New Grattan Institute modelling shows many Australians can still have a comfortable retirement even if they have withdrawn from their super. 

The public policy think tank reports that the typical worker would still see a fall in their retirement income, but by only 1%, if they took out the full $20,000 allowed under the scheme. 

Need somewhere to store cash and earn interest? The table below features introductory savings accounts with some of the highest interest rates on the market.

Provider

4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
  • No withdrawal notice periods or interest rate penalties
  • Save up to 10% on eGift cards at over 50 retailers with Macquarie Marketplace

Savings Account (Amounts < $250k)

  • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
  • No withdrawal notice periods or interest rate penalties
  • Save up to 10% on eGift cards at over 50 retailers with Macquarie Marketplace
000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
*Rate varies on savings amount
  • Deposit $500 per month to get bonus interest
  • 5.50% p.a. available on total savings up to $100k.
  • 5.00% p.a. applies to savings between $100k-250K.
  • Tiered bonus rates apply. (TMDs at ubank.com.au)
*Rate varies on savings amount

Save Account (>$100,000)

  • Deposit $500 per month to get bonus interest
  • 5.50% p.a. available on total savings up to $100k.
  • 5.00% p.a. applies to savings between $100k-250K.
  • Tiered bonus rates apply. (TMDs at ubank.com.au)
4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • For deposit amounts $0 - $49,999
  • New ING personal savings customers receive an introductory bonus 0.50% p.a. variable kick starter rate for the first 4 months on balances up to $500,000.
  • Reverts to variable ongoing rate. T&Cs apply.

Savings Accelerator (Amounts < $50000)

  • For deposit amounts $0 - $49,999
  • New ING personal savings customers receive an introductory bonus 0.50% p.a. variable kick starter rate for the first 4 months on balances up to $500,000.
  • Reverts to variable ongoing rate. T&Cs apply.
010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • Deposit at least $1,000+ each month from an external source
  • Make 5 or more eligible transactions
  • Grow your savings balance each month

Savings Maximiser (<$100k)

  • Deposit at least $1,000+ each month from an external source
  • Make 5 or more eligible transactions
  • Grow your savings balance each month
05001$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

Goal Saver

    050$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

    Young Saver Account

      000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

      Smart Saver Account (Under 25)

        00.011$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

        Reward Saver Account($0-$100k)

          0501$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

          Save up

            02000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

            Bonus Saver (<$1 Million)

              000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

              ANZ Save

                01000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

                Bonus Saver Account (Amounts < $100k)

                  5000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

                  NetBank Saver

                    00.010$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

                    Life (< 30 years) (Monthly deposit)

                      010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

                      Boost Saver

                        020000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

                        HomeME Savings Account ($0 - $100,000)

                          02001$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

                          Growth Saver ($1 - $25k)

                            010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
                            For customers aged 14-35 years
                            For customers aged 14-35 years

                            Future Saver Account ( < $50k)

                              0201$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

                              Reward Saver Kick Start (Amounts ≤ $1m)

                                010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

                                Saver Account (<$250k)

                                  Important Information and Comparison Rate Warning

                                  All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of July 20, 2024. View disclaimer.

                                  According to the Grattan Institute's program director for household finances, Brendan Coates, a typical (median income) 35 year old who withdraws the full $20,000 would see their retirement balance fall by around $58,000, but their actual income over retirement would fall by only $24,000 - about $900 per year. 

                                  This is because the pension means test means that the government, via higher pension payments, makes up much of what’s lost.

                                  "Put another way, in retirement that worker would earn 88% of their pre-retirement income instead of 89%," Mr Coates said. 

                                  "Both are well above the 70% post-tax replacement benchmark used by the Organisation for Economic Cooperation and Development and the Mercer Global Pension Index to determine how much is needed in retirement.

                                  "Workers on median incomes who withdraw the full $20,000 will remain well above that benchmark, even with compulsory super contributions staying where they are, at 9.5% of salary."

                                  Grattan1

                                  Source: Grattan Institute 

                                  However, the report does note that the very lowest income workers (as well as the highest) will receive less extra pension to compensate, and will have less of a cushion. 

                                  The graph shows that many low-income workers will receive a pay rise when they retire, even if they withdraw the full $20,000 from super.

                                  "Of course, some low-income Australians remain at risk of poverty in retirement – especially those who rent. They struggle even more before they retire," Mr Coates said. 

                                  "Boosting rent assistance would do far more to help them than would higher compulsory super contributions, and would do less to make them poor while working."

                                  For middle-income earners though, Mr Coates said the government will mostly underwrite the majority of their lost income from super via the age pension anyway, assuming the age pension still exists in its current form when a 35-year old eventually retires. 

                                  The Government's scheme, announced in late March, has given Australians financially affected by COVID-19 the chance to withdraw up to $20,000 from their super - and many have done just that, even if they weren't actually eligible for the scheme

                                  The most recent figures from the Australian Prudential Regulation Authority (APRA) revealed over $30 billion had already been drained from super accounts by nearly four million people, smashing original government forecasts and is expected to reach $42 billion

                                  Nearly 400,000 young Australians - those under 35 - have completely eroded their super balance to $0, according to research by Industry Super Australia (ISA), while as many as 40% of those who accessed their super saw no drop in income

                                  Many of the super withdrawals, which average out at around $8,000, have been spent on discretionary items like gambling, alcohol, new cars and boats, and even gambling. 

                                  [Read: How to catch up if you've withdrawn your super early]

                                  For all of these reasons and then some, the scheme has attracted criticism, including from the likes of former Prime Minister Paul Keating. 

                                  "Of the income support in Australia to date during the COVID crisis, $32 billion has been found and paid for by the most vulnerable, lowest-paid people in the country," Mr Keating told a webinar hosted by Industry Super Australia.

                                  "The main burden of income support is people ratting their own savings."

                                  ASIC meanwhile released a new super withdrawal estimator calculator, showing that if you were to withdraw the first $10,000 in your twenties, you could be up to $25,000 worse off by the time you retire (assuming a retirement age of 67).

                                  That figure jumps to $50,000 if you withdrew the full $20,000. 

                                  No need to increase the rate of super guarantee 

                                  Grattan's report also highlighted the need to keep the current rate of superannuation as is at 9.5%, instead of the planned increase to 12% starting from next year. 

                                  "Before COVID-19, there were good reasons to abandon the planned increases in compulsory super; Among them that it would do little to boost the retirement incomes of many Australians, that it would drain government tax revenues and widen the gender gap in retirement incomes," Mr Coates said. 

                                  "COVID provides another reason. Previous Grattan work has shown that higher super comes at the expense of future wage increases.

                                  "It’s a conclusion the Reserve Bank has also reached."

                                  Mr Coates also said that raising the super guarantee rate would not only lead to lower wages but would also cost the federal budget an extra $2 billion per year in extra super tax breaks, which largely benefit wealthier Australians and not those on lower incomes. 

                                  "Increasing compulsory super contributions in the midst of a deep recession would slow the pace of recovery," he said. 

                                  "And that would be bad news for all Australians, regardless of how much we end up with in super."

                                  But Assistant Superannuation Minister Jane Hume says the government has no plans to backflip on increasing the super guarantee.

                                  "It's not on the government's agenda, we've no plans to change the superannuation guarantee," she said.

                                  "We've had a very diverse range of advocates speaking up against the super rise, everybody from the Reserve Bank through to the Australian Council of Social Services.

                                  "So it may be law, it may be legislated, but of course it's going to be a controversial decision to maintain the rises."