Whether you should access your super for items such as a car, the following are some consideration points:
- Ability to access super and in what manner
- The impact on your retirement savings
- Alternative strategies
In a general sense you can access your super tax free at age 60 in 2 ways. The first being the use of a transition to retirement pension that allows you to access 10% of your fund balance even if you are still employed. The second option is via a non-caped lump sum withdraw if you have left gainful employment since turning age 60. When considering these options, it is important that you discuss with an advisor the pros and cons of each to ensure your long-term goals are also met.
Small changes to your fund balance can have long term compounding affects and these need to be considered. You need to consider at what age you are planning on retiring and on what income. It may very well be that the answer to these questions will determine the value of the car purchase you can make, so that after the transaction you are left knowing that you are likely to have adequate funds for your specific goals into the future.
It may also be an ample time to consider alternative strategies, these could include funding the purchase via a loan, or increasing personal super contributions to offset the withdraw amount. By funding the purchase with a loan outside super you are able to maintain your investments for your retirement; however, you may want to consider that if the interest rate of the loan is higher than the post-tax returns of the super fund, you will not be in a better position in the long run. A viable option may be to make a withdraw from super if it is in your interest to do so, then make personal contributions into your super fund equivalent to those of the loan repayment. This has the added benefit of reducing your personal tax liabilities whilst increasing your super balance.
There are many factors to consider regarding your personal circumstances, so it would a perfect time to sit down with an adviser to discuss the above options to determine what will be the best way to approach your short, medium and long-term goals.