DIY Super in Retirement: Golden Opportunity or Stressful Burden?
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Retirees across Australia are increasingly asking themselves a big question: Should I take control of my superannuation by running a self-managed super fund, or am I better off leaving it to the professionals? It’s a dilemma that speaks to both our desire for independence and our fear of making a misstep with our hard-earned nest egg. With more than 1.1 million Australians now managing their own super through Self-Managed Super Funds (SMSFs) – collectively overseeing over $1 trillion in assets – the DIY super trend has become a formidable force. But behind the appealing idea of “doing it yourself” lie serious considerations.
So, top up your cuppa and settle in. We’re about to unpack the reality of running your own super fund in retirement – the good, the bad, and the complicated – to help you decide whether the DIY route is your golden opportunity or a retirement headache in the making.
Being a trustee comes with responsibilities. You’re managing your retirement savings within the framework of superannuation law. You must follow the “sole purpose test” – in plain English, the fund exists solely to provide retirement benefits to members (or their beneficiaries, if a member passes away).You can’t dip into it for other reasons (more on that temptation later). You have to create an investment strategy, keep records, arrange an independent audit each year, and lodge an annual return with the Australian Taxation Office (ATO). The ATO is the main regulator for SMSFs, and it keeps a close eye on these “mum-and-dad”.
In exchange for taking on all that work, you get full control over how your super is invested. With a public super fund, your money is pooled with others and managed by professional fund managers under strict guidelines. With an SMSF, you effectively become the fund manager. You decide whether to invest in shares, bonds, property, cash, or perhaps more exotic options (like specific stocks, or even collectibles or crypto – though strict rules apply to keep things above board). Importantly, an SMSF enjoys the same tax benefits as other super funds (15% tax on earnings in accumulation phase, and generally tax-free investment earnings in pension phase after age 60, under current rules), as long as you operate the fund according to the rules.
Running your own super fund can sound empowering – and it is, but it’s also complex. As ASIC’s MoneySmart site bluntly puts it: managing an SMSF is “a lot of work,” and even with professional help it’s time-consuming. So before we delve into the pros and cons, keep in mind that choosing an SMSF means stepping into the shoes of not just the investor, but also the compliance officer and administrator. It’s perfectly doable – thousands of Australians set one up each year – but it’s not something to jump into without doing your homework (and possibly getting some solid advice).
Control and Choice: With an SMSF, you aren’t limited to the investment menu offered by a retail or industry fund. Want to invest directly in a particular ASX-listed company that you believe in? You can. Prefer to keep a chunk of your super in a term deposit or a favourite managed fund? Go for it. Some SMSF trustees buy residential or commercial property through their fund (often using the SMSF to hold a property that their business rents – a strategy allowed under specific conditions). Others might invest in assets like gold or alternative investments. There’s a wider palette of investment options available in an SMSF, and you can tailor the mix to suit your risk tolerance, interests, and goals. This flexibility is a big draw. In fact, about 26% of all SMSF assets are in listed shares and 17% in cash or term deposits, indicating many trustees gravitate to familiar options (blue-chip stocks, bank deposits) that they can manage directly.
Engagement and Empowerment: Running an SMSF can also make you more engaged with your retirement savings. Rather than glancing at an annual statement from a super fund, SMSF trustees are involved in every decision. This can be intellectually stimulating – even fun for those who enjoy following markets or tinkering with investment strategies. “Managing your own super can be very rewarding, and it’s a surefire way to encourage taking an interest in your future nest egg,” notes veteran financial commentator Paul Clitheroe. Many retirees take pride in learning the ropes and steering their own ship. There’s a sense of independence in not relying on a faceless institution – if you’ve run a business or managed your household finances successfully, you might relish applying those skills to grow your super.
Cost Savings (at Scale): For people with larger super balances, an SMSF can potentially be cost-effective. Large APRA-regulated funds (the big super funds) often charge fees as a percentage of your balance. An SMSF, by contrast, has mostly fixed costs – you might pay a fixed annual admin fee, accounting and audit fees, etc., regardless of whether your fund has $300,000 or $3,000,000. That means if you have a very large balance, the percentage cost of running an SMSF could be lower than the percentage fees in a retail fund. (Conversely, if you have a small balance, SMSF costs will eat up a bigger share – we’ll cover that in the “cons” section). Historically, regulators suggested you needed around $500k in super to justify an SMSF on cost grounds, but recent analysis suggests the break-even point may be lower. In fact, new research commissioned by the SMSF Association found that SMSFs with $200,000 or more can perform on par with larger funds, challenging the old $500k guideline.
John Maroney, former CEO of the SMSF Association, said the data showed “no material differences in performance” for SMSFs between $200k and $500k balancesnationalseniors.com.au – implying that once you cross roughly $200k, and especially as you get into the high hundreds of thousands, the playing field levels out in terms of returns (provided you manage the fund well). This has given confidence to some who want to start an SMSF with perhaps a few hundred thousand dollars, especially if they plan to add more funds (for example, rolling over other super accounts or contributing an inheritance or downsizing proceeds). The key point: an SMSF can make economic sense if you have a sufficient balance and the savvy to run it efficiently.
Estate Planning and Family Involvement: Another oft-touted benefit of SMSFs is the role they can play in estate planning. Because you’re the trustee, you have flexibility to plan how your super benefits will be distributed upon your death. For instance, you can nominate binding death benefit nominations or even set up your super pension to revert to your spouse automatically. Some people like the idea of keeping wealth “in the family” – an SMSF can include your adult children as members (up to six members total now, after a rule change in 2021 that raised the limit from four). In theory, a family SMSF could span three generations, with mum and dad and possibly the adult kids pooling their super.
This scenario is not very common (fewer than 0.2% of funds have more than four members so far), but the flexibility is there. Even without kids in the fund, many retirees appreciate that with an SMSF they can implement specific estate planning strategies – for example, managing how death benefits are paid out (lump sum vs pension), or even using reserve accounts and other technical measures to control timing and tax outcomes of passing on super assets. In short, an SMSF can be a useful tool if you have particular wishes for your legacy. It’s your fund, your rules (within the law), so you can structure things more precisely than a public fund might allow.
Personal Touch and Transparency: When you run your own fund, you have full transparency into where your money is and how it’s doing. There are no surprise changes in fees or investment strategy by someone else – you’re in the driver’s seat. For some, especially those who have experienced disappointment or distrust with big institutions, that personal control provides peace of mind. You might simply have strong convictions about certain investments (for example, avoiding certain industries or focusing on sustainable investments) – with an SMSF, you can align your portfolio exactly with your values or preferences.
