Withdrawing super early significantly reduces your retirement savings, impacts future income, and comes with immediate tax liabilities (often around 22% if under 60) and potential fees, plus you lose the benefit of compound growth, insurance cover (like TPD/income protection), and creditor protection, leaving you with less for emergencies or retirement.
Getting your super early may affect other payments you get or tax you pay. You may also need to pay a fee to your super fund. You should consider the financial impacts. Read about who can access their super early.
You don't pay tax if you withdraw up to the 'low rate cap', currently $260,000. If you withdraw an amount above the low rate cap, you pay 17% tax (including the Medicare levy) or your marginal tax rate, whichever is lower.
The 3-year bring-forward rule allows Members in an SMSF to contribute more than the Non-Concessional Contribution (after-tax Contributions) cap of $120,000 during a 3-year financial period from 1 July 2024. From 1 July 2021 to 30 June 2024, the non-concessional contributions cap was $110,000.
No, a super withdrawal isn't considered a form of credit, so it won't be included in any official credit report.
Most people will not pay tax when they withdraw their super because access to super generally starts at age 60 and payments from super to people aged 60 or over are generally tax free. Some payments from super are taxable, particularly if you are under 60 years.
The 2-2-2 credit rule is a guideline lenders use to assess a borrower's creditworthiness, requiring two active revolving credit accounts, open for at least two years, with a history of on-time payments for those two consecutive years, often with a minimum limit of $2,000 per account, to show financial stability for larger loans like mortgages. It demonstrates you can handle multiple credit lines responsibly, not just have a good score, building lender confidence.
For a $70,000 annual retirement income in Australia, you generally need a super balance between roughly $1.1 million and $1.75 million for a single person, depending on when you retire, while couples might aim for around $690,000 to $820,000, often factoring in the Age Pension and home ownership. A common guideline is to aim for a balance that provides 70-85% of your pre-retirement income, but the exact figure depends heavily on your lifestyle, investment returns, and access to government support like the Age Pension.
While exact real-time figures vary, estimates from around 2025 suggest approximately 400,000 to over 500,000 Australians held over $1 million in superannuation, with about 2.5% of the population reaching this milestone as of mid-2021, a figure that has likely grown with strong investment returns, though many more hold significant balances and millions are projected to reach this goal by retirement, especially men.
Minimum drawdown rates for your super
You can choose how much you receive from your Choice Income or TTR Income account each year, as long as you get at least the minimum. There is no maximum withdrawal limit in a Choice Income account, while the TTR Income account has a maximum withdrawal limit of 10%.
25% of a lump sum taken from a pension not already in drawdown will normally be tax free and the rest taxable. 100% of a lump sum taken from a drawdown plan will be taxable. Important information: In calculating the tax, it uses the standard personal allowance and respective income tax bands for a whole tax year.
Yes, retiring at 60 with $500,000 in super is possible for a modest lifestyle, especially if you own your home, plan to use the Age Pension, and manage expenses, though it might not cover a "comfortable" (more luxurious) retirement without other income or downsizing; it requires a solid plan, careful budgeting, and often working part-time. For a single person, $500k can support around $50,000-$52,000 per year, while a couple needs more, but you'll likely need to supplement with the Age Pension as your balance decreases.
You may be able to access part of your superannuation when you are behind on your home loan repayments. This is usually only possible on compassionate grounds to prevent your home from being repossessed or sold, or if you are receiving government income support payments and in 'severe financial hardship'.
The superannuation 'sweet' spot refers to the point where your super and other assets' total balance sits just under the asset test limit which allows you to receive the full Age Pension. When your super balance grows over this limit, your pension is reduced by $3 a fortnight for every $1,000 above the threshold.
Investing $1,000 a month for 30 years means you contribute $360,000 total, but with compounding returns, the final amount varies significantly by average annual return, potentially growing to over $1 million at 8% and reaching around $2 million or more at a 10% average return, illustrating the power of long-term, consistent investing.
It is possible to retire early at age 55, but most people are not eligible for Social Security retirement benefits until they're 62, and typically people must wait until age 59 ½ to make penalty-free withdrawals from 401(k)s or other retirement accounts.
The Super Consumers Australia guide
It assumes you'll own your home and won't be paying rent or mortgage repayments once you've retired. The guide estimates a 'medium' lifestyle will cost a couple who are already retired about $60,000 per year (with a required super balance at retirement of $371,000).
The top ten financial mistakes most people make after retirement are:
In New South Wales, one is allowed to make use of their superannuation for assistance on a house deposit. If you do decide to use an existing super to buy your first house, don't worry we'll try to explain each step and help you as much as possible.
As a single person, a balance of around $360,000 would be enough for an income of about $52,000 per year (using a combination of super drawdown and Age Pension payments), which is close to what ASFA estimates is needed for comfortable retirement.
Yes, you can likely retire at 70 with $800,000, but it depends heavily on your annual spending, investment returns, and eligibility for government support like the Age Pension, potentially supporting a modest to comfortable lifestyle, though a very high-spending one might require more capital, according to wealthlab.com.au, Toro Wealth and Frontier Financial Group. Using the "4% Rule", $800,000 could provide around $32,000/year initially, but factoring in the Age Pension and lower expenses (like no mortgage/work costs) can make it stretch further, possibly supporting a single person's $44k-$50k/year needs.
How to avoid paying higher-rate tax
By paying more than your required monthly mortgage payment, you can put that extra money directly toward the principal amount on your loan. Your interest payment is based on your principal balance, so by applying your extra payment to your principal, you could pay less in interest over time.
While the exact range for a bad credit score in Australia can depend on the credit scoring model, usually a score between the range of 300-550 is considered a bad credit score.
Here are some ways you can pay off your mortgage faster: