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6 Alternatives to claiming your super early
By MyBudget Editor

Between 1 July and 31 December 2020, Australians have a second chance to access up to $10,000 from their super. But is it worth it, what are the costs and what are your other options? 

Claim super early – $19 billion cash grab

Since April, around 2.5 million people have utilised the COVID-19 early release of superannuation scheme to get their hands on nearly $19 billion of retirement savings. More are expected to take advantage of the cash grab this financial year, with the second round of early super release being open until 31 December 2020.

Under the scheme, those experiencing an income drop of 20 percent or more due to the COVID-19 pandemic could withdraw up to $10,000 from their superannuation funds last financial year and a further $10,000 this financial year. The amounts are untaxed and don’t impact Centrelink payments.

The ABC reports that the six funds with the most early super withdrawals have been not-for-profit industry super funds. The biggest of them, Australian Super, has paid out more than $2.4 billion already. The average withdrawal amount across the entire industry has been around $7,500 per person.

$20,000 today equals nearly $80,000 later

What is the long-term cost of accessing your super early? According to Industry Super Australia, a 30-year-old who takes $20,000 out of super this year would finish with around $79,000 less for retirement. Keep in mind that the majority of people to access the scheme have been younger than 40. 

The situation might not be so concerning had the money been used for essential expenses. Instead, data shows that a large chunk of early super money has gone towards discretionary spending 

The same study shows that women and men have spent their super money differently. Women were more likely to spend it on food, clothing, personal care and utility bills, while men led the charge in entertainment, automotive spending and gambling. 

Alternatives to accessing your super early

What are your other options besides accessing super early? Are there other ways to relieve immediate money pressures without compromising your long-term financial health?

At MyBudget, we’ve been helping people in a variety of ways:

1. Give every dollar a job

Before dipping into your super, the first step is to find out if you need to. The truth is that most people don’t have a plan for their money. Money comes in and money goes out but where exactly, who knows? Once people start budgeting, they are usually surprised by how far their money can go. 

Speak with a money coach for free and get a fully customised budget that’s yours to keep.

2. Accessing financial relief measures

There is a raft of financial assistance options available, from loan and mortgage holidays to bill and rent relief. Make sure you’re taking full advantage of these schemes before dipping into your super savings. Most creditors are happy to help people in financial hardship and it’s easy as making a phone call or lodging an enquiry with your creditors online. If you don’t feel comfortable speaking with your creditors, we may be able to speak with them for you.

3. Refinance your mortgage

Interest rates are at record lows, which means there are some great home loan deals around. At MyBudget Loans, we’ve been saving clients who refinance around $400 a month on average. 

4. Slash your insurance costs

Are you paying “loyalty tax” on your insurance premiums? If you haven’t shopped around for car, home, contents or health insurance in the last 12 months, you should. It’s one household expense where potential hundreds can be saved. Increasing your excess is another way to reduce your insurance costs. The excess is the fixed amount you pay towards a claim.

5. Shop around for cheaper telephone, internet and utilities

Cutting your fixed costs can be another big win for your household budget —think: telephone, internet and power. Check out comparison websites, or in Victoria, and for mobile plans, pay TV and internet deals.

6. Turn your hobbies into cash

If you’ve got a hobby, laptop and internet connection, this could be the perfect time to turn your ideas into extra cash. In this article, we explore a range of people who are making money on the side and get the lowdown on how they got started.

Before accessing your super early, find out how far your money can take you. Call MyBudget on 1300 300 922 to speak with a free money coach or enquire online to get your FREE customised budget.

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