As an audio engineer student and musician, Nathan was ineligible for government assistance and had little savings, leaving him with no choice but to withdraw $20,000 from his super.
“It was quite scary and still is quite scary because it is a lot of money,” Nathan told The Feed.
“I was a musician so my industry got shut down and everything I had booked disappeared. I was hoping to find work after the first payment or get some government help but I was unable to find anything,” he added.
The money has helped Nathan to stay afloat. He claims if it wasn’t for his super, he would’ve had to drop out of university, move back in with his parents and possibly borrow money to survive.
Nathan was a musician and lost a number of gigs due to COVID-19 restrictions. Source: Supplied by Danyal Syed
“I don’t know where I would be in a mental capacity. It’s been hard for myself and a lot of my friends, who are audio engineers and musicians,” he said.
“The biggest battle is having confidence in what you’re doing at a time like this where nothing, in my experience, was there to support where I wanted to go and what I was doing.”
While he’s aware withdrawing his super could affect his financial standing further down the track, Nathan said he doesn’t “regret” it.
“You tell someone you took your super out and they’re quite aggressive and look down on you without realising why you had to do it. It’s quite a stressful situation for everyone at the moment. They’re like ‘why’d you do that, you’ve ruined your life’, without asking why,” he said.
Nathan’s experience is shared by millions of Australians, who’ve been approved for the of their super.
Nathan says it's been a challenging time mentally and he doesn't regret accessing his super. Source: Supplied by Danyal Syed
More than a third of Australians who’ve accessed their super early during the pandemic are under the age of 30.
Superannuation confusion
David Morrison is an Associate Professor at the University of Queensland’s School of Law.
He told The Feed those who’ve taken a substantial amount from their super will miss out on compound interest in a “tax-advantaged environment” to help pay for their retirement.
“Over time it accumulates to have substantial value and by raiding it, you’ve essentially put yourself behind because the old age pension won’t be as generous as the one that’s available today,” Mr Morrison said.
For some, withdrawing money will also mean they’ll have to work for longer, according to Mr Morrison.
“We’ve already seen retirees working longer. So it’s a good message for young people to appreciate that it’s a serious thing,” he said.
“And if they’re not particularly financially savvy, they should top those accounts up as soon as they can and voluntarily contribute more to make sure there is enough for their retirement,” he added.
After millions of people cleaned out their super, the announced tough penalties of more than $12,000 for those who've illegally withdrawn money without facing financial hardship.
But Mr Morrison said he did not get a strong impression that people had understood the specific circumstances in which they were allowed to withdraw super.
“I think some people have genuinely thought ‘this is an opportunity to access some of my super’ and the very sad news for those people is that the government will be following that up and matching tax records to declarations that have been made,” he said.
Chan withdrew a third of her super -- or $10,000 -- after losing her job as an office worker two months ago.
“I did it for the full nihilist approach like ‘nothing matters and we’re going to die anyway’ and I just thought ‘I’m unemployed now and I’ve got this opportunity now to have some cash behind me to do something’,” she told The Feed.
Chan said she accessed the money early to purchase a car.
“I bought a car because mine was slowly dying and I want to have a reliable mode of transport with the whole corona thing, especially here now in Melbourne, I don’t want to be catching public transport or doing rideshares,” she said.
“I definitely thought about it. It wasn’t spur of the moment. I needed the money for a while and the opportunity came up. I thought I potentially wouldn’t get the opportunity again and might be in a worse situation had I not done that and found myself without any transport.”
But she told The Feed she’s struggling to find work in her field and is relying on JobSeeker to keep her account “topped up.”
Chan withdrew $10,000 from her super account. Source: Supplied by Danyal Syed
“No one knows what they're doing or what's going to happen or how this is all going to pan out in the end,” she said.
“It’s basically impossible. What little jobs there are so many people are going for it and it kind of sounds defeatist but you think ‘what’s the point?’”
The 25-year-old and said her “rationale” in withdrawing her super was that she could voluntarily contribute more money to her account later in life.
“Given that retirement age is 60, 65, I think it’s plenty of time to put it back in there,” she said.
Mr Morrison said that it’s a case of “the sooner, the better” when it comes to contributing to super, particularly for those who raided their accounts during the pandemic.
Chan said she lost her job two months ago and has been receiving JobSeeker payments. Source: Supplied by Danyal Syed
“It’s important for everyone, whether they’re spoiled or whether they’re okay or struggling, to say, as a young person, they ought to be putting a percentage of their money away,” he said.
“It doesn’t matter how small, you put it away. And if you start that habit from today, I can promise you that you’ll have enough in retirement,” he added.
“It’s hard to see that they might need that money in 40 years’ time but if you make a tiny sacrifice now, you’ll have a much better chance of retiring comfortably in the future.”
