When Can I Withdraw Money From My Super?

Superannuation, often called “super,” is Australia’s compulsory savings system designed to provide financial security for individuals in retirement. Employers contribute a portion of an employee’s wages into a super fund, where it is invested and grows over time. While super is primarily intended for long-term savings until retirement, specific conditions allow for earlier access to these funds. Accessing super before these conditions are met can lead to significant penalties.

Standard Super Access

Accessing superannuation under normal circumstances requires meeting both a “preservation age” and a “condition of release.” Your preservation age is determined by your birth year, gradually increasing from 55 for those born before July 1, 1960, to 60 for those born on or after July 1, 1964. Once you reach your preservation age, you must also satisfy a condition of release to access your super.

A common condition of release is retirement, which typically means ceasing gainful employment with no intention of becoming gainfully employed again. For those aged 60 to 64, this involves stopping an employment arrangement. If you are 65 or older, you can access your super regardless of your employment status, even if you continue to work.

Early Super Access

In limited and specific situations, individuals may access their super before reaching preservation age and retirement. These exceptions are strictly defined and require meeting particular criteria.

Access on compassionate grounds is one such avenue, typically requiring approval from the Australian Taxation Office (ATO). This can cover expenses for medical treatment or transport for a life-threatening illness or injury for yourself or a dependent, modifying a home or vehicle for severe disability, palliative care, or funeral expenses for a dependent. Preventing the foreclosure or forced sale of your primary residence is another compassionate ground, with limits on the amount that can be released to cover up to three months of repayments plus 12 months interest. Eligibility requires demonstrating that you cannot afford the expense without accessing super and that the expense is currently unpaid.

Severe financial hardship allows for early release if you have received eligible government income support payments continuously for 26 weeks and cannot meet reasonable living expenses. Applications are made directly to your super fund, which assesses eligibility. The amount accessible under this condition is generally limited to a minimum of $1,000 and a maximum of $10,000 within any 12-month period.

A terminal medical condition allows for early release if two medical practitioners certify that an illness or injury is likely to result in death within 24 months. At least one of these practitioners must be a specialist in the relevant field. If these conditions are met, the super balance can be paid as a tax-free lump sum if withdrawn within 24 months of certification.

Temporary or permanent incapacity also permits early access. Temporary incapacity applies if physical or mental ill-health temporarily prevents you from working; benefits are typically paid as an income stream from insured or voluntary employer-funded benefits, not from compulsory contributions. Permanent incapacity means ill-health makes it unlikely you will ever engage in gainful employment for which you are reasonably qualified by education, training, or experience. Certification from two medical practitioners is usually required to satisfy this condition.

The First Home Super Saver (FHSS) Scheme allows early access for voluntary super contributions to help save for a first home deposit. Under this scheme, you can release up to $15,000 of eligible voluntary contributions in any one financial year, with a total maximum of $50,000 across all years, plus associated earnings. These contributions must be voluntary, separate from employer Super Guarantee contributions.

Preparing Your Withdrawal Request

Before submitting a super withdrawal request, gathering all necessary information and documentation is an important first step to ensure your application is complete and processed efficiently. A super fund will require personal identification, such as a driver’s license or passport, to verify your identity. You will also need your super fund account details and the bank account details where you wish to receive the payment.

Specific evidence is required to support your claimed condition of release. For medical or incapacity claims, this includes medical certificates and detailed reports from qualified practitioners. If applying due to severe financial hardship, you will need statements confirming continuous government income support payments and evidence of overdue bills or living expenses you cannot meet. For compassionate grounds, supporting documents like invoices, loan statements, or evidence of a dependent relationship are essential.

Your Tax File Number (TFN) is also a mandatory piece of information. Super funds provide specific application forms for withdrawals, which can typically be obtained from their website or by contacting them directly. Carefully review these forms to understand all required fields and ensure all information is accurate and consistent with your supporting documentation, which helps avoid processing delays.

Submitting Your Withdrawal Request

Once all necessary information and supporting documents are prepared and the application form completed, submit your withdrawal request. Submission methods vary by super fund, including online portals, mailing forms, or in-person submission. Always double-check all entries and ensure all required attachments are included before submission.

After submission, expect a confirmation of receipt from your super fund. Processing times vary, typically from a few days to several weeks, depending on request complexity and fund procedures. Your super fund may contact you for further information or clarification to process your application. Maintaining clear records of your submission, including dates and communication with your fund, is beneficial.

Tax and Financial Considerations

Withdrawing from superannuation involves tax and financial considerations that can significantly impact your financial position. Super benefits are generally composed of a tax-free component and a taxable component. The tax-free component typically consists of after-tax contributions, while the taxable component includes employer contributions, salary sacrifice contributions, and investment earnings.

For individuals aged 60 or over, super lump sum withdrawals from a taxed fund are generally tax-free. However, if you are under 60, the taxable component of a lump sum withdrawal may be subject to tax.

For those between preservation age and 60, the first portion of the taxable component, up to a low-rate cap ($235,000 for 2023-24), may be tax-free. Amounts above this cap are taxed at a concessional rate, typically 17% (including the Medicare levy), or your marginal tax rate, whichever is lower. If withdrawing before preservation age, under early access conditions, the taxable component can be taxed at a higher rate, around 22% (including the Medicare levy). Specific tax rates can vary based on whether the super fund is taxed or untaxed, such as some public sector funds.

Beyond immediate tax implications, withdrawing super reduces retirement savings and impacts compound returns. Withdrawn funds are no longer invested within the super environment, potentially affecting long-term financial security.

Accessing super can also affect eligibility for government benefits, such as Centrelink payments. While not treated as income for social security payments, withdrawn super can be assessed as an asset, and asset changes must be reported to Centrelink within 14 days. Substantial withdrawals increasing assessable assets could lead to a reduction or cessation of certain government benefits. Given these complexities, seeking professional financial advice is recommended to understand the full implications of any super withdrawal.