Taking super out early, a good idea?
ANYONE on an unemployment benefit or parenting payment can use the Superannuation Early Release Scheme (SERS) to take out $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.
SERS is part of the Government’s coronavirus rescue package. The money released is not taxable and does not affect Centrelink payments.
While SERS might offer welcome relief to many, taking money out of super before you reach the age of sixty is generally speaking not a good idea.
$20,000 that stays in super for 35 to 40 years will become $300,000 during that time. It’s the magic of compound investment returns.
It follows that a young, unemployed person taking out $20,000 is going to be $300,000 less well-off when they retire.
Those who use SERS need to watch out for scammers. To get the money, there is no need to involve a third party. The ATO manages SERS and there are no fees involved.
CPSA urges people suffering financial hardship to explore all the various Government income-support measures available before accessing their superannuation through an early release measure, which should be a last resort.