The COVID-19 pandemic has triggered unprecedented disruption across businesses and industries worldwide, and caused a significant economic impact that Australians will be feeling for some time to come.
With the federal government’s introduction of temporary early access to super, those who have been financially impacted by the pandemic have the option of releasing up to $20,000 combined over this financial year and the next, to help meet pressing financial obligations.
If you’re currently sitting in this position, it’s important you consider all other options available to you before releasing this money from your super, given the larger impact it could have on your retirement savings. There could be a number of different options you might consider such as government payments, other cash reserves that you may have and/or talking to your bank to see how they may be able to help. For more information on financial support being offered by the Australian Government, please visit our COVID-19 resources page.
According to the AHC Lifetime Super Modeller, if you’re 40 years of age, earning $100,000 a year, and currently hold a superannuation balance of $180,000, your retirement savings could be reduced by $30,082 if you take out $20,000 from your super over this financial year and the next.* This clearly demonstrates how the power of compound interest could work against you with this early superannuation withdrawal, particularly if you have other options available to fund your immediate expenses.
*Source: AHC Lifetime Super Modeller
Given this potentially sizeable reduction in your super savings, it’s vital that you’ve exhausted all avenues before releasing this money from your super. If you need a hand finding what other cash flow options could be available to you, get in touch with us today.
The information and any advice in this article does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. When considering whether to acquire a financial product, before making any decision, you should obtain the relevant product disclosure statement. This article may contain material provided by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. To the maximum extent permitted by law: no guarantee, representation or warranty is given that the information or advice in this document is complete, accurate, up-to-date or fit for any purpose.