For many Australians, superannuation is the nest egg we rely on to fund a comfortable retirement.
But for a growing number of people, that safety net is being tapped into much earlier than planned—and not for the reasons you might expect.
Recent figures reveal that more Aussies are dipping into their superannuation early to cover the costs of critical medical treatment.
It’s a trend that’s raising eyebrows among financial experts and health advocates alike, and it’s not hard to see why.
When life throws a curveball
Take the story of Rose Charles. Just before Christmas in 2020, Rose’s world was turned upside down with a cancer diagnosis. ‘I didn’t ask to get cancer, I didn’t want to get cancer,’ she recalls.
What followed was a gruelling journey: sixteen rounds of chemotherapy, thirty rounds of radiation, a double mastectomy, and breast reconstruction.
The toll wasn’t just physical and emotional—it was financial, too.
Unable to work and still needing to provide for her teenage son, Rose faced mounting bills. ‘You’ve still got gas bills, you’ve still got school fees,’ she says.
Like thousands of others, she turned to her superannuation, withdrawing $35,000 to cover the cost of a single procedure.
A growing trend with a hefty price tag
Rose is far from alone. In the last financial year, at least 50,000 Australians accessed their super early on compassionate grounds, with more than $1 billion released in total.
According to Peter Hogg, general manager at Aware Super, ‘We’ve certainly seen an increase over the last 12 months—it’s about a ten per cent increase.’
But while early access can be a lifeline, it comes with a sting in the tail: tax. Superannuation is taxed favourably when you contribute, but if you withdraw funds before turning 60, you’re hit with a tax bill that can be as high as 22 per cent—on top of the 15 per cent already paid on contributions.
As Rose puts it, ‘So the government got a fair chunk.’
There is a silver lining: if your marginal tax rate is less than 37 per cent, you may be eligible for a refund at the end of the financial year.
But the process can be confusing, and the immediate impact on your retirement savings is significant.
The long-term impact on your retirement
It’s tempting to see super as a rainy-day fund, but experts warn that dipping in early can have serious consequences down the track.
Mary Delahunty, chief executive of the Association of Superannuation Funds of Australia (ASFA), cautions: ‘It’s quite a high rate for people who have those immediate needs, and we think there’s probably a better way we can do it.’
The real cost isn’t just the tax—it’s the lost opportunity for your super to grow over time. Withdrawing $35,000 today could mean missing out on tens of thousands in compound interest by the time you retire.
For many, that could be the difference between a comfortable retirement and just scraping by.
Are there alternatives?
If you’re facing a medical crisis, it’s worth exploring all your options before tapping into your super. Some alternatives to consider include:
Private health insurance: Check your policy to see what’s covered. Some procedures may be fully or partially reimbursed.
Government assistance: Programs such as Medicare Safety Nets or state-based patient transport schemes can help with out-of-pocket costs.
Payment plans: Many hospitals and specialists offer payment plans for large bills.
Charities and support groups: Some organisations provide financial assistance for specific illnesses.
What you need to know before accessing your super earl
If you do decide that early access is your only option, make sure you understand the rules and implications:
Eligibility: Early access is only allowed under strict conditions, such as severe financial hardship or on compassionate grounds (including medical treatment).
Tax implications: Be prepared for a tax bill, and seek advice from a financial adviser or your super fund.
Long-term impact: Use online calculators to see how much your retirement savings could be affected.
Have your say
Have you or someone you know had to access super early for medical reasons? Did you find the process straightforward, or were there unexpected hurdles? Do you think the rules around early access are fair, or is there a better way to support Aussies in crisis?
We’d love to hear your thoughts and experiences in the comments below. Your story could help others facing the same tough decisions.
Also read: Your questions on Labor’s $3M super tax, answered
Yes, Cancer treatment through the Private Health System can be really expensive.
Rose had a $35K Out of Pocket for one procedure, but her total Out Of Pocket was not mentioned.
My late Partner was diagnosed with Breast Cancer 24th October 2017, she had a Double Lumpectomy and Reconstruction, followed by six Months of Chemo-Therapy and the one Month of Radiotherapy. The Chemo caused Osteoporosis, which entailed three monthly Bone Density Tests followed by Bone Growth Hormone Infusions, which wasn’t to bad because she still had her Injectable Power Port in. In 2021, one of her Bone Density Scans showed a clouding in her lung, on further testing and Biopsies, she was diagnosed with Lung Cancer.
Another round of Chemo & Radiotherapy. Further scans revealed more tumors, in her Adrenal Gland, Lymph Node in her neck and a small tumor in her liver. More Chemo & Radiotherapy, result:- Adrenal Gland & Lymph Node Cancer Free, BUT, the one in her Liver did not respond to any of the treatment attempted,, and she passed away on the 9th August 2022.
Now, the total Out Of Pocket Expenses over the whole five years was $115K, $35K drawdown on my Super, $65K redraw on my mortgage and $15K across 3 Credit Cards. In the time since she passed, my Mortgage is down to approx $40K, and Credit cards are down to approx $7K, I will never be able to replace the $35K drawdown from my super.
And I was diagnosed with Bladder Cancer two years ago, had the tumor removed and am currently undergoing follow-up checkups, which involve Day Surgery, and my Out Of Pocket Expenses for those is approx $1K per checkup !!!
Additional Information. After my Partner Passed, my Part Age Pension (couple) was reduced to Part Age Pension (Single), with a loss nearly $7K per Year, and now I am living from “Payday to Payday”, to paydown my Out Of Pocket Debt and try to live a “normal” life !!
But, I will survive !!