New Grattan Institute modelling shows many Australians can still have a comfortable retirement even if they have withdrawn from their super.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

4001$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance
Disclosure

High Interest Savings Account (<$250k)

  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance
Disclosure
000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • Set up your Pay Cycle and connect your accounts from over 140 financial institutions.
  • Retrace your spending steps into categories with Spending Footprint.
  • No monthly or international fees on any of your transactions.
Disclosure

Save Account

  • Set up your Pay Cycle and connect your accounts from over 140 financial institutions.
  • Retrace your spending steps into categories with Spending Footprint.
  • No monthly or international fees on any of your transactions.
Disclosure
400$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • Special offer: Savings Accelerator (Kick Starter offer).
  • For a limited time, new ING customers can get a bonus 0.70% p.a. on their savings rate on balances of $150,000 up to $500,000 for the first 4 months. T&Cs apply.
  • If your balance is over $500,000 (but less than $5 million) you will earn the ongoing variable rate of 4.7%
Disclosure

Savings Accelerator

  • Special offer: Savings Accelerator (Kick Starter offer).
  • For a limited time, new ING customers can get a bonus 0.70% p.a. on their savings rate on balances of $150,000 up to $500,000 for the first 4 months. T&Cs apply.
  • If your balance is over $500,000 (but less than $5 million) you will earn the ongoing variable rate of 4.7%
Disclosure
4000$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
Disclosure

Savings Account

  • 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
Disclosure
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
Disclosure

Savings Maximiser

  • Deposit at least $1,000+ each month from an external source
  • Make 5 or more eligible transactions. Grow your savings balance each month
Disclosure
02000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
Disclosure

Online Savings - Premium Saver

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

    HomeME Savings Account (<$100k)

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

      Growth Saver

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

        Virgin Money Boost Saver

          01001$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

          Bonus Saver Account

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

            Bonus Saver

              0100$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

              mySaver

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

                Simple Saver

                  4001$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

                  Netsave Account

                    3000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

                    Online Savings Account

                      3000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

                      HSBC Everyday Savings Account

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

                        Incentive Saver Account

                          4000.01$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

                          Bankwest Easy Saver

                            0502$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

                            Bonus Saver

                              0500$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

                              Incentive Saver Account

                                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 December 11, 2024. View disclaimer.

                                Important Information and Comparison Rate Warning

                                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."