More than 50 per cent of working Australians have or plan to access their super early to buy a home, new data reveals.
More than half of Aussies are dipping into their superannuation early to buy their first home, potentially leaving them hundreds of thousands of dollars worse off in retirement.
Exclusive research from investing app Spaceship has revealed 54 per cent of working Australians have accessed, or are planning to access, their super early to afford a home, while 76 per cent want laws changed to make it easier for them to do so.
Under current legislation, buying a home does not qualify for early access to employer-contributed superannuation.
But first homebuyers can make personal voluntary contributions to their super of up to $15,000 a year – up to a total maximum of $50,000 – that can later be used towards a home deposit.
Spaceship managing director Robert Francis.
While eligible workers are only allowed early access to personal contributions made through the first home super saver scheme – not those compulsorily made by employers – experts warned any early withdrawal of super funds could have significant financial repercussions later.
“Accessing super early may sound tempting for those struggling to get into the property market however it’s only an approach to consider with both eyes wide open,’’ said William Buck Wealth Advisory partner Chris Franco.
“Taking out say $30,000 from your super at the age of 30 may have you ultimately forgoing around $200,000 in retirement savings by the time you reach 60 due to compounding.
“It’s also important to factor in the ongoing cost of buying and owning property when considering your long-term cash flow.’’
MORE NEWS
Property prices record first fall in years
One room, 50-plus tenants: The rental nightmare
AFL star to handball luxury beachside property
With house prices soaring by almost 43 per cent in the past five years and mortgage repayments now accounting for more than half the median family income, Spaceship managing director Robert Francis said the conditions faced by first-home buyers were the toughest in three decades.
He said the first home super saver scheme, which takes advantage of lower tax rates to help workers save more money towards a home deposit, was an effective savings strategy that many were unaware of.
However, he said decisions to withdraw any super funds early should be carefully considered, preferably in consultation with a finance or retirement planning expert.
“If people are using (the scheme) as a mechanism to be able to save more quickly then I’m not really concerned (about any impact to future retirement savings),’’ Mr Francis said.
“The concern is if people’s expectations were to be able to access what the contributions are from your employer.
Ben Kinraid purchased a three-bedroom apartment in West Perth, withdrawing $6500 from his super to put towards the deposit.
“We are living longer, which means your retirement income has to last a lot longer, which means you need to save a fair bit of money for your retirement because what’s the alternative – are you going to keep working past 65 or 70 in order to live?
“If the law changed to (allow homebuyers early access to employer-contributed super) then that’s something people would really need to sit down and consider (the long-term financial consequences).’’
Ben Kinraid, 41, purchased a three-bedroom apartment in West Perth 18 months ago, withdrawing $6,500 from his super to put towards the deposit.
Mr Kinraid had salary sacrificed between $50 and $100 a week into his super for several years and, due to compounding interest, the amount he withdrew was almost double the amount of his actual voluntary contributions.
The audio visual technician said he had no regrets about accessing his super early and only wished he had made more contributions earlier.
“If it was going to be $50,000 (that was withdrawn from the super account), I probably would have had second thoughts but since it was only six (about $6000) it was all right,’’ Mr Kinraid said.
“(Without the early access to super) it probably would have set me back another good six months or a year (to save for the home deposit).’’
– by Lauren Ahwan
English (US) · 