What impact will 600,000+ people withdrawing super have on the markets?

I am seriously considering taking the cash and paying off our car loan. Getting 0% interest on my cash sitting around in Super vs paying 4.something% on the car loan. At my age, I intend drawing down Super shortly anyway so no loss of future earnings for me to care about. I currently do not meet the withdrawal criteria but that could change next month as I may be stood down from my job shortly.

 

A 30 year old may not be able to access their super for 40, possibly 45 (?) years down the track. Why not pull out the 20k and invest it the same way it's invested within super, and accelerate your path to financial freedom so you aren't waiting around to hit your 70s to retire?

If you're aiming to be financially free by your 40s/50s, isn't this a great opportunity to accelerate your wealth building during a market dip? Possible higher tax implications outside of super yes, but structured correctly that could be avoided.

I understand why it wouldn't be recommended to withdraw 20k to buy a car or a holiday, but invested properly it could be well utilised.

Am I missing something?

 

Where did you hear this?

 

Yes - lower tax environment and greater compounding.
Event though you cannot access super until 60 it can still enable you to retire earlier. If you know you will get it you could eat into capital outside super.

 

And as well any claim Government's will/can change the rules regarding tax on superannuation is also true outside of the superannuation environment. Assets outside of super could be hit harder in some circumstances.

 

But for a 30 year old, is it safe to assume you'll still be able to access super at 60, 30 years from now?

Also, if invested in a stay at home mum's name who pays no tax, couldn't there be favourable tax implications for holding outside of super?

 

Who knows what will happen within the next 30 years, but as super laws change yearly there is bound to be huge differences between now and then.

The key to compounding is to reduce tax as early as possible, but there will come a point where even a non-working spouse's tax free threshold would be eaten up.

A better approach might be to get that non-working spouse working and leave the money in super.

 

And come divorce (always a possibility) the fun begins.

 

Maybe these will be related.

 

Perhaps the part about actually being in financial hardship.

Though you only have to self certify, if you were to take the money out simply to invest it elsewhere it would seem to me you would have a hard time justifying that you were in financial hardship and needed the money. So you would potentially be breaking the law.

Up to you if you want to do that and take that risk.

 

Early access to your super

Look at : "You will not be required to attach evidence to support your application; however, you should retain records and documents to confirm your eligibility."

Seems like taxpayers will be able to self assess to get the 20K. yeeha!

 

All you need is a 20% reduction in your income (due to corona) to be eligible!

I'm taking the rest of the financial year off to have that long awaited US holiday!

Ahh wait a minute, that European pack pack, hmm, that Pacific cruise? nah, just visit Kakadu for a camping tour.....sheet I'm better off staying at work.

 

I'm probably gonna take out 20k legally, 10k now and 10k after 1st July and use that money to buy vas shares in wife's name as she isn't working and can gross up to max dividends. I'll also then salary sacrifice the additional 20k back into super. That's saving us the additional tax I would have had to pay.

The only issue I can see is if shares rebound above 30% in the near term and missing it.

 

I’m 30s, actually don’t plan to withdraw. Don’t really see the point it’s a good tax environment etc

 

There's a coronavirus super loophole that could save you $5000

 

Oh yea I saw that.... there’s a lot of things that have to align I thought? I’m not on payg also so prob can’t use it

 

there are some options that you can use if you withdraw the money even considering the taxes you would be much better off. its not easy and can backfire if you dont use the money properly

 

The ATO audit that will occur when your tax returns flag that your financial situation doesn't match the criteria for early withdrawal.