How to build an emergency savings stash and leave your super intact
![Piggy bank floating on water, representing emergency savings stash.](https://cdn.mozo.com.au/images/atwood/10607/emergency_savings_super_content.jpg)
Important disclaimer: this article is factual information only and does not contain any advice or recommendations about what you should do with your own superannuation.
Just 24 hours after the government started its second round of the early release of super scheme, it was reported that nearly half a million Aussies had wiped out their super savings.
In light of the growing number of people accessing super early, we take a look at the downfalls of the scheme and how you can build up an emergency savings fund instead.
Downfalls to the early super release scheme
Future Super’s co-founder Kirstin Hunter commented on the scheme, saying that superannuation was never intended to be used as a national relief fund and those with the lowest super balances are those that have had to resort to withdrawing their super early.
“Of Future Super members who withdrew their funds in the first round, the median balance after withdrawal was only a little over $6,000,” she said.
“Women, in particular, will be one of the hardest hit demographics. Already retiring with 47% less super than men, and being over-represented in some of the most impacted industries like hospitality and entertainment, female super balances are in freefall.”
Alternatives to accessing your super early
Super is a savings fund for your future and dipping into it now could have a massive impact in 20 or 30 years time.
Hunter said that a 32-year-old who withdraws $20,000 now could have $50,000 less in their super by the time they retire.
Here are some alternatives to consider before accessing money from your retirement fund:
- The government’s Coronavius support payments: If you haven’t applied for these already, you might want to see if you are eligible for financial assistance from the government, before accessing your super.
- Rental relief: States and territories have rental relief available for those affected by the Coronavirus pandemic.
- Mortgage relief: Some banks and other financial providers are offering emergency relief. Read more about this in our guide to Australian banks’ emergency Coronavirus relief packages.
- Start an emergency savings fund. If you have the means, think about cutting back some of your costs. In April Mozo research found that someone could save up to $6,000 just by shopping around and switching services including home loans, energy providers and car insurance.
Starting an emergency savings fund
As a general rule, you want to aim to have around three months worth of expenses in your emergency savings fund. Now that might sound like a lot, but this is really only to cover your basic living costs including:
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Competitive introductory variable rate for first 4 months (on deposits up to $250,000). No account keeping fees to pay. Multiple 2024 Mozo Experts Choice Award winner.
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Savings Maximiser
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Great variable rate every month when you grow your balance each month in addition to other eligibility criteria. No ING fees to pay. Save even more with ING Everyday Round Up. Mozo Experts Choice Awards Everyday & Savings Bank of the Year winner for 2024.^
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