top of page

What to Know Before Withdrawing From Superannuation Early

The global pandemic affected almost every industry, causing many members of the workforce to worry about their financial security. Due to the significant economic impact of this health crisis, the Federal Government provided Australians with financial support in the form of the COVID-19 Superannuation Early Release Scheme. This allowed people to withdraw some or all of their superannuation savings to address urgent short-term financial needs.

While accessing super effectively reduces some financial stress, this early access could have long-term consequences that can affect retirement. These negative implications could even outweigh the benefits they provide today. For this reason, it’s important to weigh the pros and cons before tapping into these funds.

Who Is Eligible for Early Access of Super?

Many Australians are allowed to access up to 20 thousand dollars from their super over the next two years. To determine if you are eligible for early access, you should meet one of these criteria:

  • You are a sole trader

  • You are eligible to receive a JobSeeker Payment, Youth Allowance for jobseekers, Parenting Payment, Farm Household Allowance, or Special Benefit

  • You are unemployed

  • You were made redundant

  • Your business faced a reduction in your turnover of 20 per cent or more

  • Your business was suspended

  • Your working hours were reduced by 20 per cent or more

What Are the Risks of Accessing Super Early?

Funds from your superannuation account are meant to provide long-term financial security after retirement. Because of this, withdrawing up to 20 thousand dollars can have immediate or long-term repercussions.

An immediate consequence to consider is the effect on your Income Protection insurance, Life or Total Permanent Disability insurance, or other types of insurance held within your super. The coverage you receive might change or get limited. Additionally, the value invested in your growth assets could be significantly diminished since it will require a sell-down of your investments.

As for the long-term consequence, withdrawing money before retirement means losing the benefit of compound interest over time. The severity of impact on your retirement savings depends on how much your investment earns and how long you have been investing.

Are There Other Opportunities for Financial Relief?

Withdrawing from super is not the right option for everyone. If you think dipping into your funds before retirement is not a wise choice, there are other alternatives to consider. Some government stimulus benefits to check out are Centrelink payments, including JobSeeker, Economic Support Payment, and the Coronavirus Supplement.

Remember to review your financial commitments or reach out to your lenders and creditors to discuss your financial position with them, especially if your income is reduced or you lost your job. If you are renting, consider communicating with your landlord and request a temporary reduction in rent. Some are willing to offer some financial relief during this difficult time and defer payments for several months.


Due to the pandemic, many Australians are finding themselves in a difficult financial situation they have never experienced before. This stressful time might force them to withdraw from their super before retirement. While this provides an easy way to relieve some of their financial strain, withdrawing 20 thousand dollars today could equate to a million dollars after several years.

If you are facing this dilemma, gain clarity by reaching out to our superannuation advisers. At Swell Financial Planning, we will give you sound superannuation advice and other money management tips that can help you achieve financial security. Contact us today at 07 5554 8581!


bottom of page