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Due to the financial impact of COVID-19, the government has provided access to a $10,000 tax free withdrawal from your super before June 30 2020, & $10,000 after July 1st.
There is 3 areas I want to cover:
- Should you access the money from super
- What are the long term impacts of taking $10,000 from your super
- What steps need to be taken to make the withdrawal
Should you access the money from super?
This answer isn’t a simple one, but here is how you should play things.
Firstly, are you in a position of financial stress due to COVID-19? If the answer is yes, then we would recommend exhausting the following avenues first:
- Discuss you options with your bank regarding deferment of lending payments
- Discuss your options with your landlord
- Be aware of your entitlements via the government stimulus packages (these are changing on nearly a daily basis)
If you have exhausted the above options, & still require the money from super – then the right thing to do is access it.
Hi, it’s Matt Hale from Rising Tide (senior financial planner) and I wanted to give you a really brief overview of some of the changes that have happened in superannuation lately. We’ve fielded a lot of calls with people asking if they can access their superannuation and at this stage it is on a case-by-case basis. What you need to do is set up a MYGOV account and follow the prompts from there. Later today we will have a pace up on our website, which will have a couple of instructional videos on how to create your MYGOV account and link your superannuation accounts. Everything will happen from there, although at this stage it won’t be accessible for another couple of weeks.
One thing that we want everyone to take into consideration before accessing the money in this super is the long term effects. We’ve run some numbers over the weekend and based on average long term returns of a high growth super account of around 8 per cent, if a 40 year old was to take out $10,000 from their super, right now, the impact would be $73,402. So it’s not just the $10,000 that you’re taking out now. So to give some context. If someone at the age of thirty was to take out $10,000 right now, that number would over double to $162,000 that would impact their superannuation balance at the age of 65. What we recommend doing is discussing it with your advisor first and also having a chat with your bank and your landlord before making any decisions on accessing your superannuation.
We want to make sure that any decision you make is going to have the best long-term impact for you. Saying that if you are under financial stress after looking through those avenues, then absolutely everyone has the right to do it.
What we’d recommend is touching base via someone at Rising Tide via the website and we’ll hopefully be able to talk you through it and give you clarity on what the best steps are for you.