Saving for retirement is essential, and one way Aussies do this is through superannuation or a super account. Your employer pays a percentage of your salary into a super fund, and this acts as a savings plan for retirement.
Over time, this builds up into a retirement income stream that supports you financially when you stop working. These super benefits can provide you with financial stability in your later years, ensuring you have a regular income when you retire.
While it’s essential to have a long-term savings plan so you never need to rely on your super, life can sometimes get in the way. Luckily, it’s possible to access your super early if you need to. However, you’ll need to know the correct process to avoid any unnecessary waiting or penalties. In this guide, you’ll learn how to access your super early.
When Are You Eligible to Access Your Super?
First, let’s discuss when you can and should access your super. In Australia, you can access your super at the age of retirement. This is formally known as your “preservation age” and it’s anywhere between age 55 and 60. The specific age depends on when you were born, but this is the typical timeframe to begin accessing your super.
Even if you’re still working at age 65, you can access it. In addition, if you’ve reached preservation age but haven’t yet retired, you can still access part of your super by transitioning to a retirement pension. This is also true if you’re in a defined benefit fund, depending on your specific employment arrangement.
When Can You Access Your Super Early?
There are some special circumstances when you’re eligible to access your super before retirement or your preservation age. This includes when you’re facing:
- Disability – If you’re no longer able to work (or work full-time) due to a medical condition, you can access your funds early.
- Financial hardship – If you are no longer able to afford your living expenses and you’ve been receiving Commonwealth benefits for 26 weeks, you can access your super.
- Terminal medical condition – If you’re facing a terminal illness or injury, you are free to access your super.
- Compassionate grounds – Finally, you’re also allowed access on “compassionate grounds.” This could be used for medical treatment, funeral expenses, or loan repayment to save your home. It’s also used in emergency situations, such as the recent COVID-19 pandemic.
During the recent crisis, people can apply to gain access to up to $10,000 of their super in 2019-20. They can also apply for another $10,000 in 2020-21. However, since this is your retirement savings, it’s important to consider if this is the best financial step to take before applying.
Before You Dip Into Your Super, Let’s Explore All Your Options
Thinking about accessing your super to pay off debt? Speak with Debt Busters first—there may be other ways to get relief and protect your retirement savings.
Requirements to Apply For Early Access
Before applying for your super, you need to make sure you satisfy the eligibility criteria. You’ll need to meet one of the following:
- You’re not employed
- You are eligible for a job seeker payment, youth allowance, parenting payment, or family household allowance
- On or after January 2020 you were either made redundant, faced reduced working hours, or faced a reduction in business.
- You need money to pay for medical treatment, palliative care, or a death-related expense
- You or a dependent is disabled
- You need to make a payment on a home loan or council rates to avoid losing your property
You’ll need to provide evidence that you meet one or more of the above situations with your application. Essentially, if you’re in severe financial hardship or you or a dependent have an extreme illness or medical condition, you can access your super.
Accessing Your Super
In most cases, you’ll need to contact your super fund directly to apply for access. Your super fund may ask for additional information about your income, depending on their criteria.
If you are applying on compassionate grounds, you’ll need to contact the Australia Taxation Office (ATO) directly. You can apply online via myGov or download the paper application to submit your request. From there, your application will be reviewed, and you’ll receive a response about your super.
If you’re facing financial hardship from COVID-19, you can apply online through the Australia Taxation Office (ATO) starting from 20 April 2020. These applications are being processed quickly, and you should receive your payment within 5 days via your bank account.
Getting the Funds You Need
While you’ll need to give a lot of thought to whether you need to access your super early, this can be an effective form of relief for those in a tricky situation. Sometimes life’s hardships go beyond an emergency fund. In these instances, you’ll need to get creative to make ends meet.
However, make sure you have a plan in place before withdrawing a portion of your retirement account. This is money that’s reserved for your financial future, so you want to have a plan to replace it in time for retirement.
When in doubt, work with a financial professional who can assess your unique situation and offer personal advice. Sometimes, accessing your super early isn’t the best option at all.
There’s More Than One Way Out of Debt—And Your Super Might Not Be the Answer Contact Debt Busters for a free, no-obligation assessment. We’ll help you compare early super access with alternative solutions that could get you back on track, faster and with less risk.
FAQ
What qualifies as ‘financial hardship’ for early super release?
As mentioned in the article, you must have been receiving income payments such as JobSeeker or another eligible Centrelink benefit for at least 26 continuous weeks – a cumulative period that proves sustained financial strain – and be unable to meet reasonable and immediate living expenses.
It’s one of the limited circumstances where early withdrawal is allowed.
Is an early release of superannuation generally tax-free
Early super withdrawals are not always tax-free. If you access your super before reaching your pension age, such as under financial hardship or compassionate grounds, you may need to pay tax on the amount you withdraw.
However, once you turn 60, most lump sum withdrawals and income payments from your super are tax-free. Because the rules can be complex, it’s best to check with your super fund or the Australian Taxation Office (ATO) to understand how tax might apply to your situation.
What happens if I withdraw super early and then return to work?
If you accessed your super early due to financial hardship or compassionate grounds, going back to work later is fine. But if you withdrew it because you declared yourself permanently retired, returning to work could raise compliance issues. It’s best to speak with your super fund to avoid any complications.
Can I still start an account-based pension after accessing super early?
Yes. If you’ve accessed part of your super early, due to financial hardship or other approved reasons, you can still start an account-based pension once you reach your preservation age and meet a condition of release. An account-based pension lets you turn your remaining super into regular payments during retirement, offering flexibility in how and when you withdraw funds. It’s one way to make your super last longer once you’re no longer working.