Q: A few years back my wife and I owned six homes, before we were caught out by a marketeer over an investment. We lost it all. Not good when you consider we are in our 50s. Now 59, we are looking at trying to buy a modest unit or home, within the next two years. Would we both be able to cash in our super funds and put towards a deposit?
I am sorry to hear about your experience.
The federal government has introduced a superannuation incentive for first homebuyers, but previous homeowners are not generally eligible unless they satisfy a ‘financial hardship’ exception. The new scheme relates to super contributions made from 1 July 2017, rather than pre-existing super benefits. For more information on the First Home Super Savers Scheme, see SuperGuide article 10-point guide to First Home Super Saver Scheme.
The rules for accessing superannuation benefits are quite strict in Australia. You must satisfy a condition of release to access super, and wanting to buy a property to live in, even in your difficult circumstances, is not considered a condition of release.
The reasonably good news however for those keen to access their super, is that where an individual has reached preservation age (at least 58 years for those born after June 1962, and at least 59 years for those born after June 1963), the cashing rules related to super benefits become more relaxed. You can discover your preservation age by using our reckoner: Retirement Age Reckoner: Discover your preservation age and Age Pension age or by reading the SuperGuide article Accessing super: What is my preservation age?.
If an individual has reached his or her preservation age, and then retires, he or she can withdraw any preserved super benefits. Remember, tax may be payable on any super benefits withdrawn before the age of 60. We explain the tax rules when withdrawing benefits before age 60 in the SuperGuide article Retiring before the age of 60: the tax deal.
If an individual is not ready to retire, another option is to start a transition-to-retirement (TRIP) which enables the individual to withdraw up to 10% of the account balance each year, providing the individual has reached preservation age. We explain how TRIPs work in the SuperGuide article Super pensions: Reviewing the merits of keeping a TRIP.
The super rules do allow early release of superannuation benefits in the event of severe financial hardship (must be in receipt of Commonwealth income support payments) or on compassionate grounds (typically, extreme mortgage stress, serious illness or disability). We explain these rules in the following articles: