 30 per cent compared with the findings in the previous year's report.
SMSF Association chief executive, Andrea Slattery, welcomed the report findings as an endorsement of the strength of the SMSF sector but acknowledged the worrying finding around those who would not have enough on which to retire.
"The fact there has been a slight growth in the number of trustees who can't be confident of achieving their lifestyle goals is cause for concern and highlights the need for them to get specialist advice," she said. "As the report says, this is a real opportunity for those advising SMSF trustees to help their clients before and during retirement."
Accurium senior actuary, Douglas McBirnie, said the research had shown that SMSFs were generally well prepared for retirement.
However he cautioned that lower expected investment returns meant that trustees needed to review their retirement plans to ensure their capital remained sufficient to support their retirement goals.
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