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Home Enquiring Minds Withdrawing super early – what to consider

Withdrawing super early – what to consider

legalsuper 29 Oct 2020
Stopping the domino effect

As the uncertainty of the COVID-19 virus first rattled the economy, the federal government rapidly introduced a range of initiatives to help individuals and businesses.

One of those initiatives was to allow qualifying individuals to access a portion of their superannuation to help meet living costs. These early access withdrawals are tax-free and don’t need to be included in tax returns. Those eligible could withdraw up to $10,000 in the 2019/20 financial year and/or $10,000 in the 2020/21 financial year.

Temporary residents are not eligible to apply in the 2020–21 financial year.

For many, this early access to super will prove to be a financial lifesaver, but for others, the short-term gain may lead to a significant dip in wealth at retirement. The younger you are, the greater that impact on retirement is likely to be. 

Those considering withdrawing before the December deadline may be wondering: What impact will it have on my super?

How much could I lose?

An early release from your super means that your balance is reduced by the lump sum you take, but you also lose the potential compound interest and long-term investment gains.

It’s important to look at your other options before deciding to access your super; as the long-term impact of withdrawing can be dramatic.

CEO of Industry Super Australia, Bernie Dean says the impact of taking out $10,000 to $20,000 near the start of your working life. “could be as much as six figures”1by retirement. “It could be ranging to $60,000 to $80,000, up to $100,000 you would have less in your nest egg,” he says.

Estimate the impact 
The long term impact will depend on your age, the amount you intend to withdraw, your investment option and retirement age. You can use the Super Withdrawal Estimator calculator on the MoneySmart website.

Other considerations
You should also consider other benefits, such as insurance, which are connected to your super account. If your super balance is too low to maintain your insurance, it may be cancelled. Your super account may also be closed all together if your balance falls to zero.

 Decide what’s right for you
These steps might help you decide whether withdrawing super is the right decision for you. 

  1.  Check you are eligible to access your super early
  2.  Know all your financial assistance options
  3. Check your current super balance
  4. Consider impacts on your insurance
  5. Estimate the impact on your retirement savings
  6. Make a plan for the months ahead
  7. Find additional help if you need it

Can I rebuild my super?

Yes, but depending on your circumstances, it will take a while to get back on track.

Money will be added to your super when you’re working, you can also make additional contributions to replace the money you took out. (though there are limits to how much you can add to your super in any year)

If you need to access your super but want help to get back on track, we’re here to help. We can take you through your options and help you work out an achievable long-term strategy to get you on track to a healthy balance for retirement.

How do I apply?

For information about the application and withdrawal process, refer to our COVID-19 information hub.

Need help?
Everyone's path to retirement is unique. If you’d like a confidential conversation, 1:1 with an experienced super consultant, send us a message and we’ll arrange an appointment with your local Client Service Manager. They can provide you with information and general advice in relation to your super.

Send us a message


1 .abc.net.au/news/2020-04-06/australians-access-their-super-early-coronavirus-covid19/12125328

This information is general information only and does not take into account your individual objectives, financial situation or needs. Accordingly, before taking any action, you should consider whether it is appropriate to you, having regard to your objectives, financial situation and needs. You should obtain a copy of legalsuper’s Product Disclosure Statement (PDS) which is available by contacting legalsuper or via its website at legalsuper.com.au before making a decision. Past performance is not a guide to future performance.







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For many people this early access to super will prove to be a financial lifesaver, but for others the short-term gain may lead to a significant dip in wealth at retirement.

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