Want to help your kids buy a home with your super?

Are you watching your children struggle with rising property costs and wonder if your super fund could provide the solution? Using your retirement money requires careful consideration of both immediate and long-term affects on your super balance, and you should consult a mortgage broker, financial planner, and tax accountant before making the decision as it involves more than just access to your superannuation - it impacts your retirement planning, tax obligations, and estate arrangements.

These factors can make a big difference to both your future financial security and your children's property goals. Your investment options need to manage multiple life stages, and early withdrawals can significantly impact your long-term super balance and future performance.

Can I use my super to help my children buy their first home?

If your member balance is currently in accumulation phase, the answer is no you cannot use your super to help your children with a deposit for a home as you are not able to access any of the funds. However, once you have reached your preservation age and met a condition of release, you have unfettered access to your superannuation funds, which means you can use your super to help your children with a deposit for a home.

With rising property prices, some parents have made the decision to access a portion of their superannuation balance once they have access. The long-term ramifications of accessing your superannuation funds to assist adult children may not be properly understood until sometime later. Careful planning and consideration is required. See below for the risks associated with using your super to help your children buy their first home.

The risks and considerations of using super for your children's home deposit

While using your super to help your children to climb onto the property ladder is possible once you’ve met a condition of release, it’s essential to weigh the long-term consequences carefully.

Here are some of the things you may want to consider before using a portion of your superannuation money to help your children with a deposit for their first home:

Impact on your retirement

Withdrawing from your super early means you will be left with less for retirement, which will impact your fund's future earnings. This could affect your lifestyle, future healthcare costs, and overall financial security.

Tax and centrelink implications

Drawing down super as a lump sum may have tax consequences, depending on your age and withdrawal amount. Additionally, it could affect eligibility for government benefits, which consider assets and income in their calculations as well as gifts within a certain time frame.

Alternative ways to assist

Before accessing super, consider whether alternative financial strategies might be more effective. For example, gifting funds from non-super assets, acting as a guarantor on a home loan, or setting up a family trust may provide support without eroding retirement savings.

Once money is taken out of your super it is much harder to put back in as there are heavier restrictions on types of contributions on persons over a certain age. Superannuation funds attract concessional tax rates on earnings which are not available to individual earnings.

Next Steps

Before making any decisions about using your super to help your children with a home deposit, it’s crucial to assess the financial and legal implications.

We recommend you do the following:

Consult a financial planner

Get personalised advice on how accessing your super might affect your long-term retirement plans and whether alternative strategies may be more suitable.

Speak to a tax accountant

Understand the tax consequences of withdrawing super and how it may impact your overall financial situation.

Explore other support options

Consider whether there are other ways to assist your children, such as providing a loan, acting as a guarantor, or leveraging non-super assets.

Plan for your own retirement

Ensure that any financial assistance you provide aligns with your retirement goals and does not compromise your future financial security.

Taking the time to plan now can help you support your children while protecting your own financial well-being. If you're unsure about the best approach, reach out to us today and we can take you through the tax implications and refer you to a trusted financial planner.