Australians have withdrawn $38 billion from their Super in the pandemic

The research shows that people on the lowest incomes are most likely to use their withdrawals for short-term purposes, such as gambling or withdrawing cash from an ATM. Those with the highest incomes were more likely to save on withdrawals. The money was supposed to help pay for rent and groceries, but many preferred to gamble, pay off credit cards, and buy furniture and office equipment.

It’s no use judging how Australians spend their money. It was a catastrophic time and people can ease their pain if they see fit.

But for many, the short-term fix will undoubtedly bring long-term pain. On average, they reduced their super balance by 51 percent. Researchers estimate that for those who withdraw the full $20,000, the cost of their super savings will be $120,000 in today’s dollars. One of the researchers, Steven Hamilton, a former Treasury Department official, said most people struggle with tradeoffs between spending in the near future and far into the future.

“So strong is this evidence that a large subset of the population is struggling to make informed decisions about their long-term future — this is one of those instances where they may be better off restricting people,” he said.

When the Keating administration introduced mandatory retirement plans in 1992, it was intended to help people prepare for their own retirement and ease the burden on taxpayers. For those politicians demanding access to Super for anything but retirement, the results are a reminder that the pandemic was an extraordinary time that called for an extraordinary one-off solution. It should never become a general political reaction.