How much is needed for an SMSF?

Keith has always planned to start his own SMSF, but is now starting to question whether he has sufficient funds to make it worthwhile.

Q. Keith

My retirement savings goal has always been to have my own self-managed super fund (SMSF), as I believe this is the best way to have control over whether I have enough money to enjoy the type of retirement I want. In my mind, as I’m sure I was told this some time ago, is a figure of $200,000 to make this possible. Is this still the case, or do I need to have more saved before I can consider my own fund?

A. Costs vary for a SMSF and the Australian Securities and Investment Commission (ASIC) recommends a minimum balance of $200,000 for a fund to be cost effective. However, you can start a SMSF with as little as $100,000, as long as you have access to funds to increase the fund balance within a short period of time.

Managing your own super fund may well give you control and financial freedom to achieve your retirement funding goals, but it is onerous; there are risks involved and you need to be sure to meet and follow strict guidelines. It’s important that you have a good level of financial literacy and it’s definitely worthwhile considering a suitable education program before making any commitment.

For more details, or to work out if an SMSF really is the best for you, visit Moneysmart.gov.au.

Written by Debbie McTaggart



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