Your preservation age: The primary condition for accessing super
Your superannuation savings are generally 'preserved' for your retirement, meaning they are not accessible until you reach a certain age, known as your preservation age. This age depends on when you were born.
Preservation age based on date of birth
As of July 1, 2024, the preservation age is a standard 60 for anyone born on or after July 1, 1964. If you were born before this, your preservation age would be lower, as per the phased increase introduced in 1999. The following table provides clarity on the preservation age milestones:
| Date of Birth | Preservation Age |
|---|---|
| Before 1 July 1960 | 55 |
| 1 July 1960 – 30 June 1961 | 56 |
| 1 July 1961 – 30 June 1962 | 57 |
| 1 July 1962 – 30 June 1963 | 58 |
| 1 July 1963 – 30 June 1964 | 59 |
| On or after 1 July 1964 | 60 |
Conditions of release for superannuation
Reaching your preservation age is only one part of the puzzle. To legally access your super, you must also meet a 'condition of release'. There are several conditions that allow access to your superannuation, with the two most common being reaching preservation age and retiring, or turning 65.
Retirement at preservation age
If you have reached your preservation age but are not yet 65, you can access your super if you have permanently retired from the workforce. This involves ceasing gainful employment and declaring to your super fund that you have no intention of becoming employed again in the future. For those aged 60 and over, ceasing employment with an employer is sufficient, even if you plan to work again later.
Reaching age 65
Once you turn 65, you can access your superannuation funds without any restrictions. You can take your super as a lump sum or income stream, regardless of whether you have retired or are still working. This provides maximum flexibility for your financial planning.
Transition to retirement (TTR) strategy
For those who have reached their preservation age but are not yet retired, a TTR income stream can provide a flexible option. This allows you to receive regular income payments from your super while continuing to work, and can be used to reduce your working hours or boost your retirement savings through a 'salary sacrifice' strategy. However, there are limits on how much you can withdraw per year (generally 4% to 10% of your account balance).
Early access to super in special circumstances
While super is intended for retirement, the government allows for early access in certain limited and specific situations. These circumstances are tightly regulated, and it is crucial to understand the rules and eligibility criteria before applying.
- Severe financial hardship: If you have received government income support for a specific period and are unable to meet immediate family living expenses, you may be eligible. Different rules apply depending on whether you are over or under your preservation age plus 39 weeks. For example, if you are under this threshold, you can only withdraw a maximum of $10,000 in a 12-month period.
- Compassionate grounds: This involves applying directly to the Australian Taxation Office (ATO) and is limited to very specific expenses. Eligible reasons include paying for medical treatment, modifying a home for a severe disability, palliative care, or preventing the forced sale of your home by the mortgage provider. You must demonstrate that you have no other means of paying for the expense.
- Terminal illness: If you have a terminal medical condition and two medical practitioners (one a specialist) certify that you have less than 24 months to live, you can access your super as a tax-free lump sum.
- Permanent or temporary incapacity: You may be able to access your super if you are permanently or temporarily unable to work due to a physical or mental health condition. This often involves accessing insurance benefits linked to your super account. For permanent incapacity, you will need to satisfy your fund that you are unlikely to ever work again in a suitable occupation.
- Small account balance: If you leave an employer and your super balance is less than $200, you can request early release from your fund.
The process for accessing your super
Regardless of the reason for access, the process typically involves dealing directly with your superannuation fund. For regular retirement access, your fund will provide the necessary forms, which will include declaring you have met a condition of release. For early access on compassionate grounds, you must apply to the ATO first. For all other early access grounds, you apply directly to your fund, which will assess your eligibility according to legislative requirements.
Important considerations before accessing your super
Before withdrawing your super, it's vital to consider the long-term consequences. Any money you take out now is less money for your retirement. This can affect your future financial security, potential eligibility for the Age Pension, and your insurance cover. It is highly recommended to seek professional financial advice to help you make an informed decision.
For more detailed information on superannuation, you can visit the Australian Taxation Office website at ato.gov.au/individuals-and-families/super-for-individuals-and-families.
Conclusion
Understanding when and how you can access your super is a critical part of retirement planning in Australia. While reaching your preservation age and retiring is the standard path, exceptions exist for specific circumstances. By knowing the rules and preparing in advance, you can make the best decisions for your long-term financial health and well-being. Consulting with your super fund and considering professional advice can help navigate this important aspect of healthy aging and senior care.
