Retirement prospects for SMSFs on the rise

SMSF trustees are well placed for retirement, according to new research from Accurium, with SMSF couples over 60 typically having more than enough to achieve a comfortable retirement.

The latest Accurium Retirement Insights research, which analysed data drawn from Accurium’s database of 65,000 SMSFs in the 12 months to 30 June 2014, indicated the median SMSF balance for a 65-year-old couple is $1,162,000, well above the $897,000 required to achieve the ASFA comfortable retirement standard.

“The results show that, from age 60, SMSF couples with the median balance have more than enough in their SMSF to afford this lifestyle with a reasonable level of confidence,” the research said.

Accurium said this is a slight improvement since the first SMSF Retirement Insights research in 2013, which found that couples with the median balance could afford this lifestyle from age 62, based on 2013 balances.

The research warned, however, that SMSF trustees may be expecting to spend more than the ASFA Comfortable Retirement Standard of $58,444 each year for couples, given their taxable income is 84 per cent higher than the average Australian.

Based on its retirement adequacy model, Accurium estimated the savings needed to afford a spending level of $100,000 for life in retirement.

“This spending level is broadly supported by SMSF Association research which found that, on average, trustees think they will need $1,838 per week ($95,576 p.a.) in retirement,” the survey stated.

“Here the picture is less rosy; SMSF couples at all ages in our study with median balances do not have sufficient assets in their funds to support spending at $100,000 p.a. for life with 80 per cent confidence.”

The research noted that the median balance for a 65-year-old couple of $1,162,000 is significantly less than the $1,769,000 needed for a $100,000 a year lifestyle with 80 per cent confidence.

The research also showed the average investment return was 8.2 per cent for the 12 months to 30 June 2014.

The net increase for the median balance of an SMSF trustee couple across Accurium’s database was 5.2 per cent, from $1,037,000 to $1,091,000, taking into account contributions and drawdowns.

Accurium chief executive Tracy Williams said the results show that strong investment returns in the past two years have produced relatively large increases in balances.

“SMSFs are in the comfort zone for retirement. However, for most, a more prosperous retirement lifestyle remains out of reach,” she said.

She also noted that SMSF trustees are prepared to work longer and retire later to achieve financial security.

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