When it comes to national repayment plans, there is no country in the world that beats Australia. Compulsory superannuation is a part of what contributed to the reported 2.02 trillion dollars in superannuation as of 30 June 2015. It’s also because many Australians have additional money saved up for retirement. The money in the super fund continues to grow and the interest that is accrued as well is major as normally superannuation funds are compound interest funds. However, as the money continues to accumulate, it’s common for many people to think of the various ways they can use that money at the moment; more especially if debt is weighing on you. Many people, therefore, tend to wonder if using your superannuation to pay debt is possible.
Financial difficulties are a common occurrence in the life of many Australians. Whether it’s a simple step back or a more severe upheaval, there is no denying that financial hardships can get quite devastating. There are many things that could lead to financial hardships, including a growing family, getting furred among others. Whatever the cause, the thing lingering in the minds of people in such situations is if using super to pay off debt is possible and if yes, whether it is sane. While using your superannuation to pay debt is not really advised, there are provisions for people to withdraw money if they are in a financial hardship. Withdrawal of superfunds is normally allowed on the grounds of compassion, but first you have to apply.
Personal debts, business debts and taxes
When it comes to personal debts, it can be quite difficult withdrawing super to pay debt. However, there are also provisions on the grounds of compassion. For instance, instance like facing losing your home, can you be allowed to withdraw? Normally, super funds don’t allow withdrawal of funds for business debts but there’s an exception again when it affects your personal life. Also it’s allowed when you are close to retirement age like around 57 years old or more, and you are allowed to start taking a small percentage usually 10 % as pension income. However, there are costs that will be involved and unduly the money is not enough to pay off the debts. As for taxes, you cannot be allowed to use superannuation to pay for them. Check out Debt Mediators
It’s very important that before you consider using your superannuation to pay debt, you explore other options first. In fact, talking to a financial advisor first is very important before you take such a big decision. An advisor can help you draw a plan that will help you be able to handle your current financial situation.
While you may feel tempted to access your superannuation to pay down debt, it’s important to remember the need to save for the future as well. This is especially because during the later years of life, it’s difficult for people to work and thus the money in the superannuation will come in handy to serve them during such times.