NOTE: we do our best to share general resources so you can do your own research. When it comes to tax, this is personal to your investing and financial position. We are not a tax advisor, and don't have any information about your personal situation. This does not constitute financial advice and we would urge you to speak to your financial adviser and/or tax accountant for further information.
So, you’re ready to retire (congratulations!) and are looking into super withdrawal. Or maybe you’ve hit a bump in the road and need to get your hands on your super to keep you going. Or, you could just be a super (pun intended) organised human, doing your research well ahead of time. Whatever the reason, you’ve come here to get “down-to-earth” guidance on super withdrawal.
Don’t worry, we’ll keep you grounded as we walk you through the process.
What is super withdrawal?
Super withdrawal is when you remove your retirement savings from your super account. This can be either a rollover to another super fund or received as a cash payment. There are generally no restrictions for rollovers or transfers.
However, withdrawing your super as cash is another story. Keep reading for the details.
Conditions for super withdrawal
Generally, super withdrawal is allowed from age 65 (retired or not). You can also withdraw your super when you reach your preservation age (more on that below).
The government has set different preservation ages depending on when you’re born. You can use the table below to figure out your preservation age:
To access your super at your preservation age, you need to retire or start a transition to retirement income stream. This is where you receive regular payments from your super fund while still working.
Chances are, you’ve set a goal to reach financial independence and retire early . When it comes to super, that can be easier said than done. There are tight restrictions on super withdrawals but a few reasons you can get it in your hands sooner :
- On compassionate grounds (e.g. you need to pay for medical treatment)
- You’re experiencing severe financial hardship
- You can’t work or need to work less because of temporary or permanent disability
- You have a terminal medical condition
- Your super is less than $200
- You’re a temporary resident leaving Australia for good
- You’re buying your first home and want to withdraw your voluntary super contributions
Options for withdrawing your super
If you do meet any of the super withdrawal conditions, there are three options for how you can receive it:
- Income stream (regular payments over time)
- Lump sum (one off payment in full)
- Combination of both
The option you choose will depend on your needs, goals and lifestyle.
For example, say you retire at age 65 with a super balance of $550,000. You’re comfortable you’ve got enough super (plus other assets and investments) so you don’t need it all at once. You’d prefer to withdraw your super in smaller amounts to avoid overspending in all your excitement. However, you have an overseas holiday coming up that you need the extra cash for. So, you withdraw $15,000 as a lump sum and have the remaining $535,000 trickle into your bank account each fortnight.
The tax impacts are something else to consider when deciding how to withdraw your super.
The super withdrawal process
Now that you know if you can withdraw your super, the next question is how ? Thankfully, the super withdrawal process is less complicated than the eligibility criteria.
You can generally access an online super withdrawal form via your super fund’s website. You’ll then need to fill in the form with key information. This includes your personal details, why you’re withdrawing, proof of identification, how much you want to withdraw and your payment details.
You then send the completed form to your super fund (by email or post). Your super fund will take care of the rest.
Beware of penalties
As eager as you may be to access your super, be careful with how you do it. There are steep penalties for breaking the rules around early super withdrawal. If you illegally access your super, the amount will be included as income in your tax return . Even if you return it to your fund – ouch!
To avoid paying additional tax, penalties or interest, we suggest you seek professional financial advice before withdrawing your super.
