I’m aware of some of the long-term risks around accessing Super early, however my question is: what if I was to use that $10k of super to put toward purchasing a property? It would still leave me with a substantial balance that would continue to grow over the years as I am only 26 years old, and would be an investment toward my property portfolio that would also support my retirement in the future. It's a tricky one and i would really appreciate some advice as this one has been difficult to explore online. Thank you in advance!
Ally in Tweed Heads
Top answer provided by:
Thank you for the question Ally. I believe this may be a moot point but if you were able to access your super via the recent government “Covid-19 early release of superannuation” you would be required to meet the conditions to access your superannuation. These can be found at the ATO website https://www.ato.gov.au/Individuals/Super/Withdrawing-and-using-your-super/Early-access-to-your-super/
In summary - Citizens and permanent residents
Eligible Australian and New Zealand citizens and permanent residents are able to apply to access up to:
- $10,000 of their super until 30 June 2020
- a further $10,000 from 1 July 2020 until 24 September 2020.
To apply for early release, you must satisfy one or more of the following requirements:
- You are unemployed.
- You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance.
- On or after 1 January 2020, either
i) you were made redundant
ii) your working hours were reduced by 20% or more
iii) if you were a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.
Therefore, I believe if you met one of these conditions you would most likely not be I a position to buy a property in any case.
Accessing superannuation to simply reinvest does not make sense in most cases. You are simply withdrawing from a tax concessional environment into a taxable environment at your marginal tax rate. Long term I believe superannuation will always win simply due to the compounding effect of being taxed less annually.
I suggest you could always consider investing via your superannuation with advice from a Certified Financial Planner to give you direction on what best suits your circumstances.
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