How to catch up if you had to withdraw money from your super fund

If you were one of the 1.65 million Australians who withdrew money from your super account, you either paid bills or debt or put it into savings, according to figures from the Australian Bureau of Statistics (ABS) released this week.

The ABS found that 57% of those who withdrew funds planned to use it to pay household bills, mortgage, rent and other debts while 36% added it to savings or planned to.

Around 5% of the population had applied for early access to super, most receiving the money by mid-May.

The government introduced the early access to super scheme in mid-March to allow $10,000 to be withdrawn from super in the 2019/2020 financial year and an additional $10,000 in the 2020/2021 financial year.

Australians withdrew $13.2 billion from their super in the first month of the scheme, with an average payment of around $7500.

"For someone who is a millennial, if they have early access to their super and take out $20,000, they are putting themselves in a position where they may be sacrificing between $120,000 and $130,000 of their retirement savings," says Zella director and financial adviser Victoria Devine.

If you withdrew money from your super but want to rebuild your balance, you have two options:

1. Salary sacrifice

You are entitled to contribute up to $25,000 before tax from your salary including your superannuation guarantee. If you are self-employed, you are still entitled to pay yourself super up to $25,000 from pre-tax income, for which you can claim a deduction or up to $100,000 in non-concessional contributions from your after tax income.

2. Voluntary after-tax contributions, or non-concessional contribution

If you make a voluntary contribution to super - if this amount keeps your overall contribution for the year under $25,000 you can claim a tax deduction. If you earn less than $53,564 the government may match your contribution up to $500.

According to QSuper, a 30-year-old Australian would need to pay $14 a week in after-tax contributions to recover $10,000 by the age of 65.

1. "Once your income is back to its pre-COVID19 level, ask your payroll to deduct (or salary sacrifice) $75 from your fortnightly pay into your superannuation," she says. "Over five years and with the power of compounding interest, this would see $10,000 return to your superannuation. As the amount is small enough to digest and represents the cost of a cup of coffee a day, chances are you won't miss it whilst replenishing your super. To top it off, you'd get a bonus of a tax deduction along the way.

2. "If you are lucky enough to receive a bonus this year, or a windfall of any kind, instead of an annual holiday, you may consider topping up your super to reward your future self."

3.  "If staying home has encouraged you to take time for a spring clean you might like to sell off unwanted items and contribute the proceeds into your superannuation," says Hughes, "and receive a tax deduction along the way by using the un-used concessional contributions top up."

Visit MoneySmart to calculate the effect your super withdrawal will have on your retirement savings.

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