|When the Government announced that Australians would be able to access their Superannuation early, it seemed to some like a harsh but practical solution to the financial stress they were about to face. |
New research has found that much of that withdrawn money was spent on alcohol, restaurants, furniture and clothing.
|A recent study by data firm, illion found that 38% of people who accessed their super early had experienced no drop in income while 21% had actually seen an increase in their income of more than 10%. Applicants were not required to prove that they had suffered a loss in income, and many chose a short-term cash injection over their future retirement balance. It seems a policy made on the fly may have serious consequences in the decades ahead as Australians land in retirement with shrunken nest eggs. Policymakers no doubt assumed that the withdrawn money would be set side aside to deal with essential expenses like rent, mortgages and food in the months ahead.|
Instead, Australians withdrew on average $7,495 and spent an extra $3,618 in the first 2 weeks compared with what they would normally spend in that time. Much of that was spent on those non-essential items mentioned earlier. The second round of super withdrawals is being spent in the same way – on discretionary items.
|Australians withdrew on average $7,495 and spent an extra $3,618 in the first 2 weeks compared with what they would normally spend in that time.|
|How gender plays a role Australians withdrew on average $7,495 and spent an extra $3,618 in the first 2 weeks compared with what they would normally spend in that time.|
On average, men withdrew $7,750 and women withdrew $7,240 in the second round. Here are some key differences in what they did with it:Men spent 78% on non-essential items, while women spent 70% on the same.Men spent 10% of their super withdrawals on gambling, while women spent 6%.Women devoted 15% of their super withdrawal to paying off debt, while the figure for men was 12%. While we may see a vaccine and return to normal life over the next year or two, this is one consequence of Covid-19 that will be with us for a generation or more.
This Flash Report has been written and published by Insight Investment Services.
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