Q: I am 60 years old, working 30 hours a week, with a financially dependent husband (he is paid a part aged pension, hasn’t worked for 7 years due to a brain tumour). I am a carer and my income is supplemented by Newstart. We have a mortgage of $70,000. I would like to access my super to reduce my mortgage, because I am not even meeting my interest repayments on the income I am on. I understand I can apply for hardship, however it is such a tedious process. Is there a more simple way to access my super? It’s only worth around $90,000 in total.
I’m sorry to read about your financial situation, and your personal circumstances.
If a person has reached their preservation age (anyone born before July 1960 has a preservation age of 55, and at least 56 years and up to 60 years, if born after June 1960), AND retire, he or she can access super benefits, subject to supplying a retirement declaration to his or her super fund (for more information on preservation age, see SuperGuide articles Accessing super: What is my preservation age? and Accessing super: Preservation age moves to 59 years and Retirement Age Reckoner: Discover your preservation age and Age Pension age.
Note one: A person who is currently 60 years of age has reached preservation age.
Note two: A person aged 60 and working 30 hours a week is unlikely to meet the ‘retirement’ condition, although a person who has reached preservation age has other options to access super while still working, especially when experiencing difficult financial circumstances:
- start a transition-to-retirement pension, which enables the fund member to withdraw up to 10% of the account balance each year (see SuperGuide article TRIPs: 10 important facts about transition-to-retirement pensions) .
- apply for early release due to compassionate grounds (apply to Department of Human Services –DHS – via Centrelink, and for background on the requirements, see SuperGuide article Can I access my super early due to financial hardship? )
- apply for early release to severe financial hardship (apply directly to super fund) (for background on the requirements, see SuperGuide article Can I access my super early due to financial hardship?).
Note three: Another option available to those individuals aged 60 and over (but under 65) who have not retired is a specific circumstance where a person aged 60 legitimately terminates an employment arrangement. For more information, see SuperGuide article Does changing to part-time at 60 years, count as ‘retiring’?
Compassionate grounds or severe financial hardship
An individual suffering mortgage stress may be able to access super benefits on compassionate grounds, subject to satisfying certain conditions. In some circumstances, a medical condition may also warrant early release on compassionate grounds. You apply on compassionate grounds via the DHS (Centrelink) – see this link for further information.
The ‘compassionate grounds’ rules for accessing super early generally relate to mortgage stress or medical need.
The ‘severe financial hardship’ rules require you to be on a social security benefit (you apply via your super fund).
I explain these rules in the following SuperGuide articles:
- Can I access my super early due to financial hardship?
- Accessing super early on ‘compassionate grounds’
- Accessing super early: 14 legal ways to withdraw your super benefits
- Super for beginners, part 10: Can I access my super early to reduce my mortgage?
- Accessing super early: Serious illness or surgery
- Accessing super early: Unemployed and in financial hardship
It may also be possible to access super benefits due to permanent disability. A fund member can access preserved super benefits if he or she becomes permanently incapacitated, that is, the trustee is satisfied that, due to ill health, the fund member is unlikely ever to be able to work in a job for which they are qualified by education, training or experience. A fund member needs to discuss this with their doctor and super fund, to see if they satisfy the conditions.
Free financial counselling
You can access free financial counselling to help you manage your day-to-day finances from a financial counsellor. The Australian Securities and Investments Commission has a list of the main services across the country – you can access this information by clicking on this link that takes you to the special page on the ASIC website.