Retirement at risk when people withdraw super early

Some Australians are reportedly being forced to access superannuation funds to pay for essential health care, reports show.

The reports suggest that more than 150,000 Australians have accessed their super early through the Australian Taxation Office’s compassionate release of superannuation scheme to fund medical treatments over the past five years — with dentistry, IVF and weight management among the most popular treatments.

The Chief Executive Officer of COTA Australia, Patricia Sparrow, said the number of people using their retirement savings is real cause for concern.

“We need to address the fact that people aren’t able to afford things like dental care, rather than forcing people to dig into their superannuation and creating another problem down the track,” Sparrow said.

“When you take the compounding impact into consideration, a $20,000 withdrawal at 40 years of age could mean around $100,000 less at retirement. That’s a huge impact that needs to be properly considered.

“It’s shocking to think that so many Australians are in a situation where they must choose between accessing essential medical care and sacrificing a dignified retirement.”

Sparrow said the federal government should be taking steps to legislate the purpose of superannuation.

“Our superannuation system is designed to ensure Australians can retire with dignity,” she said. “The government has a role to play in ensuring people are completely aware of the impact of accessing their superannuation early.

“It is undoubtedly our most vulnerable Australians who are being forced to access their superannuation to pay for basic health care — the people who need a healthy super balance more than most. This is an issue that needs to be addressed quickly, or we risk ending up with a generation of people who have worked hard all their life but don’t have the super balances to show for it.”

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