.... are entering retirement in unprecedented numbers.

The article, Nothing shy about retiring SMSF boomers by journalist Michael Laurence, forecasts that at least 60 per cent of existing SMSF members, some 580,000 individuals, are either in retirement or likely to retire within 10 years.

This forecast is partly based on the age of many SMSF members - 58 per cent are over 55, says the tax office - and the fact that SMSFs hold more than half of the superannuation money invested in retirement products, as estimated by Rice Warner Actuaries.

SMSF members approaching retirement face a series of issues that could have a significant impact on their standards of living during 25 years, at least, in retirement. Matters to consider discussing with a financial planner include:

How you are progressing towards meeting your retirement-savings goals. This may lead to examining how to maximise savings opportunities while still in the workforce and/or whether to delay your planned retirement for a year or two.

Whether you should be building up a sufficient cash reserve if possible before retirement that could be used to pay pensions for 12 months or more once you retire. Such a reserve would mean that a fund would be less likely to have to sell assets to pay pensions when markets experience a periodic downturn. The ability to develop a cash reserve will, of course, depend on the members' personal circumstances.

Whether your fund's strategic asset allocation set during the accumulation or savings phase is still appropriate for the retirement or pension phase. Factors to consider include sufficient exposure to growth assets to counter inflation during a potentially long retirement, adequate liquidity to pay benefits and the members' possibly changing tolerance to risk and volatility.

Imminent retirement also tends to focus more fund members minds on estate planning for their super. Superannuation estate planning can go well beyond naming preferred beneficiaries or making binding death benefit nominations - particularly given the typical flexibility of SMSFs.

Despite the large percentage of existing SMSF members in retirement or nearing retirement, it should be emphasised that the self-managed sector is continually regenerating itself with new younger members.

As Smart Investing discussed last month, the ATO's latest SMSF statistics show that more than 40 per cent of people who set up SMSFs in the June quarter this year were under 45 - with more than 13 per cent under 35.

By Robin Bowerman
Smart Investing
Principal & Head of Retail, Vanguard Investments Australia9
1st October 2013