The release of APRA’s latest data, showing more than $28 billion has been withdrawn from super in the second tranche, means that the numbers have now surpassed the government predictions of a $27 billion drawdown.
Nobody yet knows how many people will continue to draw down on this second tranche either, and the numbers may well continue to rise as COVID-19 rears its head for a second time. In our interview with Senator Jane Hume, she talked at length about the need for early withdrawal for average Australians who are doing it tough.
And yes, we have all seen press like 60 Minutes, which showed people spending their super on plastic surgery, shopping and other such items – hardly considered essential, and this gives the scheme a bad rap from many who see a lack of control on what the funds are spent on as a big risk to people’s futures.
But whichever way you view the scheme, one thing does become clear: Australians do not have enough savings outside of super. A crisis of this magnitude has clearly shown that many people and their businesses have been living close to the edge financially. So when disaster strikes, a mass domino effect happens – and the government and super become the two big lifelines to keep people afloat.
With our high household debt levels, skyrocketing property prices, and the cost of living continuing to rise without a real rise in wages, it’s no wonder that people are in this current predicament. It was only ever a matter of time before something came along to be a circuit-breaker and trigger this series of events.
And what a shame that advisers leading into this crisis have been battling with low levels of trust and extreme negative publicity after the Royal Commission, with no real promotion at a government level of the good that great financial advice can do for the average person.
So the only thing left to do now is to start the clean up on the mess we are in. We can’t go back and encourage people to save more. Instead, we can help them manage their debt, do their budgets for this new environment, and encourage them to be entrepreneurial in their outlook on making money.
I read some encouraging results in Financy today that women are leading the charge with making money from home online, which is encouraging to see people adapting to our new reality in a world that will most likely never be the same again in our lifetime.
Either way, the past is done. Advisers like those 300 in Together Australia, the group headed by Adviser Ratings, are out there promoting that they can help give advice pro bono, on whether or not to take out your super early. I applaud this initiative and Adviser Ratings for organising it. It is time to show Australia just how valuable, and well-meaning our financial advice community is.
Until next time,
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