All these upsides paint a picture of SMSFs as a retiree’s dream: control, flexibility, potential cost savings, and the ability to personally engage with and benefit your family through your super. It’s no wonder that around 85% of SMSF members are over 45 – many are in their 50s, 60s, and beyond, at the stage of life where they’re either preparing for retirement or enjoying it, and want that hands-on say in their financial future.
But (and you knew a “but” was coming), with great power comes great responsibility. The freedom of an SMSF doesn’t come free – it demands time, knowledge, and the stomach for risks and rules. Let’s flip the coin and talk about the downsides and challenges that also come with managing your own super.
Ongoing Costs: Running an SMSF isn’t free. There are setup costs (establishing the trust deed, maybe creating a corporate trustee, registration fees) and ongoing costs each year. You’ll need to prepare annual financial statements and a tax return, which for most people means paying an accountant or administrator. You must also appoint an independent auditor each year to review the fund – yes, every year, even if you’re the only member, the law says an outside auditor has to sign off that your SMSF’s finances and investments comply with regulations.
There’s also an annual SMSF supervisory levy payable to the ATO (roughly $259 currently). All up, the median operating cost of an SMSF is about $4,100 per year according to ATO data. Many spend more if they use financial advisers or additional services – the average total cost was higher (over $15k, skewed by some big or complex funds). If your fund is small, say $100,000, a $4k annual cost is a hefty 4% of your assets vanishing in fees each year – a drag that could likely be lower in a large pooled fund. This is why experts generally caution small-balance SMSFs.
As Danielle Press noted, research shows SMSFs with very low balances (e.g. under $200k) tend to deliver worse net returns compared to larger funds, partly because those fixed costs chew up a lot of the earnings. The SMSF industry’s own stance is that unless you plan to grow the balance quickly, starting an SMSF much under $200k probably isn’t in your best financial interest.
Bottom line: ensure you have enough money to justify the costs, and go in with eyes open about the bills an SMSF will generate. If you do set one up, keep a tight rein on expenses – shop around for reasonably priced audit/accounting services, and avoid unnecessary complexity that adds costs.
Time and Effort: Money isn’t the only cost – time is a big one. Being an SMSF trustee is often compared to having a part-time job managing your retirement fund. ASIC found that on average, SMSF trustees spend over 100 hours a year on managing their fund. That’s roughly 8+ hours a month – basically a full workday each month dedicated to paperwork, research, and administration. Think about what that entails: you might be researching investments, keeping up with changes in super or tax laws, recording all contributions and withdrawals, doing bank reconciliations, preparing minutes of decisions, and liaising with your accountant or adviser. Even if you outsource some tasks, you need to coordinate and review that work. Over a third of SMSF trustees in a survey said running their fund was more time-consuming than they expected.
And remember, no one automatically does things for you in an SMSF. In a regular fund, the fund handles compliance and reporting. In an SMSF, you (or someone you hire) must, for example, ensure your fund’s financials get to Centrelink if you’re on the Age Pension – it’s not automatically reported, meaning extra forms for you (some retirees are caught off guard that an SMSF can complicate means testing for government benefits, because the onus is on the trustee to supply up-to-date financial information). The ATO and ASIC also expect SMSF trustees to formally document decisions (e.g. keeping minutes of investment decisions, even if it’s just you deciding to buy Telstra shares on a Tuesday – technically you should note it in the records). All this can be quite a paperwork drag. If you’re not prepared to devote time regularly, or if you prefer a “set and forget” retirement income, an SMSF could feel like an unwelcome chore.
Compliance and Legal Responsibility: When you run an SMSF, you are the one who must ensure the fund obeys all the laws. This includes superannuation rules, tax rules, and even some corporations law if you have a corporate trustee. It’s a heavy responsibility – if something goes wrong, you (and your fellow trustees, if any) bear the consequences, not a fund manager. For example, if your SMSF breaches the rules, the ATO can declare it non-compliant, which would mean a devastating tax penalty (your fund’s assets could be taxed at the highest marginal rate, which is 45% – a potential wealth wipe-out). Even smaller infractions can lead to fines or directed education.
There are many rules to follow: you can’t use the fund’s assets for personal benefit (e.g., you can’t live in that SMSF-owned holiday house or hang that SMSF-owned artwork in your living room – that’s illegal because it gives a present-day benefit). You must not lend money to yourself or relatives from the fund. You need to adhere to contribution limits and pension withdrawal minimums. The list goes on. It’s telling that the ATO each year catches folks doing the wrong thing – often inadvertently – and comes down hard.
ATO Deputy Commissioner Emma Rosenzweig recently highlighted a major pitfall: illegal early access. In tough times, some people get tempted to tap their super early via an SMSF. Rosenzweig noted the ATO’s “greatest concern” is SMSF members withdrawing retirement savings before the legal age (typically 60) – and a large chunk of those doing so are new SMSF trustees who set up a fund with no genuine intention to run it properly, other than accessing cash. In 2020, for example, an estimated $380 million was illegally withdrawn by SMSF trustees before it was allowed.
The ATO has been cracking down on these cases, dishing out stiff penalties and even banning offenders from ever running an SMSF again. The moral here for honest retirees is: you must play by the rules, no exceptions. The money in an SMSF might feel like it’s all yours (and it is your money ultimately), but until you meet a condition to withdraw it, it’s locked for retirement. As Paul Clitheroe quips, in an SMSF it’s “your money – just not yet”. Breaking the rules out of ignorance or desperation can ruin your retirement, so the compliance burden is not something to take lightly.
Investment Risks and Potential Mistakes: Not every DIY super story has a happy ending of market-beating returns. The reality is, when you manage your own super, you shoulder the investment risk. If you make a poor investment choice, you wear the consequences. We all like to think we’ll invest wisely, but let’s be honest – not everyone is Warren Buffett. Many SMSFs have very concentrated portfolios (for instance, Aussie retirees often love bank stocks and rental properties). That can work out, but it also can backfire if those assets take a hit. A large super fund spreads your money across thousands of investments worldwide; an SMSF might have you a bit over-exposed to one sector or asset. In fact, the ATO has in the past sent letters to SMSFs that had more than 90% of their money in one asset or one class (like a single property), reminding trustees of their obligation to consider diversification as part of their investment strategy. It’s not illegal to have all your eggs in one basket with an SMSF, but it’s risky – and something a professional manager would generally avoid.
