As you would suspect those suffering financial stress would buy, cheap food and drinks were a popular purchase with early superannuation withdrawals. It is understandable why some individuals opted to withdraw $10,000 however, what about those who were eligible but were financially stable and maintained employment?
By withdrawing $10,000 out of your superannuation you lose the compounding interest
within your super. Especially if you are young, think about all the interest you lose within
those decades until retirement! Of course there are variables as it depends on your salary, your superannuation fund, investment option and the amount your employer contributes to your super.
Let’s use $50,000 gross annual income as an example, and the standard requirement for
employers with a Superannuation Guarantee of 9.5%.
Per year, this works out to be $4,750.
Meaning you need to work over 2 years to gain your $10,000 back. This calculation does not include the interest that you would have earned on your balance if you had not withdrawn.
If for ease of an example, there was initially $10,000 in super.
With an estimate on administration fees ($74 p.a), investment return (7.5% p.a), tax on
earning (7% p.a) and investment fees (0.85% p.a).
In one year, including contributions and compounding interest, that $10,000 would have
grown to approximately $17,912.
That’s a massive amount in one year!