Retirement
What is the impact of withdrawing your super early?
With over 600,000 members accessing their superannuation early, the challenge shifts to downsizing the potential impact of the policy on the long-term outcomes for members, a consumer group has suggested.
What is the impact of withdrawing your super early?
With over 600,000 members accessing their superannuation early, the challenge shifts to downsizing the potential impact of the policy on the long-term outcomes for members, a consumer group has suggested.
Super Consumers Australia believes members need to weigh up not only their immediate needs but their long-term futures when deciding what is right for them.
Super Consumer Australia’s director, Xavier O’Halloran, said, “When weighing up whether to access your super early, it is a good idea to balance your whole household’s financial needs now and in retirement.”
“Members should also consider the insurance needs, as early access may leave them without enough superannuation to continue paying for insurance premiums in super,” Mr O’Halloran said.
The advocate group highlighted that losses will be cemented if members withdraw, while money spent today will not compound for tomorrow.
“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,” he continued.
Impact on retirement
The consumer advocate group highlighted that if a member reduces their superannuation balance today, it means less income in retirement.
The size of the impact is uncertain because it will depend on unknown factors such as the future rate of investment earnings on your super.
Based on the assumption an investor withdraws the full $20,000, The Conexus Institute, Actuaries Institute and Super Consumers Australia have come up with the impact on the member’s retirement.
|
Current age |
30 |
40 |
50 |
60 |
|
Reduction in retirement balance |
$50,000 |
$39,000 |
$30,000 |
$24,000 |
|
Reduction in fortnightly income from superannuation |
$108 |
$83 |
$65 |
$52 |
|
Reduction in annual income from superannuation |
$2,800 |
$2,200 |
$1,700 |
$1,300 |
RELATED ARTICLES
About the author
About the author
Superannuation
Aware Super slashes admin fees for retirees by up to 25 per cent
Aware Super has reduced administration fees for members with a retirement income account by up to 25 per cent and lowered the maximum annual fee. Read more
Superannuation
SuperAPI co-founder criticises Labor's superannuation tax as 'sneaky tax on young people'
The co-founder of SuperAPI has labelled Labor's proposed tax on superannuation balances above $3 million as a "sneaky tax on young people, tomorrow" disguised as a policy targeting wealthy retirees ...Read more
Superannuation
Election policies could reshape Australia's superannuation landscape, expert warns
Competing superannuation policies from Australia's major political parties could have significant implications for investors and retirees, according to a financial expert. Read more
Superannuation
Industry leaders weigh in on concessional super tax as Budget confirms $55bn investment
Changes to the taxation of superannuation earnings and contributions have drawn mixed responses from financial and payroll sector leaders, as the Federal Budget confirms over $55 billion in ...Read more
Superannuation
Call for indexation on super tax cap as $3m threshold draws criticism
A senior executive in the superannuation technology sector has criticised the Federal Government for failing to index the proposed $3 million superannuation tax cap, arguing the measure will unfairly ...Read more
Superannuation
Rest members back calls for fairer superannuation rules ahead of Federal Budget
Rest has called on the Federal Government to implement superannuation reforms aimed at improving fairness across the system, after member survey results showed strong support for a range of proposed ...Read more
Superannuation
Rest welcomes progress on ‘Payday Super’ reform
Rest, one of Australia’s largest profit-to-member superannuation funds, has welcomed the Australian Government’s release of draft ‘Payday Super’ legislation, which aims to align Superannuation ...Read more
Superannuation
SuperAPI and Humanforce partner to improve superannuation compliance for one million Australians
Superannuation engagement platform SuperAPI has partnered with human capital management provider Humanforce to streamline payroll and superannuation contributions for more than one million Australian ...Read more
Superannuation
Aware Super slashes admin fees for retirees by up to 25 per cent
Aware Super has reduced administration fees for members with a retirement income account by up to 25 per cent and lowered the maximum annual fee. Read more
Superannuation
SuperAPI co-founder criticises Labor's superannuation tax as 'sneaky tax on young people'
The co-founder of SuperAPI has labelled Labor's proposed tax on superannuation balances above $3 million as a "sneaky tax on young people, tomorrow" disguised as a policy targeting wealthy retirees ...Read more
Superannuation
Election policies could reshape Australia's superannuation landscape, expert warns
Competing superannuation policies from Australia's major political parties could have significant implications for investors and retirees, according to a financial expert. Read more
Superannuation
Industry leaders weigh in on concessional super tax as Budget confirms $55bn investment
Changes to the taxation of superannuation earnings and contributions have drawn mixed responses from financial and payroll sector leaders, as the Federal Budget confirms over $55 billion in ...Read more
Superannuation
Call for indexation on super tax cap as $3m threshold draws criticism
A senior executive in the superannuation technology sector has criticised the Federal Government for failing to index the proposed $3 million superannuation tax cap, arguing the measure will unfairly ...Read more
Superannuation
Rest members back calls for fairer superannuation rules ahead of Federal Budget
Rest has called on the Federal Government to implement superannuation reforms aimed at improving fairness across the system, after member survey results showed strong support for a range of proposed ...Read more
Superannuation
Rest welcomes progress on ‘Payday Super’ reform
Rest, one of Australia’s largest profit-to-member superannuation funds, has welcomed the Australian Government’s release of draft ‘Payday Super’ legislation, which aims to align Superannuation ...Read more
Superannuation
SuperAPI and Humanforce partner to improve superannuation compliance for one million Australians
Superannuation engagement platform SuperAPI has partnered with human capital management provider Humanforce to streamline payroll and superannuation contributions for more than one million Australian ...Read more
