Can I access my super early?

By Vanguard

Super and retirement

 

Many older Australians are understandably eager to access their superannuation, but strict rules apply

For many Australians, superannuation will be their most significant source of long‑term savings.

Yet, despite being a crucial part of the nation’s retirement income system since the introduction of compulsory super payments in the early 1990s, confusion still reigns for many people over when they can access super, or if they can get it early.

Broadly speaking, anyone can access their super when they turn 65, regardless of whether they are still working or not. From age 60, if you are retired or leave a job, you can also get full access to your super. For more information about release conditions, visit the ATO’s website.

 

Transition to retirement

One option is to open a Transition to Retirement (TTR) account, which allows you to access part of your super while you are still working. This can help supplement your income if you choose to reduce your working hours. You can start a TTR once you reach your preservation age, which is the minimum age at which you can generally access your super and is currently 60. Preservation age is different from the Age Pension age, which is 67.

Under TTR rules, your super must be paid as a regular income stream rather than as a lump sum. Withdrawals are capped at 10% of your account balance each year. Once you turn 65, this cap is removed and your TTR automatically becomes a Retirement Income account, giving you full access to your super. To decide what is best for you, it’s important to speak with your super fund or a financial adviser before making any decisions.

 

Beware of false promises

If you have been on social media platforms recently, you may have been targeted with reels about accessing your super early. The sales pitch is that you can withdraw funds early from super to pay for expensive medical and dental treatments, or even to invest in property. But if it sounds too good to be true, it probably is.

There are limited circumstances allowing you to get your super before retirement under a compassionate grounds scheme. If approved, you can use the retirement funds to meet certain medical, palliative care, disability, death and home foreclosure expenses. However, be conscious that the Australian Taxation Office (ATO) manages such applications, imposing strict eligibility conditions and requiring a raft of relevant documents to support claims.

Some other rare approvals may be granted that allow early access to super. For example, under the First Home Super Saver Scheme, investors may be eligible to withdraw voluntary contributions they have made to super to help save for their first home.

 

Don’t waste your super

The primary reason the government and the ATO are reluctant to endorse the early release of super is that they want you to have sufficient finances for a healthy and happy post-work life.

Early withdrawals can minimise the magic of compound interest, and potentially leave Australian retirees short of money at a vulnerable point of their life.

 

^{This article contains certain ‘forward looking’ statements. Forward looking statements, opinions and estimates provided in this article are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements including projections, indications or guidance on future earnings or financial position and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. There can be no assurance that actual outcomes will not differ materially from these statements. To the full extent permitted by law, Vanguard Investments Australia Ltd (ABN 72 072 881 086 AFSL 227263) and its directors, officers, employees, advisers, agents and intermediaries disclaim any obligation or undertaking to release any updates or revisions to the information to reflect any change in expectations or assumptions.}