Two thirds of Australians who have already dipped into their superannuation want to take out more this financial year, new research from RateCity showed.
Nearly 13 per cent had cashed out their retirement savings in the first round of the government’s early release of super scheme, the RateCity survey of 1,009 people found.
While the majority intend to pull out more money from their nest eggs before the end of the year, a third have no plans to access more of their super.
To date, 3.8 million financially distressed workers have received $29.4 billion in super payments to help them manage the economic impacts of COVID-19, the latest Australian Prudential Regulation Authority (APRA) figures showed.
Of those, more than a million have already applied to raid their nest eggs for a second time, with repeat applications totalling $8.9 billion between July 1 and 26.
The federal government allowed millions of Australians whose work and income has been negatively affected by the pandemic to request up to $10,000 of their retirement savings between April 20 and June 30.
The scheme’s second round began on July 1 and will be open for applications until December 31. The new financial year allows many a second chance to take out another $10,000 from their super, making the maximum possible withdrawal for an individual $20,000.
How Australians spent their super money
Half of poll respondents used their super withdrawals to pay household bills, including mortgage repayments or rent. About 36 per cent spent their retirement savings to buy essentials like groceries, and a third chipped away at personal debt such as credit cards.
About 27 per cent stashed their super money in an emergency savings account, while one in nine are putting the cash towards a house deposit.
While it’s worth noting that while some people used the money for more than one reason, not everyone has spent their retirement savings wisely.
One in six said they splashed the cash on non-essentials such as TVs, technology or home improvements. Six per cent admitted to using their super to buy alcohol, and one in 20 gambled their retirement savings away.
But for Paul Birdsey, who has had his income from his job as a security guard cut due to the pandemic, taking $20,000 tax-free from his super fund was “a no-brainer”.
“You've got no options, it's not like you can get a part-time job somewhere because there's no part-time jobs to be had,” he told RateCity.
“The telco firms still want their money, the power firms still want theirs, so you’ve got to get it somewhere.”
The 57-year-old has been cautious with his withdrawn super money and JobKeeper income. He is thinking about setting up an emergency fund in case another crisis happens – something he had not considered before COVID-19.
“It's not like I accessed it to go on a holiday or buy a new yacht, I accessed the super for one reason and one reason only, and that was to keep functioning,” Mr Birdsey said.
He added that while many are concerned about their long-term savings, people were “entitled” to the money in their super.
What to do if you’re worried about your super withdrawal application
While many have taken money from their super legitimately, some who don’t meet the criteria may have been approved initially, as the application is based on self-assessment and doesn’t request proof of eligibility.
Sally Tindall, research director at RateCity, warned those who have dipped into their retirement savings to make sure they’re eligible to avoid getting fined.
“Access to this scheme was deliberately made simple to speed up the process, and it’s possible some people withdrew their super when they weren’t actually eligible,” she said.
“The Australian Taxation Office (ATO) is reviewing applications they suspect don’t meet the criteria, so now is the perfect time to own up if you think you made a mistake.”
Ms Tindall said anyone who thinks they’ve made a mistake should get in touch with the ATO to see how it can be fixed.
“You may need to pay tax on the amount you took out, but it’s likely you’ll avoid a fine if you own up.”