There’s also the risk of being sold into an inappropriate investment by unscrupulous advisers or promoters. Fraud and scams sadly do target SMSF trustees. Unlike large funds which have internal controls and compensation schemes (in limited cases) for fraud, if your SMSF gets defrauded, you often have little recourse. A sobering thought is that SMSFs were excluded from government compensation arrangements that bailed out victims of some finance scandals in the past. As one independent adviser put it, SMSFs can be “vulnerable” because they offer “more scope for fraud and fewer safety nets” – if a dodgy scheme or adviser causes losses, the trustee may bear it alone. This isn’t to say SMSFs are inherently unsafe – but you must keep your wits about you, choose advisers carefully if you use them (check they’re licensed, etc.), and avoid “too good to be true” pitches (like the classic line: “Set up an SMSF and we’ll help you invest in [insert scheme] for guaranteed high returns” – red flag!). The autonomy of an SMSF is double-edged: you’re free to make great investment choices, and you’re also free to make mistakes without a safety net.
Knowledge and Confidence Required: Hand-in-hand with risk is the need for financial literacy and decision-making confidence. ASIC’s research found that SMSFs are “not an appropriate option for people who want a simple super solution, particularly if they have a low level of financial literacy or limited time to manage their affairs.” That might sound blunt, but it’s a fair warning. If you’re not comfortable reading financial statements, understanding investment concepts, or making big money decisions, running an SMSF could be a stressful venture. And unlike a managed fund where you can blame the fund for poor performance, with an SMSF the buck stops with you. Some retirees set up an SMSF on the enthusiastic advice of an accountant or friend, only to later feel in over their heads.
Remember, you can hire professionals (accountants, financial planners) to help with an SMSF – and indeed you should get expert help for taxes, audits and possibly strategy. But even if you delegate tasks, you remain the trustee responsible for everything. ASIC underscores that even when paying professionals, SMSF trustees are responsible for the fund’s compliance with the law. In practice, this means if your adviser makes a bad call or doesn’t follow the rules, you can’t just say “Oh, my adviser did it, not me.” The ATO will still say you, the trustee, failed your duty. That’s a heavy weight, and it requires a level of confidence in overseeing those you hire. It also means you need to be engaged enough to notice if something’s amiss.
Now, none of these challenges are insurmountable. Plenty of ordinary Australians run SMSFs successfully. But it’s often because they’ve treated it like a serious endeavour – they educate themselves, possibly come from a business/finance background or are willing to learn, and they commit the time. They also tend to have enough super savings to make it worthwhile. If that doesn’t sound like you, you might be a prime candidate to not have an SMSF. As ASIC’s Danielle Press said, many consumers hear all about the benefits but are “not equally alive to the considerable risks and responsibilities that come with the deal”asic.gov.au. So, it’s wise to take a hard look at the “cons” column before jumping in.
A Part-Time Job in Your Golden Years? For some people, managing their SMSF becomes almost a hobby – something to keep them mentally active and engaged. If you love reading the financial news, tracking stocks, and tinkering with spreadsheets, you might actually get a kick out of those 100 hours a year spent on the fund. It can provide a sense of purpose and routine.
On the flip side, if you find that stuff tedious or stressful, those hours can become a burden. One retiree wryly described his SMSF admin as “like doing homework, forever” – every year there’s another set of forms and filings. Consider whether you want to allocate time each week or month to managing paperwork and decisions. Will you resent it when you’re trying to enjoy a caravan trip around Australia but have to log in to pay the fund’s tax instalment or deal with a corporate action on a stock you hold? Or will you be the type to bring the laptop on the road and happily manage your investments from a campground? Knowing your own tolerance for ongoing tasks is key.
Stress and Anxiety vs. Confidence: Managing money can be emotional. Markets go up and down. When you’re in charge, a market downturn can feel scary – you might lose sleep worrying, “Should I move more to cash? Ride it out? Am I doing the right thing?” In a regular super fund, you’re somewhat shielded from day-to-day anxiety; someone else is at the wheel. With an SMSF, you’re constantly aware of your balance’s fluctuations because you’re often actively monitoring and making choices. This can cause stress, especially in turbulent times. ASIC’s Danielle Press pointed out that even professionals find the current economic climate challenging, and “investors with low financial literacy who wanted a simple retirement strategy could not compete with professionals who spent more than 100 hours a year” managing the fund. That highlights that it takes skill and diligence to run an SMSF well.
If you’re not confident, you might second-guess yourself a lot, which is stressful. Alternatively, some people become overconfident – thinking they’ll do better than the big funds easily – which can also be dangerous if it leads to taking on too much risk. Be honest with yourself about whether running your own fund would make you feel empowered or anxious. A bit of nervousness is normal at first, but if the whole idea makes you break out in sweat, there’s no shame in sticking with a professionally managed fund and enjoying a simpler life.
Impact on Relationships: If you have a spouse or other family members in the SMSF, consider the dynamic. Often in couples, one person takes the lead in managing the SMSF (commonly one partner might be more financially inclined). That can work fine, but both of you are trustees and legally responsible. It’s important that both parties have a basic understanding and agree on the strategy. There have been cases where one spouse passes away or loses capacity (for example, due to dementia), and the surviving spouse is left grappling with an SMSF they never really handled. This can add tremendous strain at an already difficult time. Succession planning for an SMSF is vital – you might need enduring powers of attorney in place, and you should have a plan for what happens to the fund when you’re 85 and perhaps not keen to manage it any more (or no longer able).
Winding up an SMSF and moving back to a large fund or into annuities later in life is an option many take, but that itself is a process you’ll have to manage. Additionally, involving adult children in an SMSF (making it a family fund) can be rewarding if it’s a shared project, but it also could introduce family conflicts (differences in investment approach, or issues if one wants out and others don’t). Think about whether you want your family finances entangled in that way.
Administrative Hassles vs. Independence: Some retirees actually enjoy the independence of an SMSF – not having to deal with call centres, not worrying that rules of a fund might change, etc. But others find the administrative load frustrating. One practical example: if you’re on a part Age Pension and have an SMSF, you must report the fund’s assets to Centrelink at least once a year (and anytime there’s a significant change). With an industry fund, Centrelink often gets your balance data automatically.
With an SMSF, it’s manual paperwork for you, which can be a headache. Little things like that can chip away at the joy of your retirement days. If you’re not particularly organized or detail-oriented, the admin of an SMSF can lead to procrastination and then panic when deadlines loom (ATO fines for late lodgment are no fun). On the emotional side, some people feel isolated managing their own fund – you are on your own to make sense of everything, whereas in a big fund you sort of go with the flow of the market and trust the system. However, others feel liberated by not being just one of millions in a big pooled fund.
