If you find yourself strapped for cash, you might wish you could dip into your super.
But in reality, it’s easier said than done. There are strict rules around when, and in what circumstances, it is possible to access your super before retirement.
That’s because the point of superannuation is to help set you up with some financial security later in life, so getting it early really goes against the whole point of it.
What’s more, there are heavy penalties if you access super early without meeting the eligibility requirements, making it an even more important topic to get your head around.
So, here’s an intro on when you can legally gain access to your super early.
What’s your ‘preservation age’?
Simply put, your preservation age is the age you’re eligible to access your super. In other words, it’s the minimum age that’s set by law and is currently mandated at between 55 and 60, depending on when you were born.
When you reach preservation age, you can access your super as long as you are permanently retired or have reached 65. If you haven't permanently retired, which takes in a growing number of people, there are also ways you can access part of your super.
Are there any exceptions?
The simple answer is yes, but the circumstances in which you can access your super early are very limited.
In the case of “severe financial hardship,” for instance, you may be able to withdraw some of your super. The criteria used to judge this is if you have received eligible federal government income support payments for 26 continuous weeks but you’re still unable to meet reasonable and immediate living expenses.
Also, as the ATO makes plain, withdrawing super due to severe financial hardship is paid and taxed as a super lump sum, with the minimum amount that can be paid being $1,000 (unless your super balance is less than that).
The maximum amount you can withdraw when in financial dire straits is $10,000 and, according to the ATO, there can be only one withdrawal in any 12-month period.
Accessing super on ‘compassionate grounds’
“Compassionate grounds” is another way you can get access to your super early.
In short, this covers a range of instances including: medical treatment and medical transport for you or a dependant; palliative care for you or a dependant; making a payment on a loan or council rates so you don't lose your home; modifying your home or vehicle, or buying disability aids for you or a dependant because of a severe disability; and expenses associated with a death, funeral or burial for a dependant.
Incapacity, terminal illness, super less than $200
Another avenue for accessing your super early is “temporary or permanent incapacity.”
Then there’s the sad event of a terminal medical condition, which generally means you have a terminal illness or injury likely to result in death within two years, and this has been certified by two registered medical practitioners, at least one of whom is a specialist.
It’s also possible to gain access to your super early if you’re a temporary resident and you’re leaving Australia permanently (and you meet the requirements) or if you change employers and have less than $200 in your super account.
Consider your super carefully
Remember, it’s very important that you carefully consider whether you really need to access your super early, because it may not be a prudent long-term financial solution.
