SMSFs now being used more for retirement income, not wealth building: report

Despite popular belief, ATO data confirms that SMSFs are increasingly being used to pay retirement income rather than to build wealth, new analysis shows.

The report by financial planner James Hayes, a specialist in superannuation and retirement planning, reveals that SMSFs have firmly shifted into retirement mode with the ATO’s own data showing more money now flowing out of SMSFs than coming in.

In his analysis, Hayes found that for the annual cash flow in 2023–24, SMSFs recorded $46.5 billion in inflows but $80.4 billion in outflows, driven mainly by $57.7 billion in benefit payments.

He said that pattern aligns with the age profile of SMSF members, where around half are 60+. At the same time, the newest entrant cohort looks different with nearly half of new SMSF members in the June 2025 quarter under 45 years, and a majority reported taxable income of $100,000+, pointing to earlier adoption by working-age Australians.

“Taken together, the data shows SMSFs operating at two speeds: a large, mature member base drawing benefits, and a newer cohort entering earlier, building balances, and setting up structures they expect to run for decades,” he said.

The report found that SMSFs are now paying out far more than they take in revealing that in 2023–24, SMSFs paid $57.7 billion in retirement benefits, compared with $26.2 billion in total member and employer contributions, meaning benefit payments were around 2.2 times higher than contributions.

“The 2023–24 flow lines describe a sector that is paying out more than it receives, with benefit payments as the dominant outflow, and rollovers as a major inflow channel. That combination rewards funds that treat liquidity as a standing requirement, not a last-minute task,” Hayes said.

“It also indicates that SMSFs are operating as income vehicles, not wealth builders. More than half of SMSF members are already at retirement age with 50.8 per cent of SMSF members are aged 60 or over, 38.2 per cent are 65+, and 16.7 per cent are 75+, reinforcing SMSFs’ role as a retirement-stage structure.”

Additionally, Hayes found that liquidity and access to cash remain a priority with nearly half of all SMSF assets held in listed shares (28.1 per cent) and cash or term deposits (16.2 per cent), reflecting the need for flexibility as members draw regular income.

Furthermore, typical SMSF balances are lower than headline averages suggest and while the average SMSF balance is around $1.63 million, the median is closer to $930,000, reflecting how a relatively small number of very large funds pull the average higher.

“When SMSFs are paying out more than twice what they receive in contributions, it’s a clear sign they’ve entered the income phase. These funds are no longer about accumulation – they’re funding day-to-day life in retirement,” he said.

More importantly, Hayes said this shift changes how SMSFs need to operate once members leave full-time work.

“Running an SMSF in retirement is very different to running one in your working years. Liquidity, simplicity and cash flow become just as important as investment returns,” he said.

The report numbers also challenge the long-held idea that SMSFs are mainly for high-earning professionals in their peak working years.

“A lot of people still think SMSFs are mostly for people in their 40s building wealth. In reality, most SMSF members are already at, or well into, retirement,” he said.

Keeli Cambourne

February 5 2026

smsfadviser.com