In essence, running an SMSF will color your retirement experience in some way. It can keep you mentally sharp and in control, or it can add stress and complexity. It might do both at different times. Financial expert Paul Clitheroe has observed that it can be rewarding personally and financially to manage an SMSF, but he immediately adds that anyone considering it “needs more than a pamphlet” to get it right – in other words, go in prepared and with realistic expectations. If you thrive on responsibility and learning new things, you may find an SMSF very fulfilling. If you’d rather spend your time on other pursuits and keep finances simple, that’s equally valid – there’s nothing wrong with saying “you know what, I’d rather not be bothered with tax returns in my 70s.”
The ATO, meanwhile, as the regulator of SMSFs, has increased its oversight in areas like illegal early access (as discussed) and ensuring funds stick to the straight and narrow. They have an SMSF hotline and resources to educate trustees, and they’ve been known to directly contact new trustees to guide them. One recent ATO focus has been ensuring new SMSF trustees understand their duties – for instance, ASIC piloted sending an SMSF fact sheet to all new registrants, to basically say “do you really know what you’re getting into?”. This reflects a concern that some people are being sold SMSFs without fully understanding them.
From a policy perspective, there have been some changes and debates in the last couple of years that SMSF retirees should note. In 2021, the government increased the maximum number of SMSF members from 4 to 6 members, which theoretically allows larger family SMSFs. In practice, as we mentioned, uptake of 5-6 member funds has been minuscule so far, but the option exists if you have a bigger family and everyone wants in.
Another discussion has been around what is an appropriate minimum balance for SMSFs. ASIC’s guidance in 2019 suggested under $500k balance generally had poorer outcomes, but in late 2022 they removed the hard reference to $500k in their guidance – a move hailed as a “significant breakthrough” by the SMSF Association. Now, ASIC emphasizes looking at each person’s situation in full, not just a number. Still, they maintain (and even the SMSF Association agrees) that if you start with much under $200k and no prospect of rapid contributions, it’s likely not cost-effective. This softened stance came after research showed the $200k+ funds can do fine. For retirees, this is a reminder that if you have a smaller super balance, you should carefully crunch the numbers (and consider alternatives like sticking with a low-cost industry fund).
There’s also been attention on very large SMSFs. Some SMSFs have tens of millions of dollars (the largest have $50m+ in assets – often wealthy individuals using SMSFs for estate and tax planning). Recent tax policy proposals by the government aim to reduce tax concessions for super balances over $3 million (by introducing an extra tax on earnings for those high-balance accounts). While this affects only a tiny fraction of Australians, many of them are in SMSFs (since big company or industry funds often don’t let one person accumulate that much in one account). This measure, slated for the next couple of years, means that if you’re lucky enough to have an extraordinarily large SMSF balance, you might face new tax implications. It’s a sign that regulators are watching the extremes – both the very small SMSFs (to ensure people aren’t being misled into them) and the very large (to ensure super’s tax breaks aren’t overly skewed to the ultra-rich).
Lastly, expert and advocacy groups like National Seniors Australia and consumer groups encourage older Australians to periodically review their decision to run an SMSF. It shouldn’t be a “set and forget” for life. As circumstances change – health, finances, interest levels – it’s okay to say “maybe managing my own super is no longer the best option.” For example, an independent retirement advice group recently suggested that as people age, shifting the compliance and admin burden back to a large fund or an annuity can simplify life and provide peace of mind. In fact, thousands of SMSFs are wound up each year (over 12,000 were closed in the year to June 2023), often because trustees decide to merge back into an easier arrangement, or the balances drop (perhaps after withdrawals) making it less viable. This isn’t to put a negative spin – it’s simply recognizing that an SMSF might make sense for one chapter of your retirement and not another. Wise trustees keep an eye on whether their SMSF is still serving their needs and exit if it’s no longer worth it.
It’s a balance between being cautionary and empowering. For some retirees, an SMSF genuinely is empowering – it aligns with their personality, skills, and financial situation. For others, it could turn what should be carefree years into a source of anxiety and drudgery – a trap of stress they didn’t anticipate. The key is knowing yourself and the facts. As the saying goes, “with your eyes wide open.”
A few takeaways to remember:
So, where does that leave you? Perhaps the best way to wrap up is with a thoughtful question – the same one you might ask yourself as you lie awake mulling over your super options: Is the freedom and control of an SMSF worth the cost and effort for your retirement lifestyle and goals? It’s a question only you can answer, after weighing everything we’ve discussed. There’s no one-size-fits-all answer – just the right answer for you. And whichever way you lean, making an informed choice will set you on the path to a more confident and comfortable retirement.
Happy reflecting, and here’s to making the most of your golden years – with a super strategy that truly suits you.
So, top up your cuppa and settle in. We’re about to unpack the reality of running your own super fund in retirement – the good, the bad, and the complicated – to help you decide whether the DIY route is your golden opportunity or a retirement headache in the making.
What Exactly Is a Self-Managed Super Fund?
Let’s start with the basics: what is an SMSF, and how does it work? In simple terms, a self-managed super fund is a do-it-yourself superannuation fund. It’s a private super fund that you manage yourself, as opposed to a public fund managed by a big institution (like an industry fund or retail fund). An SMSF can have up to six members (often it’s just one or two, typically a couple), and every member must also be a trustee (or director of a corporate trustee company) of the fund. That means if you set up an SMSF for yourself (and perhaps your partner or family members), you are legally in charge of the fund’s decisions and compliance.Being a trustee comes with responsibilities. You’re managing your retirement savings within the framework of superannuation law. You must follow the “sole purpose test” – in plain English, the fund exists solely to provide retirement benefits to members (or their beneficiaries, if a member passes away).You can’t dip into it for other reasons (more on that temptation later). You have to create an investment strategy, keep records, arrange an independent audit each year, and lodge an annual return with the Australian Taxation Office (ATO). The ATO is the main regulator for SMSFs, and it keeps a close eye on these “mum-and-dad”.
Credit: Seniors Discount Club
In exchange for taking on all that work, you get full control over how your super is invested. With a public super fund, your money is pooled with others and managed by professional fund managers under strict guidelines. With an SMSF, you effectively become the fund manager. You decide whether to invest in shares, bonds, property, cash, or perhaps more exotic options (like specific stocks, or even collectibles or crypto – though strict rules apply to keep things above board). Importantly, an SMSF enjoys the same tax benefits as other super funds (15% tax on earnings in accumulation phase, and generally tax-free investment earnings in pension phase after age 60, under current rules), as long as you operate the fund according to the rules.
Running your own super fund can sound empowering – and it is, but it’s also complex. As ASIC’s MoneySmart site bluntly puts it: managing an SMSF is “a lot of work,” and even with professional help it’s time-consuming. So before we delve into the pros and cons, keep in mind that choosing an SMSF means stepping into the shoes of not just the investor, but also the compliance officer and administrator. It’s perfectly doable – thousands of Australians set one up each year – but it’s not something to jump into without doing your homework (and possibly getting some solid advice).
