=! to Marty. If you check THE sources, they warn against trying to access before 55.
https://www.moneysmart.gov.au/superannuation-and-retirement and
http://www.ato.gov.au/Super/.
You can access a TRAP or TRIP at 55 *IF* that is your preservation age, but as Marty says it carries extra tax @15%.. But for you young'uns preservation rises successively to 60. I'm 54 and in theory I could access in a few months when I turn 55, but I am choosing not to because of the tax benefits of waiting to 60.
So with this in mind, are Aussie Mustachians maxing out their super contributions? On one hand, extra contributions are so tax effective and will compensate for years of lost super from ER, but then it is such a long time until you can access them. I'm still studying so I have a few years until this is even an option for me.
At 54 , yes I am.
For those younger, I would say yes, probably but keep an eye on the government and their reforms from now on and adjust accordingly.
The danger I see is that the the government can change the rules with regard to tax sheltering super and I'm pretty sure it will probably gradually in the coming decades. (i.e. it probably won't affect me much, but will affect my kids as they start to earn in the next 5 years or so).
Its case all of "all roads lead to Rome" with regards to income tax/super etc. no matter how you come at it, IF you can live on 20k yr/single, 30k yr couple (this is equal to OAP currently)...kiss taxes goodbye. If you have a single income of 40k you only pay about 3k tax. So *IF* you learn your Mustachian lessons well, and can live happily on this level of income, you've hit the sweet spot Down Under. The govt will provide all the excellent Australian amenities: health care, education, road, schools , police etc etc basically for FREE. As soon as you get above 40k, you start to lose efficiency since you will start to pay more tax.
Note that the max tax concessional cap for super is 25k. Over 40 years working that equals the big 1mill. Now as Mustachians, we know that 1mill is 40k a year at 4%SWR. (hmmm has govt been taking MMM lessons?). If you earn 100k a year, then you look forward to 12k a year super when we hit 12% compulsory contributions in 2019. 12k for 40 years at 5% return = about 1.5mill in todays dollars. But if we use 2.5% to allow for 2.5% CPI we get 800k ie 32k @4% SWR. Or about the OAP for a couple. 4% is a bit generous since the govt uses a minimum of 5% on a super income stream if you are between 60-64 years. ( but 100k is a bit above average wage).
Now the reason for tax sheltering super is to entice Aussies into becoming self-funded retirees, reducing the govts ever increasing OAP cheque. Also once you put the money in there, the govt (within electoral popularity limits) can change the rules and get its hands on the proceeds of the money invested via taxation.
FWIW, my opinion is that once we hit 12% compulsory contributions, , super will start replace the OAP, since thats what 12% will generate. Once we are 40 years into 12% super will replace the OAP by and large (except for low income earners who are tax sheltered anyways) and there will be NO need for the govt to provide tax sheltering. So if you are 50 like me, super is good. If you are 20? NOT so sure. Certainly *everything* you contribute /invest privately in you early 20s is *very* important since after 30years, and approaching 40years compounding returns are magic. But should everything you put aside in your early 20s be maxed into super?...don't know the answer but wonder if it would not be wiser to hedge and put 50% super and 50% private. If you can afford it obviously max super AND invest privately for the time being. If you are trying ER, then the math is different again.
1 million in super seems to be a magic number. I keep a close eye on the 2 websites above, and there was, well hidden to be sure, definite mention of a lifetime tax effective cap of around 1mill. I spent a lot of time trying to find this for this post to make sure I described it accurately and it seems to have disappeared. In my searching I did come up with some political debate about this concept. So I would watch for a max tax effective cap that might come in... i.e. again super after 60 will effective up to about 40k a year.
I'm not financial expert, but I have spent a lot of time on the above web sites. The money smart team are quite helpful at answering general questions. For example I emailed and discovered that the contributions tax of 15% referred to not just my contributions (my understanding), but my returns that were re-invested ( who'd have thought that interest was a "contribution?").
Ok a couple of glasses of red and a day in the sun by the sea listening to music.....a long post, hopefully coherent. Any comments, corrections, insights welcome