Australians take out $10,000 in super for ‘emergency’ money as experts reveal how to get it back

Australians accessing superannuation during the coronavirus pandemic have been warned of the potential dire long-term effects of the early access scheme, but there are ways to stay on top.

Australians have been spending their early release superannuation dollars on everything from gambling to plastic surgery, but many are simply stashing the cash for a rainy day.

A survey of more than 1000 people found that almost one in five respondents said they had accessed their retirement savings early or intended to do so.

The data, provided exclusively to News Corp by Canstar, also revealed that more than one in four people who planned or had accessed their nest egg prematurely wanted the cash as a “back up plan”.

Of those who said this applied to them, almost half were Gen X-ers and one in four were Millenials.

Sixty-four per cent of Baby Boomers said they planned to, or had done the same.

Envision Financial Specialist Adviser, Luke Smith, said accessing superannuation early in order to have cash on hand and not use it for ongoing costs was “silly”.

Mr Smith said withdrawing $10,000 or $20,000 now during a “beaten up market” could hurt Australians’ nest egg balances upon retirement if you considered the value of capital growth.

However, he said for those who chose withdraw early in order to have back-up funds, it was better to keep the money out of sight.

“They should think about holding it in a mortgage offset account, or a savings account that is not tied to their personal online banking,” Mr Smith said.

“They could also use the money to prepay costs that they know are not going away such as rent or household bills. This way if they are out of work for an extended time, they don’t have to find more money.”

Canna Campbell, the founder and director of SASS Financial Services and Sugar Mamma TV, echoed these concerned, saying it was “madness” to draw on superannuation early unless absolutely necessary.

Hefty penalties of more than $12,000 for illegally accessing the cash weren’t the only thing to worry about, Ms Campbell said. Withdrawing $10,000 or $20,000 now could cost younger Australian’s upwards of $100,000 in their retirement. And Baby Boomers weren’t immune from problems either.

“If you’re 65 and are about to retire and you have $500,000 in super, you could say ‘yes I’m about to retire and I don’t have that time’, but if you look at life expectancy, they could be relying on that money for another 20 years,” she said.

Canna Campbell with her daughter Apple Simpson, 1, at Bondi Beach. Picture: John Appleyard

“So that $10,000 or $20,000 being out of their superannuation still impacts the long-term compounding growth benefit.

“But regardless of what age you are, you’re crystallising a loss. You’re pulling money out of the market at a deflated value.”

Ms Campbell urged Australians to start restoring money to their nest egg when they were back on their feet.

She said a “great way” to do this was through salary sacrificing, but added it was important to first establish what your employer paid you in superannuation each year in order to work out what an individual could contribute without breaking the $25,000 annual cap.

These pre-tax contributions are taxed by superannuation funds at 15 per cent, so if you withdrew $10,000 early, you should pay back $12,000 to ensure it was “like for like”, Ms Campbell said.

“The other option is to set up a regular investment plan into superannuation where it’s set up on a direct debit,” she said.

“For example, every month you put a thousand dollars back in or whatever the number might be over your time in order to replace that money.”

She said there were better ways to get cash quickly, including selling a depreciating asset such as a car.

“Or if you’re lucky enough, selling your second car. It’s often a good way to generate a decent amount of cash to keep your head above water during this challenging time,” she said.

She said one way to easily find out the value of your vehicle was to use an online valuation tool, such as online marketplace Gumtree’s Instant Car Valuation tool.

MORE NEWS

How to make soup for 35 cents a bowl

How you can save $60 a week in just 15 minutes

Aussie kids’ pocket money cut as some still get $20 a week

How to find the best NBN deals right now

Selling a vehicle also meant you were also getting rid of the associated costs of owning a car, such as insurance, registration and petrol.

“There’s also a whole world of online jobs out there that you can do at home, such as market research surveys, proofreading and online tutoring,” she said.

“I’ve even watched people turn their hobbies into an income.”

She said Australians could also save cash by contacting their utility or service providers for better deals, and shopping through cashback websites.