The following information is not intended to be viewed as financial advice. Please consult a qualified financial adviser before making any decisions relating to your superannuation.
Prime Minister Scott Morrison announced on Sunday that Australian’s who lose their job or more than 20% of their income as a result of the coronavirus pandemic would be allowed to pull money from their superannuation savings, with withdrawals capped at $10,000 this financial year and a further $10,000 from July. This withdrawal would be free of tax with normal rules for release waived.
However, all professional financial practitioners including Heart Financial Advisers would unanimously say that drawing down on superannuation should only be considered as a last resort.
We highlight this with an example; If a 25-year-old takes full advantage of the federal government's offer of early access to their super funds, they could lose between $58,000 and $84,800 in retirement savings by the time they reach retirement age, according to mathematical modelling prepared by SuperRatings.
Please let me be clear here, in withdrawing your $10,000 from super you are making a decision much bigger than $10,000! You are actually making a decision that impacts greatly on your retirement capital. Withdrawing even the smallest sum you are locking in market losses.
Modelling by SuperRatings has determined the losses being between $45,000 and $70,000 and for workers in their 30’s and $24,000 to $27,000 for employees in their 50’s!
I cannot reiterate strongly enough that early withdrawal of super should be seen as a "last resort" and the unseen results could be devastating.
I would encourage you to reach out to me should you be in financial distress. As a professional financial practitioner, I am capable of providing you with appropriate advice to help you navigate these difficult times. Please call me on 1300 861 143 or email me at email@example.com.
Stu Varidel and Your Choice Financial Planning Pty Ltd trading as Heart Financial Advisers are authorised representatives of Sentry Financial Services Pty Ltd AFSL 286786.
The information contained herein is of a general nature only and does not constitute advice. You should not act on any information without considering your personal needs, circumstances and objectives. We recommend you obtain professional financial advice specific to your circumstances. The views expressed here are not ours. While the information contained in this article may contain or be based on information obtained from sources believed to be reliable, it may not have been independently verified. Where information contained in this publication contains material provided directly by third parties it is given in good faith and has been derived from sources believed to be accurate at its issue date. To the maximum extent permitted by law: no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up to date or fit for any purpose; and no party or associated entities as mentioned is in any way liable to you (including for negligence) in respect of any reliance upon such information. This article may also contain links to websites operated by third parties who are not related to us. These links are provided for convenience only and do not represent any endorsement or approval by us.