Business owners are potentially facing a shortfall in funding for their retirement years, with many not understanding the significance of recent superannuation changes on the value of their nest egg.
“Reports suggest a couple needs around $60,000 for a comfortable retirement, which means they need more than $1.1 million in their superannuation account when they retire. For those looking to retire on an annual income of $75,000 or more, they must build that goal into the business plan sooner rather than later,” says Peter Saccasan, national head of business advisory at accounting firm RSM Australia.
“Let’s face it – the owner’s SME will be the source of investment funds for superannuation. Under the new regime, it may be more difficult to accumulate enough in superannuation to support an annual income of $75,000.”
According to Mr Saccasan, this is likely to mean business owners will need to accumulate assets outside of their super, or push for riskier investment opportunities with potentially higher returns, to make up for any shortfall.
The other impact, however, is that some business owners may be forced to delay their retirement.
“This just goes to highlight that owners should be continuously improving their businesses to ensure they create the wealth to meet their future needs, whether that be inside of superannuation or outside.”
Mr Saccasan’s comment coincided with the release of the firm’s latest thinkBIG report, which found that close to 40 per cent of SME owners don’t understand the changes made to superannuation over the past year, while a further 25 per cent believe the changes are unreasonable. Only 35 per cent felt the changes were reasonable.
When it comes to the value of super, if you are dissatisfied with your current provisions, you may find some solace in knowing you’re not alone – more than one in four (28 per cent) admitted feeling the same way.
On the flip side, 36 per cent said they were highly satisfied.
“As the superannuation landscape continues to change, it remains crucial for SME owners to keep a close eye on their strategies and investments. It’s important to seek professional advice from licensed financial advisors before making any decisions as these can affect their ability to retire as planned,” says Mr Saccasan.