Why Do Retirees Go DIY? The Appeal of Control and Flexibility
What drives so many Australians to opt out of the big super funds and fly solo with an SMSF? In a word, control. A common reason people set up an SMSF is the desire for greater control over their super investments. After decades of working and compulsory super contributions, some retirees feel they’ve accumulated a significant nest egg and want to be personally involved in managing it. It’s your money, after all – and an SMSF lets you call the shots.Control and Choice: With an SMSF, you aren’t limited to the investment menu offered by a retail or industry fund. Want to invest directly in a particular ASX-listed company that you believe in? You can. Prefer to keep a chunk of your super in a term deposit or a favourite managed fund? Go for it. Some SMSF trustees buy residential or commercial property through their fund (often using the SMSF to hold a property that their business rents – a strategy allowed under specific conditions). Others might invest in assets like gold or alternative investments. There’s a wider palette of investment options available in an SMSF, and you can tailor the mix to suit your risk tolerance, interests, and goals. This flexibility is a big draw. In fact, about 26% of all SMSF assets are in listed shares and 17% in cash or term deposits, indicating many trustees gravitate to familiar options (blue-chip stocks, bank deposits) that they can manage directly.
Engagement and Empowerment: Running an SMSF can also make you more engaged with your retirement savings. Rather than glancing at an annual statement from a super fund, SMSF trustees are involved in every decision. This can be intellectually stimulating – even fun for those who enjoy following markets or tinkering with investment strategies. “Managing your own super can be very rewarding, and it’s a surefire way to encourage taking an interest in your future nest egg,” notes veteran financial commentator Paul Clitheroe. Many retirees take pride in learning the ropes and steering their own ship. There’s a sense of independence in not relying on a faceless institution – if you’ve run a business or managed your household finances successfully, you might relish applying those skills to grow your super.
Cost Savings (at Scale): For people with larger super balances, an SMSF can potentially be cost-effective. Large APRA-regulated funds (the big super funds) often charge fees as a percentage of your balance. An SMSF, by contrast, has mostly fixed costs – you might pay a fixed annual admin fee, accounting and audit fees, etc., regardless of whether your fund has $300,000 or $3,000,000. That means if you have a very large balance, the percentage cost of running an SMSF could be lower than the percentage fees in a retail fund. (Conversely, if you have a small balance, SMSF costs will eat up a bigger share – we’ll cover that in the “cons” section). Historically, regulators suggested you needed around $500k in super to justify an SMSF on cost grounds, but recent analysis suggests the break-even point may be lower. In fact, new research commissioned by the SMSF Association found that SMSFs with $200,000 or more can perform on par with larger funds, challenging the old $500k guideline.
John Maroney, former CEO of the SMSF Association, said the data showed “no material differences in performance” for SMSFs between $200k and $500k balancesnationalseniors.com.au – implying that once you cross roughly $200k, and especially as you get into the high hundreds of thousands, the playing field levels out in terms of returns (provided you manage the fund well). This has given confidence to some who want to start an SMSF with perhaps a few hundred thousand dollars, especially if they plan to add more funds (for example, rolling over other super accounts or contributing an inheritance or downsizing proceeds). The key point: an SMSF can make economic sense if you have a sufficient balance and the savvy to run it efficiently.
Estate Planning and Family Involvement: Another oft-touted benefit of SMSFs is the role they can play in estate planning. Because you’re the trustee, you have flexibility to plan how your super benefits will be distributed upon your death. For instance, you can nominate binding death benefit nominations or even set up your super pension to revert to your spouse automatically. Some people like the idea of keeping wealth “in the family” – an SMSF can include your adult children as members (up to six members total now, after a rule change in 2021 that raised the limit from four). In theory, a family SMSF could span three generations, with mum and dad and possibly the adult kids pooling their super.
This scenario is not very common (fewer than 0.2% of funds have more than four members so far), but the flexibility is there. Even without kids in the fund, many retirees appreciate that with an SMSF they can implement specific estate planning strategies – for example, managing how death benefits are paid out (lump sum vs pension), or even using reserve accounts and other technical measures to control timing and tax outcomes of passing on super assets. In short, an SMSF can be a useful tool if you have particular wishes for your legacy. It’s your fund, your rules (within the law), so you can structure things more precisely than a public fund might allow.
Personal Touch and Transparency: When you run your own fund, you have full transparency into where your money is and how it’s doing. There are no surprise changes in fees or investment strategy by someone else – you’re in the driver’s seat. For some, especially those who have experienced disappointment or distrust with big institutions, that personal control provides peace of mind. You might simply have strong convictions about certain investments (for example, avoiding certain industries or focusing on sustainable investments) – with an SMSF, you can align your portfolio exactly with your values or preferences.
All these upsides paint a picture of SMSFs as a retiree’s dream: control, flexibility, potential cost savings, and the ability to personally engage with and benefit your family through your super. It’s no wonder that around 85% of SMSF members are over 45 – many are in their 50s, 60s, and beyond, at the stage of life where they’re either preparing for retirement or enjoying it, and want that hands-on say in their financial future.
But (and you knew a “but” was coming), with great power comes great responsibility. The freedom of an SMSF doesn’t come free – it demands time, knowledge, and the stomach for risks and rules. Let’s flip the coin and talk about the downsides and challenges that also come with managing your own super.
The Downsides: Costs, Complexity and Compliance Headaches
Before you decide to break up with your APRA-regulated super fund and start an SMSF, it’s crucial to understand the commitments and risks involved. ASIC Commissioner Danielle Press famously warned that “SMSFs are not for everyone, simply because not everyone can meet the significant time, costs, risks and obligations associated with establishing and running one.” Let’s unpack what some of those challenges look like in practice.Ongoing Costs: Running an SMSF isn’t free. There are setup costs (establishing the trust deed, maybe creating a corporate trustee, registration fees) and ongoing costs each year. You’ll need to prepare annual financial statements and a tax return, which for most people means paying an accountant or administrator. You must also appoint an independent auditor each year to review the fund – yes, every year, even if you’re the only member, the law says an outside auditor has to sign off that your SMSF’s finances and investments comply with regulations.
There’s also an annual SMSF supervisory levy payable to the ATO (roughly $259 currently). All up, the median operating cost of an SMSF is about $4,100 per year according to ATO data. Many spend more if they use financial advisers or additional services – the average total cost was higher (over $15k, skewed by some big or complex funds). If your fund is small, say $100,000, a $4k annual cost is a hefty 4% of your assets vanishing in fees each year – a drag that could likely be lower in a large pooled fund. This is why experts generally caution small-balance SMSFs.
