"Can I withdraw my superannuation after turning 60 to invest in property?"
- Question from Ken in Brisbane.
Top answer provided by:
Ken: The short – and not very helpful – answer to the question is either ‘it depends’, or ‘probably not, but there are some factors for you to consider that could lead to a more supportive outcome.
I am taking the liberty to break your question down into two parts: when you can access your Super (after turning 60); and what you can spend it on (to invest in property)?
Access to Super money is facilitated under what is termed ‘conditions of release’ – and the only situations that the ‘what you can spend it on’ question comes into play, are if the condition of release itself, is on severe financial hardship grounds (including threatened loss of property due to inability to pay rates etc), or on compassionate grounds (including terminal illness cases).
So, given that it is highly unlikely that an ‘investment’ in property could fit into the circumstances that qualify as either of these broader qualifying situations, the only aspect of the question we need to dwell on, is the access question. (The Australian Taxation Office is the regulator for most superannuation arrangements and you can read more about the particular aspects of these conditions of release on this page of the ATO site.)
Given that reference is made to age 60 in your question, I am not making further reference to the ‘First Home Super Saver Scheme’, nor to the highly controversial and seemingly frequently misused ‘COVID-19 early release of Super’ arrangement (which was time-limited in any event).
Coming back to the critical aspect of the answer to your question then: do your circumstances suggest that you can satisfy a condition of release? There are two age bands where an aged-based condition of release is satisfied: they are –
- Attaining the SIS-prescribed ‘preservation age’ (albeit subject to the employment status at the relevant time); and
- Age Pension age.
(‘SIS’, by the way, is the Superannuation Industry Supervision legislation’s acronym.)
The starting criteria for the preservation age is age 55 – but if your date of birth was after 30 June 1960, that age moves out. For each financial year after 30 June 1960 that you were born, the preservation age extends by one year – until a birth date after 30 June 1964 at which stage, it becomes – and is thereafter age 60.
As mentioned above, your employment status is important if relying on preservation age to access a lump sum from, or of all of your superannuation: how that impacts your access can be summarised as follows:
- Not yet at Age-Pension age: need to be retired
- If only partially retired, can only access Super funds by way of a Transition to Retirement income stream (no lump-sum access available).
To get to a position where you can safely access your superannuation in a lump sum, having attained the age of 60, you will have to demonstrate that you have retired.
Just returning to the use to which you want to put your withdrawal from the Super account: I trust that you will undertake informed research on the asset being considered and carefully consider what you invest in. Property values in Australia tend to operate in cycles, and the timing of purchase in any cycle can have a significant impact on your experience with that asset class: buying at the top of a cycle, can mean a long wait before the anticipated returns will be achieved (whether by capital growth or from rental income).
Because of the late stage of traditionally-accepted work life for this move, I am avoiding the issue as to whether you might consider moving your funds from its current superannuation environment into a self-managed superannuation fund (SMSF) as there are issues of liquidity, risk management and sole purpose tests that would take considerably more space to address. If you were to be considering this alternative, you are strongly encouraged to seek professional advice from an experienced financial planner and get into a place where you will be able to make an informed decision.
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