Accessing $10k of super is worth $60k in future

ATO/australian-taxation-office/superannuation/early-access-to-super/

24 April 2020
| By Jassmyn |
image
image
expand image

Accessing $10,000 of superannuation early now could mean a loss of $60,000 in 40 years, according to an accounting practice. 

BDO’s superannuation partner, Mark Wilkinson, warned against Australians using the Government’s scheme to access their super early due to financial hardship caused by the COVID-19 pandemic.  

Wilkinson said while $10,000 did not sound like a lot, it would be worth $60,000 in 40 years for a 25-year-old today, and worth $38,000 for a 35-year-old. 

“Whilst accessing your super right now might provide some relief if you’re facing significant financial pain, there should be a big, red ‘proceed with caution’ sign warning that your future-self will pay the price for this move,” he said. 

“There have been similar arguments in recent years for accessing super as a way of helping first home buyers get into the market. But the numbers just don’t add up.” 

Wilkinson said people needed to weigh up the long-term effects on their retirement savings if they were looking to access their super early. 

“If you qualify and you do decide to withdraw funds from your super you need to be mindful that it’s not so easy to replace your retirement savings and you’ll be playing catch-up for a few years to come,” he said. 

“Whilst the early access incentive may appear enticing, people should act with caution before implementing this measure and be aware of the longer-term implications.” 

On Thursday, the Australian Taxation Office (ATO) confirmed over 456,000 Australians had been approved access to their super, totalling $3.8 billion. 

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months ago

Entireti has unveiled the new name for the AMP financial advice businesses that it acquired last year....

4 weeks 1 day ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

3 weeks ago

Minister for Financial Services, Stephen Jones, has provided further information about the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms....

1 week 6 days ago

TOP PERFORMING FUNDS