As Danielle Press noted, research shows SMSFs with very low balances (e.g. under $200k) tend to deliver worse net returns compared to larger funds, partly because those fixed costs chew up a lot of the earnings. The SMSF industry’s own stance is that unless you plan to grow the balance quickly, starting an SMSF much under $200k probably isn’t in your best financial interest.
Bottom line: ensure you have enough money to justify the costs, and go in with eyes open about the bills an SMSF will generate. If you do set one up, keep a tight rein on expenses – shop around for reasonably priced audit/accounting services, and avoid unnecessary complexity that adds costs.
Time and Effort: Money isn’t the only cost – time is a big one. Being an SMSF trustee is often compared to having a part-time job managing your retirement fund. ASIC found that on average, SMSF trustees spend over 100 hours a year on managing their fund. That’s roughly 8+ hours a month – basically a full workday each month dedicated to paperwork, research, and administration. Think about what that entails: you might be researching investments, keeping up with changes in super or tax laws, recording all contributions and withdrawals, doing bank reconciliations, preparing minutes of decisions, and liaising with your accountant or adviser. Even if you outsource some tasks, you need to coordinate and review that work. Over a third of SMSF trustees in a survey said running their fund was more time-consuming than they expected.
And remember, no one automatically does things for you in an SMSF. In a regular fund, the fund handles compliance and reporting. In an SMSF, you (or someone you hire) must, for example, ensure your fund’s financials get to Centrelink if you’re on the Age Pension – it’s not automatically reported, meaning extra forms for you (some retirees are caught off guard that an SMSF can complicate means testing for government benefits, because the onus is on the trustee to supply up-to-date financial information). The ATO and ASIC also expect SMSF trustees to formally document decisions (e.g. keeping minutes of investment decisions, even if it’s just you deciding to buy Telstra shares on a Tuesday – technically you should note it in the records). All this can be quite a paperwork drag. If you’re not prepared to devote time regularly, or if you prefer a “set and forget” retirement income, an SMSF could feel like an unwelcome chore.
Compliance and Legal Responsibility: When you run an SMSF, you are the one who must ensure the fund obeys all the laws. This includes superannuation rules, tax rules, and even some corporations law if you have a corporate trustee. It’s a heavy responsibility – if something goes wrong, you (and your fellow trustees, if any) bear the consequences, not a fund manager. For example, if your SMSF breaches the rules, the ATO can declare it non-compliant, which would mean a devastating tax penalty (your fund’s assets could be taxed at the highest marginal rate, which is 45% – a potential wealth wipe-out). Even smaller infractions can lead to fines or directed education.
There are many rules to follow: you can’t use the fund’s assets for personal benefit (e.g., you can’t live in that SMSF-owned holiday house or hang that SMSF-owned artwork in your living room – that’s illegal because it gives a present-day benefit). You must not lend money to yourself or relatives from the fund. You need to adhere to contribution limits and pension withdrawal minimums. The list goes on. It’s telling that the ATO each year catches folks doing the wrong thing – often inadvertently – and comes down hard.
ATO Deputy Commissioner Emma Rosenzweig recently highlighted a major pitfall: illegal early access. In tough times, some people get tempted to tap their super early via an SMSF. Rosenzweig noted the ATO’s “greatest concern” is SMSF members withdrawing retirement savings before the legal age (typically 60) – and a large chunk of those doing so are new SMSF trustees who set up a fund with no genuine intention to run it properly, other than accessing cash. In 2020, for example, an estimated $380 million was illegally withdrawn by SMSF trustees before it was allowed.
The ATO has been cracking down on these cases, dishing out stiff penalties and even banning offenders from ever running an SMSF again. The moral here for honest retirees is: you must play by the rules, no exceptions. The money in an SMSF might feel like it’s all yours (and it is your money ultimately), but until you meet a condition to withdraw it, it’s locked for retirement. As Paul Clitheroe quips, in an SMSF it’s “your money – just not yet”. Breaking the rules out of ignorance or desperation can ruin your retirement, so the compliance burden is not something to take lightly.
Investment Risks and Potential Mistakes: Not every DIY super story has a happy ending of market-beating returns. The reality is, when you manage your own super, you shoulder the investment risk. If you make a poor investment choice, you wear the consequences. We all like to think we’ll invest wisely, but let’s be honest – not everyone is Warren Buffett. Many SMSFs have very concentrated portfolios (for instance, Aussie retirees often love bank stocks and rental properties). That can work out, but it also can backfire if those assets take a hit. A large super fund spreads your money across thousands of investments worldwide; an SMSF might have you a bit over-exposed to one sector or asset. In fact, the ATO has in the past sent letters to SMSFs that had more than 90% of their money in one asset or one class (like a single property), reminding trustees of their obligation to consider diversification as part of their investment strategy. It’s not illegal to have all your eggs in one basket with an SMSF, but it’s risky – and something a professional manager would generally avoid.
There’s also the risk of being sold into an inappropriate investment by unscrupulous advisers or promoters. Fraud and scams sadly do target SMSF trustees. Unlike large funds which have internal controls and compensation schemes (in limited cases) for fraud, if your SMSF gets defrauded, you often have little recourse. A sobering thought is that SMSFs were excluded from government compensation arrangements that bailed out victims of some finance scandals in the past. As one independent adviser put it, SMSFs can be “vulnerable” because they offer “more scope for fraud and fewer safety nets” – if a dodgy scheme or adviser causes losses, the trustee may bear it alone. This isn’t to say SMSFs are inherently unsafe – but you must keep your wits about you, choose advisers carefully if you use them (check they’re licensed, etc.), and avoid “too good to be true” pitches (like the classic line: “Set up an SMSF and we’ll help you invest in [insert scheme] for guaranteed high returns” – red flag!). The autonomy of an SMSF is double-edged: you’re free to make great investment choices, and you’re also free to make mistakes without a safety net.
Knowledge and Confidence Required: Hand-in-hand with risk is the need for financial literacy and decision-making confidence. ASIC’s research found that SMSFs are “not an appropriate option for people who want a simple super solution, particularly if they have a low level of financial literacy or limited time to manage their affairs.” That might sound blunt, but it’s a fair warning. If you’re not comfortable reading financial statements, understanding investment concepts, or making big money decisions, running an SMSF could be a stressful venture. And unlike a managed fund where you can blame the fund for poor performance, with an SMSF the buck stops with you. Some retirees set up an SMSF on the enthusiastic advice of an accountant or friend, only to later feel in over their heads.
