Survey reveals SME owners’ high post-retirement income expectations

Small-business operators are grappling with recent superannuation changes despite recognising that they need more than $1 million for a worry-free retirement, according to the latest thinkBIG report.

The annual national study by RSM Australia measures the pulse of Australian SME owners who are reported to have high expectations of post-retirement income.

According to the survey, this release being the first of a five-part series, 36 per cent of respondents were highly satisfied with their superannuation provisions while 28 per cent were dissatisfied. More than half (57 per cent) believe they need more than $75,000 per annum in retirement and just 12 per cent believe they need less than $50,000 per annum.

Peter Saccasan, National Head of Business Advisory, RSM Australia says, “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. 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. This will require people to accumulate assets outside of superannuation or it may push for riskier investments in the quest for higher returns.

Consequently, it’s more important than ever that people start contributing to their superannuation funds as early as possible and, if SME owners are nearing retirement age, that they get professional advice as soon as possible to ensure they’re aware of their opportunities to maximise superannuation.”

“Superannuation is a moveable feast and recent changes may affect some business owners’ ability to retire on time,” Saccasan says. “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.”

This year’s thinkBIG survey showed that nearly 40 per cent don’t understand the many changes made over the past 12 months, 35 per cent of respondents believed they were reasonable and 25 per cent said the changes are unreasonable.

Saccasan says that 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.

There is also a growing trend in self-managed superannuation funds to buy real estate for the business, and half of the survey respondents said they were either willing to or had already used their superannuation to buy business premises. As recently as 2015, just 35 per cent would consider using their superannuation to buy real estate for the business. The increase this year suggests more people have become aware of the benefits of doing so.

More than 200 business owners participated in this year’s study, which is the 12th year that RSM has conducted it. It is structured around five key areas: superannuation; business growth; business planning; exit strategy; and SME of the future.

In the superannuation section of the survey, participants were asked to benchmark critical areas such as superannuation planning and provide information on their utilisation of self-managed superannuation funds. The other key areas will be the subject of upcoming releases of the 2017 thinkBIG report.


Inside Small Business

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