When retirement seems such a long way off, it’s easy to look at the money that is building in your super account and feel like you’d be better off being able to spend it now. However, it’s worthwhile squashing that urge and thinking about your future lifestyle at retirement when you won’t have a salary to rely on.
Your super balance is generally inaccessible for good reason. Without sufficient money in your super, you may have to rely on a government benefit which may not cover your retirement expectations – unless you have other forms of investment.
That said, there are three conditions where you may be able to have access to your super before you have reached your preservation age.
You may be able to withdraw from your super on the basis of “compassionate grounds”. This means you need money to pay for:
- medical treatment, medical transport or palliative care for yourself or a dependant,
- payment on a loan to prevent you from losing your home,
- modifying your home or vehicle, or buying disability aids for you or a dependant because of a severe disability, or
- funerals, burials or other death-related expenses.
When applying for early release on compassionate grounds, you will only be provided the amount of money deemed reasonable to meet your obligations.
Applications for the release of super on compassionate grounds are assessed by the Australian Taxation Office (ATO). For more information, see here.
Your super may also be released to you if you are permanently incapacitated and unable to work or you are terminally ill. However, most super funds will offer insurance to provide cover for you in these instances as well. Here at Club Plus Super, you can apply for insurance to cover the events of Death, Terminal Illness and Total Permanent Disability, as well as Income Protection, which provides a monthly benefit to replace your income if you are unable to work.
Severe financial hardship
If you’ve received ongoing government income support for at least 26 consecutive weeks and find yourself unable to meet reasonable and immediate family expenses, you may be eligible for early access on the grounds of financial hardship.
There are limits on the minimum and maximum withdrawal amounts and you can only make one application in a 12-month period. If you have reached your preservation age and you are not in gainful employment there are different requirements, but you don’t have a limit on the amount you can withdraw. Not all funds provide early access to super on the basis of financial hardship. To find out more, call Club Plus Super on 1800 680 627.
First Home Super Saver Scheme (FHSSS)
As of 1 July 2017, first time buyers can grow their savings for a deposit on their first home inside the lower-taxed super environment. From 1 July 2018, savers will be able to access their savings and earnings to pay towards the deposit on a home loan. This is only available if you have never owned real estate previously and intend to live in the home for at least six months. To see how effective it is to save a deposit through super, use the Club Plus Super calculator here.
If you’re experiencing financial difficulty and need assistance with managing your money or growing your super, get in touch with our friendly member services team on 1800 680 627. Alternatively, if you’d like to arrange a consultation with an experienced financial adviser, you can contact them here.