The government has released details of financial support available to Australians who have lost income due to the COVID-19 pandemic.
A huge number of us have been affected – and many have been left feeling confused about what to do.
Although concern about money isn’t the only problem we’re grappling with, financial stress is likely to be on the rise. Even among those of us who are generally pretty good at staying on top of our finances!
A sudden and unexpected loss of income can send anyone into a panic. Many are looking for ways to replace that income to avoid racking up debts or running out of savings.
Withdrawing super has become an option for some people.
Withdrawing super – who can do it and how much can I get?
Looking at applying for early access to your super savings?
Here’s a quick summary of some of the more important details of this temporary measure of withdrawing super:
- Eligible Australians will be able to access up to $20,000 from their super fund or funds.
- You can apply for $10,000 before 30 June 2020 and a further $10,000 after 1 July 2020. (If you meet the financial hardship criteria.)
- Early withdrawal is available to people who are unemployed, have had their working hours/business income reduced by 20% since 1 January 2020, or are receiving Centrelink payments.
A payment of $10,000 is a welcome injection of cash if you’re struggling to cover basic costs.
However, these super savings have the potential to make a significant difference to your level of income in retirement.
Thinking of dipping into your super now? You could find yourself lagging behind when you need to live comfortably when you’ve stopped work.
“The ramifications of accessing super early could be really significant,” says Ben Marshan, Head of Policy and Standards at the Financial Planning Association of Australia (FPA).
“Conservatively, every $1000 that you have in super at age 30 will be worth about $4500 at age 60. If you take $1000 out now, you have to put in $4500 over the next 30 years to get back to the same position. Financially, for a lot of people that can be a massive struggle and they’ll never actually catch up.”
Multiply that $1,000 by 10 or 20 and you can start to see what you could be sacrificing from your retirement. And this is why it’s so important to get expert advice before making a decision, as well as exploring other options.
“Consider getting professional financial help to understand the implications for yourself, Marshan advises. “Accessing your super early should only ever be a last resort.”
What are my other options?
Seeking advice is particularly important if you are told by any service provider that you have no other option but to access your super. Why not reach out to our team, to talk about whether you should be using your super as a temporary income boost.
The financial services regulator ASIC has recently taken steps to caution landlords and property agents against suggesting that tenants should be accessing super to keep paying their rent.
Making such a suggestion could be seen as giving financial advice, and real estate agents are neither qualified or licensed to provide such advice.
Source: Money & Life