The superannuation tragedy affecting half a million Aussies
Almost half a million Aussies have jeopardised their retirement by withdrawing some or all of their superannuation via the early release scheme.
Industry Super Australia, using Australian Tax Office data on the proportions by age of those with accounts below $10,000, and Treasury statistics on the age distribution of early release, also estimates that young people have been particularly eager to reach into their super fund savings with 395,000 under-35s withdrawing money.
The near half-million Aussies who have dipped into their super represent about 15% of Australian workers.
Superannuation funds, like all investment funds, aren't like savings accounts. It's not as if taking out a dollar now and replacing that dollar back five years down the road will put you in the same position. You miss out on all the compounding that would've taken place over that timeframe.
"Those early contributions are like yeast, without them you're left with a much flatter nest egg," says Industry Super Australia CEO Bernie Dean.
"To have hundreds of thousands wiping their savings out mid-way through their life is a tragedy waiting to happen and it will affect everyone. Every Australian deserves a good life in retirement, not just scraping by on the pension."
For many the super withdrawal offer provided a lifeline for much needed cash during a period of hardship, and recovery is possible.
"If people genuinely needed it and have lost their job then they will need to wait until they have built up a savings buffer again before refocussing on repaying their super," says financial adviser Tanya Carlson.
Once you're on the financial straight and narrow, you can put in a plan to undo the damage from the withdrawal.
"What most people don't realise is that just $100 per month of salary sacrifice will repay that amount back over a 20-year period, with a little extra.
"The impact of $100 per month salary sacrificed is almost not noticeable for most people on their everyday cash flow - again personal circumstances will vary with this - but making it a priority will be key."
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