A $20,000 dental bill could cost you $100,000 in retirement
Need expensive dental work? Using your super may seem like an easy solution, but experts warn a $20,000 withdrawal today could leave you more than $100,000 worse off by retirement.
About 60,000 Australians accessed $1.4 billion of their super through early release arrangements in the year to July. More than half withdrew funds to pay for dental treatment.
Like many of his colleagues in the super industry, James Koval is concerned by the figures.
But the Association of Superannuation Funds of Australia's (ASFA) chief policy and advocacy officer understands why Aussies' nest eggs are proving tempting.
"There is genuinely a legitimate debate about dental care affordability in Australia," he says.
"Because of that unaffordability, people are looking for solutions."
When others profit from your super withdrawal
When revealing the amount people had pulled out of their super early, the Australian Tax Office (ATO) took the opportunity to sound the alarm.
You are allowed to access your super early for some expenses, including urgent medical care.
But the ATO says some businesses are encouraging Aussies to lie about their health and tap into their retirement savings to pay for cosmetic procedures.
Many of these promotions relate to cosmetic dental procedures designed to improve the appearance of someone's teeth rather than address serious pain or medical issues.
The social media ads targeting your super
Consumer advocates say social media advertising is playing a growing role in encouraging people to access their super.
"We're seeing all kinds of advertisements, particularly on social media, encouraging people to withdraw their super," says Super Consumers Australia chief executive Xavier O'Halloran.
"Some are pretty sleazy AI-generated ads of a dentist encouraging people to use their super to pay for surgery."
Experts and advocates say some operators are exploiting Australians' concerns about rising dental costs for their own financial gain.
The true cost of raiding your super for dental treatment
As mentioned above, if you do have serious dental problems causing you significant pain that you can't afford to fix, you may be allowed to access your super.
But, as outlined below, doing so can leave you with unexpected bills and significantly less money to pay for retirement.
Arranging a withdrawal through a company advertising on social media can make the damage even worse.
While accessing super may solve an immediate dental problem, experts warn the long-term consequences can be easy to overlook.
1. Unnecessary fees
Experts say dental clinics or finance companies promising to help you get access to your super will often charge for their assistance.
A 2024 investigation by SCA and CHOICE found these fees could be as high as $700.
James Koval from ASFA says such costs are still common and all the more galling considering you're being charged for something you can do yourself for free.
"You don't actually have to go through a third-party [to get your super early]," he says.
"A lot of people can just apply directly through the tax office or their superannuation fund, depending on what the request is for."
2. Higher taxes
Xavier O'Halloran from SCA says these third-parties also tend to play down the tax implications of taking super out of your account early.
"When you put money into super, you get a big tax concession," he explains.
"If you take it out early, you haven't saved it for your retirement, so the government looks to recoup what you probably would've paid in tax if [that money] had been regular income."
O'Halloran say the taxman's cut can be in the thousands of dollars: a "rude shock", leaving you with much less to cover your dental procedure than you thought.
Case in point, in 2024 the ABC reported on one man who was hit with an unexpected tax bill of more than $19,000 after withdrawing $67,000 from his super to pay for dental work.
The ATO says the transfer of super to your bank account can also play havoc with your eligibility for welfare payments like the Family Tax Benefit.
3. Rip-off bills
"These often aren't very reputable players," O'Halloran says of the dentists and third parties encouraging people to tap into super for unnecessary procedures.
He says these operators know patients using their super are likely tapping into a large sum of money and see that as a chance to up their treatment bills.
"We've got real concerns about overcharging," he says.
"We've seen evidence of some pretty expensive and probably inflated surgeries being charged for when super is in the mix."
4. Less money for retirement
The average early withdrawal from super will immediately leave you with around $20,000 less to spend in retirement.
But the Super Members Council says the absence of these funds means you'll also miss out on a significant chunk of investment returns.
The industry group says this lost power of compounding means withdrawing $20,000 at age 30 will leave you $93,000 worse off by the time you retire.
What to do instead of withdrawing your super to pay for dental
- Shop around: Dentists encouraging you to withdraw your super may be charging you more than other clinics. If possible, get quotes for the same procedure from other dentists.
- See if you're eligible for free treatment: If you're on a pension or have a concession card, you may be able to get free or cheaper treatment at a government-funded dental clinic or hospital.
- Consider private health insurance: Certain private health policies will cover dental costs, though these come with upfront premiums, limits on how much support you'll receive and the potential for mandatory waiting periods.
- Look at overseas options: Many Aussies have saved significant sums by getting dental treatment overseas. But many have also received poor-quality care that left them in pain and discomfort. See our guide to dental tourism for advice on how to proceed safely.
Even if you do meet the ATO's requirements for compassionate early release of super, SCA recommends talking to a financial counsellor first.
You can speak to one for free via the National Debt Helpline and get information on how withdrawing your super could affect you specifically and if there are other dental payment options you may be eligible for.
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