Early super access desirable for over half of Australians

As the country continues to face a cost-of-living crisis, a growing number of Australians say they would take out and use money from their super if they could, much like the early access to super observed during the pandemic.

A Finder survey of some 1,090 respondents found that 56 per cent, equivalent to more than 11.3 million people, would access their super early if they had the option. 

For 17 per cent, or around 3.4 million people, it would alleviate cost pressures for them, they said.

Another 15 per cent said they would use their super to buy a home, put it towards an investment property (8 per cent), or help buy a home for their kids (4 per cent). 

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The early access to super scheme which ran during the COVID-19 pandemic allowed super fund members experiencing financial hardship to withdraw up to $20,000 before retirement. Many of these members were people who had been furloughed or lost their job as a result of the pandemic lockdown.

Research by the Australian Bureau of Statistics (ABS) released in August 2023 found the number of people who reported receiving a lump sum payment from a super scheme increased from 540,000 to 870,000 between 2018–19 and 2020–21.

Much of this increase was observed in people who had not yet retired, doubling from 270,000 in 2018–19 to 560,000 in 2020–21. 

ABS highlighted this increase reflected the early release of super during the COVID pandemic, which allowed up to $20,000 to be accessed before retirement by people suffering financial hardship.

Previously, Industry Super Australia (ISA) has called the COVID-era early release of super scheme a ‘mistake’ after it was found more than 2.6 million Australians jumped on the scheme and withdrew 51 per cent of their balances on average.

Its modelling further identified its long-term impacts, finding that every $1 taken out during the scheme added up to $2.50 to the aged pension, “a bill every Australian could pay through taxes”. 

Data from ASFA in 2022 had also estimated that withdrawing $10,000 from super at the age of 30 could cost Australians more than double that in retirement with a possible loss of $21,516.

Alison Banney, superannuation expert at Finder, said early access to super isn’t something that should be taken lightly.

“Currently, there are a limited number of circumstances where you can access your super early such as financial hardship, compassion grounds and the First Home Super Save Scheme but just because you can doesn’t mean you should,” she said. 

She added: “Superannuation is a valuable investment so it’s important to check it regularly to ensure you’re getting the best return possible and building it up as you head towards retirement.”

In its latest survey of retirement intentions, the ABS found people intend to retire at 65.5 years, which is largely unchanged since its last survey in 2018–19 (65.6 years).

Some 140,000 people retired in 2020, when the average age of retirement was 64.3 years. For men, the average age was 65.4 years and for women the average was 63.7 years. 

Over 670,000 people intend to retire in the next five years, with 220,000 in the next two years.

Of those who intend to retire, 37 per cent (1.7 million) do not know when they would retire from the labour force, down from 40 per cent in 2018–19.

Over half (56 per cent) of retirees are women. 

“The population of retired women increased more than men. On average, women retire sooner than men. However, women are retiring later than in previous years,” the ABS noted.