There may be some instances where you need to improve your financial position before you retire, so it’s important to know how you can make this situation work for you. If you are planning to make an early withdrawal from your super before you retire, we will discuss the different reasons this might be a good thing you can do.
If you are nearing retirement but still working, there a two approaches to accessing your superannuation early:
- when you reach age 65, or
- if you have reached your preservation age and want to commence a transition to retirement pension.
Keep in mind that the information that this article provides may not be specific to your needs and situation. So be sure to talk to your financial adviser to get the most accurate information about your superannuation fund and financial situation.
Early Withdrawals to Your Super: Should I Do It?
There is no one-size-fits-all answer to this question. However, there may be some instances where withdrawing some of your super before retirement may make sense or even be a sound financial decision. As previously mentioned, this decision should be made after looking at all options and discussing the consequences with your financial adviser.
In this section, we will outline different reasons why it may make sense to withdraw early from your super.
To Repay Debt
If you are planning to use the proceeds of your early withdrawal to get rid of debt and pay off any outstanding loans you have, it may be a good decision to do so. Doing this may help you maximise your budget as you prepare for retirement, minimise any debt-related stress you may be experiencing as you enter retirement and help to increase your credit score in the process.
If you have depleted your savings and want to replenish it to have a fund to dig into in case of emergency, taking an early withdrawal from your super may help.
However, if this is what you intend to do, it is best to calculate how much you need beforehand to ensure that you do not withdraw too much or deplete your super completely. Keep in mind that you could also potentially miss out on additional returns from super funds that are invested once they are moved to a cash account yielding low interest.
Suffering a serious medical condition can be expensive, particularly if you do not have adequate insurance to cover expenses. For example, the average lifetime costs of melanoma treatment is $20,360. You are likely to incur hospital bills, out of pocket expenses for medical tests and medication, ongoing treatment costs, all while likely experiencing a loss of wages whilst you are unable to work.
Taking out an early withdrawal from your super in these circumstances might make sense if you use it to receive the best treatment and smoothen your road to recovery.
Getting Back on Track
Even if you have a good reason to withdraw from your super, it is a must that you assess the situation in depth and determine how you will still achieve your financial retirement goals.
This will ensure that you will have enough money set aside for retirement when the time comes. Speaking with your financial advisor will enlighten you on how to repay the withdrawal and put it back into your super.
Talk to a Financial Adviser and Get Started Today!
The key to making sure that you utilise your super withdrawal wisely is to consider what you are going to use the money for before making the withdrawal. Also, look into how you are going to get back on track after you make the withdrawal. Speaking to a licensed financial adviser will help you make all the necessary changes to your lifestyle to ensure that you don’t negatively impact the retirement you have planned for.
Whether you are looking to take out an early withdrawal on your super before retirement or need to get your retirement plan on track, you can benefit from the financial planning services at Central Coast Financial Planning Group! Book a complimentary meeting today!
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.