360,000 Aussies gear up to access super early: Should you?

·3-min read
360,000 Aussies gear up for early super access. Source: Getty
360,000 Aussies gear up for early super access. Source: Getty

More than 360,000 Australians intend to take advantage of the government’s early super release measure, despite experts warning this could leave them hundreds of thousands of dollars worse off at retirement.

The Australian Taxation Office revealed that as of April 2, 361,000 Australians have registered their interest in accessing up to $10,000 of their superannuation in the 2019-20 financial year, and a further $10,000 in 2021-21.

And while this doesn’t mean they will definitely complete the application form to release their super, it is an indication of the high volume of Aussies interested in doing so.

It follows news that real estate agents were caught snooping into tenants’ superannuation accounts, forcing the corporate regulator to sound the alarms.

The Australian Securities and Investments Commission warned agents asking tenants to dip into their super accounts before asking for rent reductions could face fines of up to $126,000, and five years imprisonment. The company they work for could also face fines of up to $1.26 million

Should I access my superannuation early?

Accessing your superannuation should be a last resort, experts have warned.

“I don’t love this,” Nicole Pedersen-McKinnon said.

“Modelling shows a $20,000 withdrawal in your twenties becomes $80,000 less in your fund at retirement. And right now, you may well be selling at an historic low.“

In fact, a 20-year-old woman who accesses the full $20,000 from her super stands to lose as much as $120,000 from her balance by retirement, Industry Super Australia analysis shows.

A 30-year-old who also took $20,000 from their super could lose around $100,000, while a 40-year-old could lose $63,000.

“Members should tread carefully and only think about cracking open their super after they’ve taken up the extra cash support on offer from the government - super should be the last resort given the impact it can have on your retirement nest egg,” Industry Super Australia chief executive Bernie Dean said.

And while coronavirus has taken the Australian stock market on a rollercoaster ride, money commentator David Taylor advises you simply strap in.

“Australia’s super industry was worth a staggering $3 trillion earlier this year. It’s now significantly less than that,” Taylor said.

“For some that will cause some pain, but you shouldn’t let that pain lead to poor decision making. For others, by being sensible, and waiting on the shoreline for the storm to pass, you could be setting yourself for brand new opportunities – notwithstanding the need for a lot of patience in the meantime.”

What can I do instead?

The government’s second and third stimulus packages revealed an increase to the JobSeeker Payment (formerly Newstart) via a $550 per fortnight Coronavirus Supplement, as well as wage subsidy, which Aussies in financial strain can apply for.

Major banks are also postponing mortgage repayments for six months, and landlords have been encouraged to work out rent relief with their tenants as the government imposes a six-month ban on evictions.

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