Remember, you can hire professionals (accountants, financial planners) to help with an SMSF – and indeed you should get expert help for taxes, audits and possibly strategy. But even if you delegate tasks, you remain the trustee responsible for everything. ASIC underscores that even when paying professionals, SMSF trustees are responsible for the fund’s compliance with the law. In practice, this means if your adviser makes a bad call or doesn’t follow the rules, you can’t just say “Oh, my adviser did it, not me.” The ATO will still say you, the trustee, failed your duty. That’s a heavy weight, and it requires a level of confidence in overseeing those you hire. It also means you need to be engaged enough to notice if something’s amiss.
Now, none of these challenges are insurmountable. Plenty of ordinary Australians run SMSFs successfully. But it’s often because they’ve treated it like a serious endeavour – they educate themselves, possibly come from a business/finance background or are willing to learn, and they commit the time. They also tend to have enough super savings to make it worthwhile. If that doesn’t sound like you, you might be a prime candidate to not have an SMSF. As ASIC’s Danielle Press said, many consumers hear all about the benefits but are “not equally alive to the considerable risks and responsibilities that come with the deal”asic.gov.au. So, it’s wise to take a hard look at the “cons” column before jumping in.
Credit: Seniors Discount Club
Lifestyle Factors: Stress, Responsibility and the Emotional Toll
Beyond the dollars and regulations, there’s a very personal side to managing an SMSF: how it affects your lifestyle and peace of mind in retirement. Retirement is supposed to be enjoyable – time to relax, pursue hobbies, maybe travel (when we’re not in a pandemic), and spend time with family. Will running an SMSF complement that life, or interfere with it? The answer can be different for everyone, so it’s worth reflecting on a few lifestyle considerations.A Part-Time Job in Your Golden Years? For some people, managing their SMSF becomes almost a hobby – something to keep them mentally active and engaged. If you love reading the financial news, tracking stocks, and tinkering with spreadsheets, you might actually get a kick out of those 100 hours a year spent on the fund. It can provide a sense of purpose and routine.
On the flip side, if you find that stuff tedious or stressful, those hours can become a burden. One retiree wryly described his SMSF admin as “like doing homework, forever” – every year there’s another set of forms and filings. Consider whether you want to allocate time each week or month to managing paperwork and decisions. Will you resent it when you’re trying to enjoy a caravan trip around Australia but have to log in to pay the fund’s tax instalment or deal with a corporate action on a stock you hold? Or will you be the type to bring the laptop on the road and happily manage your investments from a campground? Knowing your own tolerance for ongoing tasks is key.
Stress and Anxiety vs. Confidence: Managing money can be emotional. Markets go up and down. When you’re in charge, a market downturn can feel scary – you might lose sleep worrying, “Should I move more to cash? Ride it out? Am I doing the right thing?” In a regular super fund, you’re somewhat shielded from day-to-day anxiety; someone else is at the wheel. With an SMSF, you’re constantly aware of your balance’s fluctuations because you’re often actively monitoring and making choices. This can cause stress, especially in turbulent times. ASIC’s Danielle Press pointed out that even professionals find the current economic climate challenging, and “investors with low financial literacy who wanted a simple retirement strategy could not compete with professionals who spent more than 100 hours a year” managing the fund. That highlights that it takes skill and diligence to run an SMSF well.
If you’re not confident, you might second-guess yourself a lot, which is stressful. Alternatively, some people become overconfident – thinking they’ll do better than the big funds easily – which can also be dangerous if it leads to taking on too much risk. Be honest with yourself about whether running your own fund would make you feel empowered or anxious. A bit of nervousness is normal at first, but if the whole idea makes you break out in sweat, there’s no shame in sticking with a professionally managed fund and enjoying a simpler life.
Impact on Relationships: If you have a spouse or other family members in the SMSF, consider the dynamic. Often in couples, one person takes the lead in managing the SMSF (commonly one partner might be more financially inclined). That can work fine, but both of you are trustees and legally responsible. It’s important that both parties have a basic understanding and agree on the strategy. There have been cases where one spouse passes away or loses capacity (for example, due to dementia), and the surviving spouse is left grappling with an SMSF they never really handled. This can add tremendous strain at an already difficult time. Succession planning for an SMSF is vital – you might need enduring powers of attorney in place, and you should have a plan for what happens to the fund when you’re 85 and perhaps not keen to manage it any more (or no longer able).
Winding up an SMSF and moving back to a large fund or into annuities later in life is an option many take, but that itself is a process you’ll have to manage. Additionally, involving adult children in an SMSF (making it a family fund) can be rewarding if it’s a shared project, but it also could introduce family conflicts (differences in investment approach, or issues if one wants out and others don’t). Think about whether you want your family finances entangled in that way.
Administrative Hassles vs. Independence: Some retirees actually enjoy the independence of an SMSF – not having to deal with call centres, not worrying that rules of a fund might change, etc. But others find the administrative load frustrating. One practical example: if you’re on a part Age Pension and have an SMSF, you must report the fund’s assets to Centrelink at least once a year (and anytime there’s a significant change). With an industry fund, Centrelink often gets your balance data automatically.
Credit: Dimitri Karastelev / Unsplash
With an SMSF, it’s manual paperwork for you, which can be a headache. Little things like that can chip away at the joy of your retirement days. If you’re not particularly organized or detail-oriented, the admin of an SMSF can lead to procrastination and then panic when deadlines loom (ATO fines for late lodgment are no fun). On the emotional side, some people feel isolated managing their own fund – you are on your own to make sense of everything, whereas in a big fund you sort of go with the flow of the market and trust the system. However, others feel liberated by not being just one of millions in a big pooled fund.
In essence, running an SMSF will color your retirement experience in some way. It can keep you mentally sharp and in control, or it can add stress and complexity. It might do both at different times. Financial expert Paul Clitheroe has observed that it can be rewarding personally and financially to manage an SMSF, but he immediately adds that anyone considering it “needs more than a pamphlet” to get it right – in other words, go in prepared and with realistic expectations. If you thrive on responsibility and learning new things, you may find an SMSF very fulfilling. If you’d rather spend your time on other pursuits and keep finances simple, that’s equally valid – there’s nothing wrong with saying “you know what, I’d rather not be bothered with tax returns in my 70s.”
