By Philip La Greca


Many SMSF trustees wrestle with the question of when to change the fund from an investment vehicle to a cash-flow vehicle for retirement – and what then to do differently.

A key issue to consider is this: should trustees continue building assets in the concessionally taxed super environment to attain a level of wealth that may be surplus to needs? The proposed super changes have prompted us consider this issue, as we’re now not compelled to touch our nest egg if we don’t need to.

Of course, trustees older than 55 can use their SMSF to top up their pre-retirement income, which can help in retirement planning and to maintain the lifestyle they want. 

However, there is a downside: the impact that your superannuation can have on your kids’ inheritance. If you don’t use your super then the kids may have to deal with it – as there are few ways to pass money from an SMSF to children without them having to worry about death taxes.

If trustees do decide to start using an SMSF to fund their retirement lifestyle, the first step is to review the assets in the fund. Ensuring a regular cash flow in retirement (similar to what you had when you were working) requires focusing on issues such as regular cash income from the assets, and ease of liquidity if the earnings don’t produce enough cash.

Have you faced the investment-to-retirement switch with your SMSF and how have you handled it?