4 C
Alba Iulia
Sunday, August 16, 2020

Early access to superannuation a “last resort”: retirement advocates

Must Read

Covid positive Filipina from Geelong breaks down after being taken into hotel quarantine

A 58 year old Filipina named Ella is currently being held in hotel quarantine in Melbourne after...

Philippine Airlines to operate special flights between Sydney and Manila

Philippine Airlines has announced a limited number of direct flights in the month of August/early September between...

Around 290 passengers fly home on special flight from Melbourne to Manila

Philippine Airlines in cooperation with the Philippine Department of Foreign Affairs, and the Philippine Consulate in Melbourne...

One of the ways the Australian government is responding to the needs of those who lost jobs caused by COVID-19 is by easing the rules around early access to superannuation.

Many Australians are now eligible to withdraw up to $20,000 from their super over the next two financial years.

However, retirement advocates Super Consumers Australia, Council On The Ageing (COTA) Australia and CHOICE are advising people to exhaust all other options before thinking of taking money out of their super.

According to Super Consumers Australia modelling, early access could negatively impact people’s retirement balances around $50,000 in today’s money. 

For instance, for a 30-year-old, the modelling found that the impact of withdrawing $20,000 would be $49,823 by retirement age.

AgeImpact on balance at retirement of $20,000
withdrawn from your super
30$ 49,823
40$ 39,904
50$ 31,181
60$ 23,770

“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,” said O’Halloran.

COTA Australia CEO Ian Yates cautioned that people will lose tens of thousands of dollars in retirement savings if they withdraw their superannuation now. 

“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,” Yates said.

He explained further that “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.”

“It may not seem important now, but that’s many tens of thousands of dollars that you will not have to support you in retirement,” said Yates.

CHOICE Policy and Campaigns Adviser Patrick Veyret warns that “accessing your super should be a last resort.” 

“If people are in financial difficulty, we encourage them to contact financial counsellors, not financial advisers. Financial counsellors offer a free and independent service. They can help people navigate through financial hardship, access government payments, and assist with any debt matters.”

“It will only be in very rare circumstances that a financial adviser recommending early access of superannuation is doing so in your best interests.”

The advocates also urge people to be alert to scammers who offer to help people access their super early for a fee.

“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,” 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,” O’Halloran added.

Resources:


Get more stories like this in your inbox!

Sign up for our newsletter and receive regular updates.

- Advertisement -
- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

- Advertisement -

Subscribe to our newsletter

To be updated with all the latest news, offers and special announcements.

We value your privacy. Your personal details will not be shared to third parties.

Latest News

Covid positive Filipina from Geelong breaks down after being taken into hotel quarantine

A 58 year old Filipina named Ella is currently being held in hotel quarantine in Melbourne after...

Random Posts

Arnel Pineda of the Journey sings the U.S. national anthem at NFL

https://www.youtube.com/watch?v=F7YZdEhnATw Filipino lead singer Arnel Pineda and the members of the Journey played Star-Spangled Banner before the Cardinals-Ravens game on Monday night at the University...

Money-saving gift ideas for family and friends

  Giving gifts can be tricky. Factors such as age, status, occasion and culture have to be taken into consideration when picking one. A common...

Flooding in Philippines Leaves Dozens Dead

More than 13 inches of rain fell in just 12 hours as Tropical Storm Ketsana slammed ashore in the Philippines, killing dozens of people...

Lapped it up

By Ryan Perdio It would have been funny if it weren’t so ludicrous. Derek and I met up for lunch at a quaint little cafe located...

More Articles Like This

- Advertisement -