Accessing Super to Retire or Reduce Debt
Written by Brett Martin
For most people, retiring with debt is less than ideal.
Therefore, with interest rates continuing to go up and the cost of debt increasing, we have had an increase of people interested in finding out what they can do to access their super to help reduce their debt. It is important to note, that for most circumstances you need to be aged over 60 to tap into your super.
However, before accessing your super, it's crucial to assess your overall retirement plans and financial situation. We would recommend consulting with someone on our team, who can provide personalised advice based on your circumstances and help you evaluate the potential impact of accessing your super early so you can understand the pros and the cons.
Personalised Recommendations
After assessing your individual circumstances, we have different strategies that can assist you in reducing debt while still protecting your retirement.
If we feel this is the right choice for you, from your super you can set up a transition to retirement pension, and you can access up to 10% of your balance each year tax-free.
In certain situations, we can take the pension money from super and use a portion of it to put back into super and claim a tax deduction (against their income), and the remainder of the pension goes to reducing their debt.
Things we will review and discuss when assessing your debt reductions strategy will include:
Comparing the potential earnings on your super with the interest you're paying on the loan
Loan interest rate: If the interest rate on your loan is higher than the potential earnings on your super, it may make financial sense to use your super to pay off the loan. By paying off high-interest debt, you can save money on interest payments and potentially improve your overall financial situation.
Assess your time horizon for both your super and the loan.
Consider the potential tax implications of accessing your super early
Whilst we have seen clients really benefit from accessing their super to reduce their current debt, it is imperative to discuss this with a financial advisor or professional to ensure you are making the right decisions for your personal circumstances.
If you have any questions, or want to learn more, reach out to our team. Contact Us
If you would like to arrange a time to speak with Brett Martin for more information on how we can help, please contact our office on 02 6651 2000, or at info@harbourwealth.com.au.