Coronavirus: Why withdrawing superannuation early is a mistake

Australians who have taken a hit due to the COVID-19 pandemic will be able to apply for the early release of their super within days – but experts warn the result could be disastrous.

The Federal Government recently announced retirement funds would be made available to those experiencing financial hardship because of the coronavirus crisis.

Eligible Aussies will be able to grab $10,000 from their super this financial year and a further $10,000 in 2020-21, with applications being accepted through Australian Taxation Office online services in myGov from Monday, April 20.

But last week, the ATO revealed a staggering 618,000 fund members had already registered to take cash out so far, and as the start date approaches, financial experts are warning Australians to think twice before accessing the scheme.

“Before you withdraw super, there are two main things you need to consider,” Australian Securities and Investments Commission senior executive leader, financial capability Laura Higgins told

“Firstly, have you considered other options such as government financial assistance or applying for a hardship variation on your mortgage? Secondly, are you considering the long-term impacts?

“Money withdrawn and spent now is money you won’t have invested for the future. Go to and make an informed decision.”



Finance expert Natasha Janssens, the founder of the Women With Cents online finance platform for women, said withdrawing super early could be a huge mistake.

“Superannuation tends to grow over the long term, and by taking out more than necessary now, people might miss an opportunity for future growth, leaving them with a lower retirement balance,” she said.

“Early access to retirement savings should only occur under extenuating circumstances and needs to ensure it gets to those who need it most, in an efficient manner.”

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For example, a 25-year-old who withdrew $20,000 from their super now could end up losing more than $130,000 when they retire, while the same withdrawal from a 35-years-old’s account could represent an $80,000 loss of future benefits.

“It must be an absolute last resort after you have exhausted all other government-related options,” Ms Janssens stressed.



Pascale Helyar-Moray, co-founder of the female-focused Super-Rewards program which earns users cash as they shop and puts that money directly into their super to boost it, said the pandemic was particularly affecting women and their superannuation.

Firstly, the industries that have been hardest hit by closures and staff stand-downs – such as retail, hospitality and events – are predominantly staffed by women, as they tend to allow greater flexibility.

Secondly, women are “already behind the eight-ball” when it comes to superannuation, with women ending their working lives with 58 per cent as much super as men on average.

She said women who withdrew $20,000 from their superannuation now could seriously decimate their nest egg.

“There’s a bit of a short-term attitude we’re seeing, with more than 600,000 already requesting early access to their super – that represents around five per cent of the Australian adult population, so that’s huge,” she said.

“I am sure some people absolutely need this because they’re at the wall financially after having the rug pulled out form under them, but I also think there could be an element of people panicking and thinking, ‘If I can get my hands on the money I’ll just take it and have it there in case,’ and to me it feels like the financial equivalent of stocking up on toilet paper.

“By doing that, how are women in particular going to build it back up again?”

Ms Helyar-Moray said there was already a huge percentage of women out of the workforce or only working part-time or casually pre-COVID-19, and that it would be a “long time” before many businesses started hiring – and paying super – again.

“Do whatever you can before you touch your super – review government entitlements, apply for assistance from banks or apply for jobs first,” she said.

“And if there’s no other choice, withdraw the absolute bare minimum – just because $20,000 is there doesn’t mean you have to take it all.

“Remember it takes 50 years to build a comfortable retirement even when everything’s going well.”

She said it was “frightening” that so many people were considering withdrawing their super, and that while it might look like a relatively small sum of money now, it would add up over the course of their working lives.


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