As you hit your middle years, the idea of retiring starts to become an ever more pressing concern. You realise that your superannuation is no longer just a distant concept but a fast-approaching reality that you need to actively prepare for.
The choices that you make now can have a direct impact on how your lifestyle shapes up later.
For many Australians in their 40s and 50s, it’s the ideal time to take control, reassess your superannuation strategies and consider options like a self-managed super fund (SMSF).
You are old and wise enough now to potentially take on the responsibility of managing your super fund yourself, so why not consider the benefits?
Reassessing Your Super Strategy Midlife
The years between 40 and 60 are, for many people, their peak earning years, which makes this period crucial for boosting their super balance. It’s also a time when your financial goals start to become ever clearer. At this point, your children may be nearing independence or have already attained it and your mortgage might be shrinking or fully paid off.
Now, with retirement no longer a vague future plan, it’s the perfect time to review how your super is performing.
Are you happy with your fund’s fees and returns? Are you taking advantage of concessional and non-concessional contributions? Catch-up concessional contributions, in particular, are worth considering if you have had interrupted work periods earlier in life, as they allow you to make up for those years when you couldn’t contribute as much.
An SMSF can offer more control and flexibility at this stage.
However, it’s important to know that an SMSF is not a one-size-fits-all solution. It requires time, involvement and comprehensive compliance know-how.
Is An SMSF Right for Your Situation?
Setting up an SMSF can offer many potential benefits. However, you need to carefully consider whether you are in the right position to make it work for you. If not, it could ultimately end up backfiring.
Typically, a balance of $200,000 or more is considered the minimum for an SMSF to be cost-effective. You also need to honestly ask yourself if you have the time, financial knowledge and appetite for hands-on management to pull it off.
If you answer in the affirmative to these questions, then some of the benefits of an SMSF include greater control, improved investment flexibility (such as direct property or shares) and the ability to consolidate family superannuations into one fund.
There are also estate planning advantages and potential tax efficiencies that could come your way. However, these potential benefits must be thoughtfully weighed against the arduous legal and administrative responsibilities involved.
If you are thinking seriously about pursuing an SMSF, Blue Diamond Financial can guide you through the setup and management process and help ensure that your compliance and investment strategy align with your long-term goals. Contact us now to get started.