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Retirement

What is the impact of withdrawing your super early?

  • April 17 2020
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Retirement

What is the impact of withdrawing your super early?

By Cameron Micallef
April 17 2020

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.

impact of withdrawing your super early

What is the impact of withdrawing your super early?

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  • April 17 2020
  • Share

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.

impact of withdrawing your super early

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.

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“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

What is the impact of withdrawing your super early?
impact of withdrawing your super early
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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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