The super decision 2.2 million Australians regret

New research suggests millions who have already dipped into their nest eggs wish they hadn’t, as politicians argue over whether Australians should be given greater access to their superannuation before retirement.

Almost one in four Australians say they have withdrawn money from their super before retirement, according to new Finder research, with an estimated 2.2 million now regretting the decision.

The findings come at a particularly charged moment for Australia’s $4 trillion-plus retirement savings system, with debate erupting over whether people struggling with mortgages, housing costs and other financial pressures should be allowed greater access to their own retirement savings.

One Nation leader Pauline Hanson has called for super rules to be loosened for Australians facing financial pressure, arguing people should have greater control over their money.

Treasurer Jim Chalmers has strongly rejected moves to weaken the system, warning that allowing greater early access could leave Australians worse off in retirement, but Australians are already accessing substantial amounts of super before retirement under existing provisions.

Recent figures show applications for compassionate release have risen sharply, particularly for medical treatment.

About a quarter have accessed super before retirement

Against that backdrop, Finder’s survey of 1011 Australians found 24 per cent said they had accessed their super before retirement.

Medical expenses were the most commonly cited reason, with 9 per cent saying they had withdrawn super to pay for treatment.

Another 9 per cent accessed it for other reasons, while 8 per cent said they withdrew retirement savings under the temporary COVID-19 early release arrangements. Four per cent said they had used super towards a home deposit.

But the most noticeable figure comes from what happened afterwards. Among Australians who had withdrawn super early, 43 per cent said they regretted it — equivalent, Finder estimates, to about 2.2 million people.

Finder personal finance expert Sarah Megginson said accessing super could provide immediate relief but the eventual cost could be much greater.

“When you’re under financial pressure, dipping into your super can feel like the only option,” Megginson said.

“But every dollar you withdraw today is a dollar that misses years – sometimes decades – of compound growth.

“What feels like a short-term solution can leave you significantly worse off in retirement, particularly if you access your super while you’re still relatively young. It’s essentially like stealing from ‘future you’.”

The issue isn’t going away.

Finder found another 11 per cent of Australians are considering accessing their super early.

Under current rules, Australians generally cannot simply withdraw super because they need additional money. Early release is permitted only in limited circumstances, including severe financial hardship and specified compassionate grounds such as some medical treatment and preventing the loss of a home.

There is also a separate First Home Super Saver scheme, which allows eligible first-home buyers to withdraw certain voluntary contributions they have made to super, rather than simply raiding their compulsory employer contributions.

The maximum amount of eligible contributions that can count towards a First Home Super Saver release is $50,000.

Could you have $41,000 in forgotten super?

There could also be money Australians don’t realise they already have as fresh Australian Taxation Office figures reveal more than $21 billion in lost and unclaimed super is waiting to be reunited with its owners, often after people change jobs, move house or lose track of old accounts.

The ATO returned more than $1.1 billion in unclaimed super last year alone, while the average lost super balance is about $41,000.

Deputy Commissioner Ben Kelly said people approaching retirement in particular should check for forgotten accounts, with lost super easily searched for through myGov.

Access only as a last resort

Megginson said early access should be considered a last resort.

“Super is designed to support you when you’re no longer earning an income, not to solve everyday financial challenges,” she said.

“Before withdrawing your retirement savings, it’s worth exploring every other option available.”

The debate comes during a significant year of change for superannuation.

Since July 1, employers have been required to pay compulsory super at the same time as wages under the new Payday Super regime, rather than making contributions quarterly.

For Australians watching the political argument over whether super should become easier to access, Finder’s findings offer another side of the equation: getting hold of the money now may be welcome, but rebuilding the retirement savings later can be considerably harder.

Also check out Super Funds Defy Global Upheaval To Deliver Big Gains and Labor Vows to Defend Super Scheme From One Nation, Libs