Expert Insights and Recent Developments
It’s worth noting what regulators and experts are saying lately about SMSFs, especially as they attract more attention (both positive and critical). ASIC and the ATO – the two key bodies in this space – have been quite vocal. ASIC (the Australian Securities and Investments Commission) regularly urges consumers to “question whether SMSFs are right for them”, highlighting cases where an SMSF would likely do more harm than good. They’ve even identified “red flag” scenarios: for example, if you have limited super savings, low financial literacy, or simply want a set-and-forget retirement income, those are signs an SMSF might be unsuitable. ASIC’s message isn’t “SMSFs are bad” – it’s more “SMSFs are great for some, but not necessary or wise for others.” They want people to be aware of the work and risks, not just the lure.The ATO, meanwhile, as the regulator of SMSFs, has increased its oversight in areas like illegal early access (as discussed) and ensuring funds stick to the straight and narrow. They have an SMSF hotline and resources to educate trustees, and they’ve been known to directly contact new trustees to guide them. One recent ATO focus has been ensuring new SMSF trustees understand their duties – for instance, ASIC piloted sending an SMSF fact sheet to all new registrants, to basically say “do you really know what you’re getting into?”. This reflects a concern that some people are being sold SMSFs without fully understanding them.
From a policy perspective, there have been some changes and debates in the last couple of years that SMSF retirees should note. In 2021, the government increased the maximum number of SMSF members from 4 to 6 members, which theoretically allows larger family SMSFs. In practice, as we mentioned, uptake of 5-6 member funds has been minuscule so far, but the option exists if you have a bigger family and everyone wants in.
Another discussion has been around what is an appropriate minimum balance for SMSFs. ASIC’s guidance in 2019 suggested under $500k balance generally had poorer outcomes, but in late 2022 they removed the hard reference to $500k in their guidance – a move hailed as a “significant breakthrough” by the SMSF Association. Now, ASIC emphasizes looking at each person’s situation in full, not just a number. Still, they maintain (and even the SMSF Association agrees) that if you start with much under $200k and no prospect of rapid contributions, it’s likely not cost-effective. This softened stance came after research showed the $200k+ funds can do fine. For retirees, this is a reminder that if you have a smaller super balance, you should carefully crunch the numbers (and consider alternatives like sticking with a low-cost industry fund).
There’s also been attention on very large SMSFs. Some SMSFs have tens of millions of dollars (the largest have $50m+ in assets – often wealthy individuals using SMSFs for estate and tax planning). Recent tax policy proposals by the government aim to reduce tax concessions for super balances over $3 million (by introducing an extra tax on earnings for those high-balance accounts). While this affects only a tiny fraction of Australians, many of them are in SMSFs (since big company or industry funds often don’t let one person accumulate that much in one account). This measure, slated for the next couple of years, means that if you’re lucky enough to have an extraordinarily large SMSF balance, you might face new tax implications. It’s a sign that regulators are watching the extremes – both the very small SMSFs (to ensure people aren’t being misled into them) and the very large (to ensure super’s tax breaks aren’t overly skewed to the ultra-rich).
Lastly, expert and advocacy groups like National Seniors Australia and consumer groups encourage older Australians to periodically review their decision to run an SMSF. It shouldn’t be a “set and forget” for life. As circumstances change – health, finances, interest levels – it’s okay to say “maybe managing my own super is no longer the best option.” For example, an independent retirement advice group recently suggested that as people age, shifting the compliance and admin burden back to a large fund or an annuity can simplify life and provide peace of mind. In fact, thousands of SMSFs are wound up each year (over 12,000 were closed in the year to June 2023), often because trustees decide to merge back into an easier arrangement, or the balances drop (perhaps after withdrawals) making it less viable. This isn’t to put a negative spin – it’s simply recognizing that an SMSF might make sense for one chapter of your retirement and not another. Wise trustees keep an eye on whether their SMSF is still serving their needs and exit if it’s no longer worth it.
Weighing It All Up
By now, it’s clear that managing a self-managed super fund in retirement has two faces. On one face, you see empowerment: the flexibility to invest as you wish, the potential to save on fees and tailor everything to your liking, and the satisfaction of being in control of your financial destiny. On the other face, you see responsibility: the paperwork, the legal obligations, the risk of costly mistakes, and the need to dedicate time and brainpower to what can feel like a part-time job.It’s a balance between being cautionary and empowering. For some retirees, an SMSF genuinely is empowering – it aligns with their personality, skills, and financial situation. For others, it could turn what should be carefree years into a source of anxiety and drudgery – a trap of stress they didn’t anticipate. The key is knowing yourself and the facts. As the saying goes, “with your eyes wide open.”
A few takeaways to remember:
- Know the rules or get a good guide. If you do go the SMSF route, educate yourself and use professional advice wisely. Groups like ASIC and the ATO offer guides (ASIC’s “SMSFs: Are they for you?” fact sheet is a great checklist). Consider getting independent financial advice not from someone who just wants to sell you on an SMSF, but from someone who will objectively assess if it suits your goals and will help you run it properly if you proceed.
- Size and scale matter. You generally want a solid super balance to start with, or a clear plan to grow it, to make the effort worthwhile. If you only have a small amount, the consensus is you’re likely better off in a low-fee APRA fund until you have more to justify an SMSF.
- Time is a cost – and so is stress. Be realistic about whether you (and your partner) want to spend time on this and whether it will add stress. If you have any health issues or anticipate not being able to manage complex tasks down the track, factor that in. Have a succession plan: who will take over if you can’t do it someday? You may love it now but be prepared to hand over or wind up if needed.
- Don’t chase fads or quick access. An SMSF is a long-term vehicle for retirement – not a shortcut to use super money early, nor a magic way to get higher returns without effort. Avoid anyone promising you the world or urging you to set one up to invest in a single speculative venture. Remember the ATO’s watchful eye on illegal early access and dubious schemes. Stick to legitimate strategies and consider diversification to manage risk.
- Regularly review your decision. If you have an SMSF, pause every so often (say, once a year or every couple of years) and ask: Is this still working for me? Are the costs reasonable? Am I keeping up with the tasks? Are the investments performing as expected? Life changes – you might decide to simplify things later, and that’s okay. As one seniors’ finance advocate basically suggests, it’s worth reassessing if “shifting the compliance and admin risk to a large institution” might at some point give you more peace of mind. In other words, the decision isn’t one-and-done; you have the power to pivot if needed.
So, where does that leave you? Perhaps the best way to wrap up is with a thoughtful question – the same one you might ask yourself as you lie awake mulling over your super options: Is the freedom and control of an SMSF worth the cost and effort for your retirement lifestyle and goals? It’s a question only you can answer, after weighing everything we’ve discussed. There’s no one-size-fits-all answer – just the right answer for you. And whichever way you lean, making an informed choice will set you on the path to a more confident and comfortable retirement.
Happy reflecting, and here’s to making the most of your golden years – with a super strategy that truly suits you.
