Retirement
Super release ‘a last resort’, industry urges
Accessing your super should be a last resort after exhausting all other options, including new government benefits, industry experts have advised.
Super release ‘a last resort’, industry urges
Accessing your super should be a last resort after exhausting all other options, including new government benefits, industry experts have advised.
According to Super Consumers Australia, Council On The Ageing (COTA) and Choice, a member in their 30s who takes advantage of the government’s early access to superannuation and withdraws the full $20,000 will be $49,823 worse off in retirement.
“Taking out money before retirement means losing the benefit of compound interest over a lifetime. Depending on how old you are, withdrawing money now could see you having to work much longer to make up the difference before you retire,” said Super Consumers Australia director Xavier O’Halloran.
“There are a number of financial assistance options to help people through these tough times. Super will be the right option for some, but you should be looking at what else is available and possible cuts to discretionary spending before raiding the cookie jar,” Mr O’Halloran said.
The group also advises members that losses will be cemented if superannuation is withdrawn today, without giving it time to rebuild.
COTA CEO Ian Yates applied past lessons, explaining that one of the tragedies of the GFC was that people crystallised their losses by taking their diminished funds out of their super accounts.
“They then had no way of growing them back, and at the same time they lost the multiple tax advantages you get from having your savings in a superannuation account.”
“Our message is that, if at all possible, if your savings are in super, keep them in super. Even if you move your money into a more conservative option within your super fund, you can move it back into a growth fund later. But if you move it out of super, you may not be able to put it back in again,” Mr Yates said.
Finally the advocacy groups urged people who might want to access their superannuation early to watch out for scammers looking to take advantage of the situation.
“Trying to scam people out of their super is disgraceful behaviour. We’d advise people to stay well away from anyone attempting to charge you a fee to help you withdraw your super early,” Mr O’Halloran said.
“If you get an unsolicited email about early access to your super, delete it. If you get an unsolicited call, hang up.”
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