Cracking nest egg not end of the world

WITHDRAWING money from your superannuation account to help survive the coronavirus crisis does not mean your retirement income will be permanently damaged.

Despite warnings that $20,000 withdrawn now could leave a financial hole more than five times larger at retirement, super fund members have opportunities to pay it back and broaden their wealth.

Fiduciary Advice co-founder Andrew Crawford said many in the super industry assumed that people’s total retirement balances would come from superannuation “but that’s not the reality”.

“For most people it’s a mix of age pension, maybe rent from an investment property or some dividends from shares, or they may release some equity in their home,” he said.

Mr Crawford said people suffering financial hardship from the COVID-19 fallout would be better off withdrawing super rather than losing their house or taking a big hit to their credit rating.

“Keeping your home and having peace of mind about your finances is far more important,” he said.

“You can make up the lost contributions later when you return to working.”

Borrowers are being offered six-month mortgage repayment holidays to help cope with the crisis.

Wealth for Life Financial Planning Principal Rex Whitford said many people withdrawing their super under the COVID-19 rules were unlikely to put the money back.

“I don’t like seeing people pulling money out of long-term savings, but what’s the alternative?” he said.

Mr Whitford said super should not be people’s only form of saving as governments would want to claw back billions and super was a constant target for rule changes.

“Now, more than ever, it makes sense to have a pot of money separate to superannuation that doesn’t have the same legislative strings attached,” he said.

‘You can make up the lost contributions later when you return to working’ Fiduciary Advice co-founder Andrew Crawford