If you’ve recently saved up some money—whether it’s just enough to get your foot in the door of the property market or a substantial amount you’re considering to reduce your tax liability—you might be wondering if putting it into your superannuation is the right move. While super offers some great tax benefits, I want to share why investing outside of super might be a better option if you’re looking to reap the rewards sooner rather than later.
This Is Not Financial or Tax Advice—Just a Different Perspective
Superannuation is built for long-term savings, and any funds you contribute now will be locked away until you reach retirement age, typically around 60. However, don’t forget that the government continues to increase the preservation age, so by the time you retire, it could be well above 60, meaning even longer before you can access your funds. If you’re hoping to maximise your wealth and see more immediate returns, investing outside of super might be a smarter strategy for your current situation.
When Can You Access Your Super?
Accessing your superannuation is generally restricted until you reach what’s known as the preservation age. For most Australians, this age currently ranges between 55 and 60, depending on your birth year. However, keep in mind that the government has been gradually increasing this age, and it’s possible that by the time you retire, the preservation age could be even higher.
In most cases, you can access your super when:
- You reach preservation age and retire,
- You turn 65 (regardless of whether you’re still working), or
- Under specific circumstances such as severe financial hardship or a medical condition.
The increasing preservation age means that any funds you contribute now might not be accessible for several decades, which is an important consideration when deciding whether to invest through super or look at alternatives that provide more immediate flexibility.
Why Invest Outside of Super?
1. Access to Your Returns Sooner – By investing outside of super, any profits—whether from property growth, dividends, or rental income—can be accessed now, giving you the flexibility to use or reinvest them. You won’t have to wait decades to enjoy the benefits of your investment. For example, some investors build momentum early by going from one home to a portfolio of eight properties and an Airbnb.
2. More Control and Flexibility – Unlike super, where funds are locked away, investing outside of super means no restrictions on accessing your money. Whether you’ve saved up a small amount to get started or you’ve built a larger sum, investing it outside of super allows you to use your wealth on your own terms.
3. Immediate Enjoyment – If you invest outside of super, you can take advantage of your wealth now, whether that means reinvesting profits, taking advantage of new opportunities, or simply enjoying the financial freedom your investment provides. Super, on the other hand, locks you into a long-term plan.
Super Was Always Meant to Be a Backup Plan
It’s important to remember that superannuation was never designed to be the primary way to build wealth. Instead, it was intended as a safety net for retirement—something to support you when you’re no longer earning a regular income. The government introduced compulsory super in 1992 to reduce the reliance on the age pension and help ensure that Australians have financial stability in retirement.
However, by locking away your funds until retirement, you may miss out on opportunities to grow your wealth in the present. For many people, investing outside of super can offer greater flexibility and the chance to make their money work for them now, rather than waiting decades to access it.
When Super Might Make Sense
If you were closer to retirement age—say in your late 50s—super might be more appealing. At that point, the tax advantages within super, like concessional tax rates and tax-free income in retirement, can make a big difference to your financial planning. But if you’re still in your prime working years and building wealth, investing outside of super might better suit your goals.
Of course, this is just my personal take. To make the best decision for your unique situation, I strongly recommend speaking with a qualified financial planner or accountant who can provide specific advice tailored to your needs.
