Many Australians have turned to self-managed super funds (SMSFs) to gain more control over their retirement planning and savings. As of 30 June 2024, over 625,000 SMSFs (with more than 1.1 million members) held $990 billion in assets, making up a quarter of all Australian superannuation assets. But is an SMSF right for you? There are several factors to consider before making a decision.

Potential Benefits of an SMSF

An SMSF can offer attractive benefits, particularly when it comes to control and flexibility in your retirement planning. With an SMSF, you can tailor your investment strategy to suit your personal goals and risk tolerance. Additionally, an SMSF provides access to a broader range of investment options compared to retail or industry super funds, including direct property, shares, term deposits, and even certain collectables.

The flexibility of an SMSF can also offer advantages in tax planning, particularly around timing investment decisions and managing your retirement planning. You may also have the opportunity to implement more sophisticated estate planning strategies.

Key Considerations

Running an SMSF is not suitable for everyone. You need to take on several roles, including investor, administrator, and trustee. Before deciding, ask yourself the following questions:

• Costs and Expertise: Have you considered the setup and ongoing costs of running an SMSF, including auditing, tax, and financial advice? Do you understand your legal obligations as a trustee? Do you have sufficient financial or investment knowledge, or access to professional guidance?
• Time and Commitment: Can you dedicate enough time to manage your fund? Are you prepared to stay informed about superannuation regulations and market conditions?
• Practical Considerations: Are you ready to actively participate in investment decisions and fund administration? Have you considered how your insurance needs (e.g., life, total and permanent disability [TPD], income protection) will be met? Will transitioning to an SMSF be financially beneficial for you?

ATO Support and Resources

The ATO offers resources for those considering or running an SMSF, covering the full lifecycle from start-up to winding down. Available resources include:

• Starting a Self-Managed Super Fund: This education module helps you understand how an SMSF is set up and whether it’s right for you.
• Running a Self-Managed Super Fund: This new self-paced module covers the obligations of a trustee when running an SMSF, managing contributions and rollovers, handling investments, paying super benefits, and staying up-to-date with reporting and administration.
• Winding Up a Self-Managed Super Fund: This module explains the situations where you might consider winding up your SMSF and prepares you for the process when the time comes.

These SMSF resources and online education modules are available on the ATO website under “Self-managed super fund education products” or by accessing the “Small business education portal.”

Professional Advice

Before making any decisions about setting up an SMSF, it’s crucial to seek professional advice to ensure it’s the right choice for your retirement planning strategy.