When can you access your super
In Australia the second biggest asset after the family home for most people would be the superannuation fund account.
Super has lots of benefits:
- Tax benefits – read my article explaining those benefits
- Investment benefits – access to investments that are usually outside of the ability to invest for a private person,
- Length of time money is invested – this is a benefit and a negative at the same time, depending how you look at it. Having money put aside with no access till your retirement for some is a blessing, as unfortunately most people are really bad savers, so for most this could be just about the only way to have any savings in retirement. But others might feel constraint and uneasy that money is being controlled by the government and subject to so many rules and limits.
From experience I would say that the first applies to most people. - Compound interest – because your savings are invested for such a long time, compound interest is the magic ingredient multiplying your money over-time
- Ongoing contributions – adding extra money to super consistently is a major benefit to the final outcome. Your employer contributes every time you get paid. Through different tax incentives, you are invited to contribute more yourself. Here is another article explaining super contributions.
At some point you might start wondering, when you can get access to your super savings?
So today I will explain the rules you need to meet to finally have access to your super money.
In order to have access to your superannuation savings, first you need to meet Conditions of Release, and one of the conditions is to reach your Preservation age.
What is Preservation Age?
Your preservation age is the age you can access your super if you are retired or if you start a Transition to Retirement income stream, so called TTR – this is a topic of my future video.
If you were born before 1960, you have already reached your preservation age of 55, so you can actually access your super providing that you met other conditions of release.
If you were born after 1960 – your preservation age depends on the year you were born.
Preservation age is not the same as pension age, so if you are of Age Pension age, you have reached your preservation many years ago.
Why is the preservation age so important?
Reaching your preservation age is the very first step in checking if you are eligible to access your super savings and what would be the tax treatment at that point in time.
For example if you have reached your preservation age you can:
- retire from work and start and income stream from your super savings
- start a transition to retirement income stream or pension and you can do this either you continue working full time or reduce your working hours to part-time and this is going to be our topic for the next video
What are other conditions of release to have access to savings:
- If you stop working all together after you reach age of 60, you can also start and income stream or withdraw a lump sum from your super tax-free. You could even start another work later on.
- Turning 65 – even if you continue working
Be very careful though with your decision to access super money as income or lumpsum withdrawals, as it can have a negative impact on governments benefits such as Age Pension or Job Seeker.
Any chances to withdraw super earlier?
Generally speaking, no – super has been designed as your benefit for your retirement, the time when you no longer work, but there are few situations, when you could:
- First Home Super Saver Scheme – it was introduced in 2017 as a way to help eligible Australians save a deposit for their first home.
- Covid-19 early release of superannuation – this was a new idea from the government to provide and immediate help to people financially affected by Covid. However now, with the last budget, government has introduced “Covid-19 recontribution” that I think everyone who took the money out of super during covid, should use this recontribution idea. Watch my video “8 changes to super” to find out more about “Covid-19 recontribution”, as well as many other changes that will impact your super
- Accessing super under compassionate grounds such as:
- medical treatment and medical transport for you or your dependant
- palliative care for you or your dependant
- making a payment on a home loan or council rates so you don’t lose your home
- accommodating a disability for you or your dependant
- expenses associated with the death, funeral or burial of your dependant.
- Access due to severe financial hardship
- Access due to a terminal medical condition
- Access due to permanent incapacity
- If your employment is terminated and your super balance is below $200.00 or you have found a “lost super” with less than $200.00 in it.
As you can see, there are few measures to assist your with access to your super savings earlier if you really need it, but I do not wish anyone to be in any of those situations, I’d rather wait for my money till my preservation age.
“Retirement is a journey not a destination, so please be well prepared for the ride”
Here is the article you might be interested in:
By: Katherine Isbrandt CFP®
Money Strategist & Retirement Planner
Principal of About Retirement
