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More than half of Australians believe they should have the ability to withdraw money from their superannuation whenever they want, according to new research from financial comparison company Mozo.
Currently, Australians can only access their superannuation early under specific circumstances, such as for medical treatment.
Otherwise, they must wait until they reach ‘preservation age’.
For retirees, the preservation age is between 55 and 60 years old, depending on their birth date, while working individuals can withdraw their super fund if they are 65 or older.
Mozo’s survey of 2,129 Australians revealed that 56 per cent of those with a super fund believe they should be able to withdraw from it anytime.
Rachel Wastell, spokesperson for Mozo, said the “drive to access super early highlights the financial strain Australians face as the cost of living continues to rise, but it is reassuring that a third still plan to keep it for retirement.”
“The growing sentiment that Aussies should be able to access their superannuation whenever they need it highlights the increasing public debate on whether Australians should have more flexibility in using their super,” Wastell said.
According to Mozo’s research, one in three Australians who said they should be able to access their super also said they weren’t planning to withdraw until reaching retirement age.
In contrast, one in six said they want to withdraw an average of $21,297 from their super before they retire.
When is the best time to spend your super?
Economist Cameron Murray said he was “not that surprised” by the survey results and that giving Australians early access to their super funds is a “reasonable” demand.
“Those stressed households are young renter families who’ve got more mouths to feed, are competing with other households to rent in the cities, and are financially stressed,” he told SBS News.
“The best time to spend your own money is now, right? No one’s getting any younger,” he said.
“We’ve made the problem worse by tying up more than 10 per cent of people’s income when they’re young and poor to have more income when they’re old and rich.
“We don’t need the [superannuation] system at all. People should be free to spend the money as they choose when they earn it. That’s my view, and I think many people who study super closely realise it. It’s just a lot of people don’t want to rock the boat.”
However, some experts strongly disagree with Murray on the idea of opening up early access to super.
“It’s understandable that people would like to have access to money that they think is theirs, even though it’s actually been put there by their employers rather than by them,” independent economist Saul Eslake told SBS News.
“People don’t always know what is in their best long-term interests because it’s human nature to put short-term needs ahead of longer-term aspirations.
“Inevitably, people would have less income in retirement, and they would be more likely to find themselves dependent on the age pension than if they continued to save through superannuation over the course of their working lifetimes.”
A Treasury retirement income review published in 2020, shows a 30-year-old person withdrawing $10,000 in two consecutive years would lower their superannuation at retirement by $40,300.
A recent study by the Association of Superannuation Funds of Australia (ASFA) found that only 30 per cent of retirement-aged Australians had enough super to retire comfortably, with that number expected to rise in the next three decades.
Should Australians get a ‘super’ boost into home ownership?
The Mozo survey indicated that housing was a popular choice for Australians who wished to access their super account before retirement, with 48, 30, and 39 per cent of gen Z, millennial, and gen X respondents, respectively, wanting to use the money to buy a house.
However, Eslake said using super funds for housing deposits would make homes more expensive, echoing arguments he made in a recently released report titled Super for housing – will it help solve or exacerbate the housing affordability crisis?
A study also argued that accessing superannuation for housing deposits could exacerbate housing affordability, especially for low-income households.
“I think it’s a thoroughly bad idea … Anything that allows Australians to spend more on housing than they’d otherwise be able to results in more expensive housing,” Eslake said.
“These schemes don’t work. However well-intentioned they might be, they actually don’t help the problem. They make it worse.”
Murray believes these arguments are misguided.
“Your own home is the best asset to own in retirement. Everybody knows this. Every financial advisor will tell you this. It’s absolutely not a secret. So why is it that super is only allowed for non-housing assets, not housing assets?” Murray said.
“I think it’s completely reasonable, the fear that there might be a wave of new buyers when super is allowed to be used directly for first-time buying is genuine, but we can smooth that out as long as we smooth that effect over time,”
The allows first-home buyers to access up to $15,000 of their voluntary super contributions in a year, with a total limit of $50,000 across multiple years.
Meanwhile, the Opposition remains committed to the former , allowing Australians to access mandatory and voluntary contributions to fund home buying.