How to access your super early


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In 2020, at the start of the COVID pandemic, the Federal government let Australians draw up to $20,000 from their previously hard-to-reach super to avert financial hardship.

About three million people took up the offer, withdrawing an average of $17,000 - some $38 billion in total.

The scheme attracted considerable criticism. Industry Super Australia estimates that a 30-year-old who withdrew $20,000 at the start of the pandemic would be $80,000 worse off in retirement because of the compounding effect of lost investment earnings.

how to access superannuation early

Fast-forward to 2024, and for Australians battling the high cost of living it can be frustrating to see a honeypot locked away in super. A Finder survey shows one in two of us would happily dip into that money given the opportunity.

In fact, tens of thousands of Australians do access their super early each year. We're talking about money pulled out ahead of 'preservation age' (between 55 and 60 for most of us), not withdrawals made under the First Home Super Saver scheme.

Early withdrawals are most commonly made on the basis of:

  • Compassionate grounds, which includes medical treatment and preventing the forced sale of a home 
  • Severe financial hardship. 

Records from the tax office, which manages early release of super for compassionate reasons, show 56,400 applications were made in 2021-22, of which 34,400 were approved - a figure that's held relatively steady since 2018-19.

Financial hardship claims are handled directly by super funds, making annual figures harder to come by. To be eligible, you need to have received Centrelink income support for at least 26 weeks.

Even then, the maximum withdrawal is $10,000 annually.

Can I access my super due to illness?

Super savings released on compassionate grounds are typically used to pay for medical treatment.

While the ATO handles these claims, the first step is to check if your fund allows early release. If it doesn't, there's always the option of switching to a fund that does.

Next, check if you have sufficient super - after allowing for tax. Early withdrawals are taxed at lump sum rates, usually between 17% and 22%, if you're aged below 60.

From here, you'll need ATO permission to access your super. Applications can be made online, and need to backed by two medical reports confirming you need treatment plus a recent quote for the cost.

If you get the green light from the ATO, there's more form filling, this time with your super fund. If all goes well, the money can be available within a fortnight.

Using super to pay for medical bills can mean bypassing lengthy wait times in the public health system. It's also a way to avoid taking on debt to pay for treatment.

However, Alison Banney, from the Finder comparison site, points out that early access to super shouldn't be taken lightly. "Just because you can, doesn't mean you should," she says. "You risk wiping tens of thousands of dollars off your retirement fund."

It's not just your future retirement at stake. The Financial Rights Legal Centre warns that cleaning out your super can mean losing the life insurance cover it provides. A lump sum can also impact eligibility for Centrelink payments and adversely affect child support payments.

Despite the possible downsides, don't expect your fund to wave a red flag. Jo Brennan, chief operating officer at Aware Super, says members applying for early release "generally have pressing financial needs or they're in distressing situations - an inappropriate time for us to highlight the potential long-term impact of early release on their retirement savings, which could simply add to their stress. Our priority in these circumstances is to be as supportive as we can to members."

That said, your fund can help you gauge the impact of an early withdrawal through simple, general advice relating to your super. This service comes at no additional cost as it is included in the annual fund fees. Most funds offer this type of advice, and it can be just a phone call away.

"If members need help to understand the impact on their super if they were to draw on it early, we'd encourage them to contact us," says Brennan.

can i access my super early due to illness

The number of Aussies accessing super for weight-loss treatments

Claims for medical procedures top the list of reasons for early access to super. Chief among these is claims for weight-loss treatments.

In 2021-22, the tax office received more than 42,000 requests to access super on medical grounds, including:
• 15,760 for weight loss; 
• 11,780 for dental treatments;
• 4150 for IVF; and  
• 10,400 for 'other' medical treatments.

Withdrawing money from super is 'something I regret'

Four years ago, 45-year-old Cassie* was experiencing chronic back pain. Her doctor recommended weight-loss surgery to help relieve the problem.

Faced with gastric sleeve surgery costing $30,000, Cassie turned to her super. To get the $30,000 she needed after tax, Cassie had to withdraw $40,000 from her fund.

Four years later, Cassie deeply regrets her surgery - and using her super to pay for it.

"I lost about 50 kilos, but I still have back pain plus new health problems relating to the surgery," she says. "When it comes time to retire and I don't have enough to live on, I'm sure that taking $40,000 out of my super will be something I regret even more."

The sting in the tail is that Cassie's super balance on retirement will likely be down by a lot more than $40,000. Based on ASIC's Moneysmart calculator, she could be around $64,000 worse off by age 67, thanks to the lost returns that her $40,000 withdrawal could have earned.

*Last name withheld for privacy.

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Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.