Cash-strapped Australians are dipping into their superannuation savings earlier than ever, with dental expenses emerging as the dominant force behind a staggering surge in compassionate ground withdrawals that reached a record $1.4 billion last financial year.
Early Super Withdrawals Up 126 Per Cent
The number of Australians accessing their superannuation early has more than doubled compared to the period before COVID-19's temporary early release scheme, rising by 126 per cent. While the total number of approved applications dipped slightly in the most recent financial year, the dollar value paid out on compassionate grounds hit an all-time high.
Dental procedures are leading the charge. More than 33,000 Australians were approved to withdraw an average of $26,500 from their super for dental costs last financial year, outpacing other approved categories including weight loss surgery and IVF.
"There has been a meteoric rise," said Canstar data insights director Sally Tindall. "The cost-of-living crunch is taking its toll."
For more detail on the rules governing when and how Australians can access their super early, see our explainer on early super access in Australia, the rules, exceptions and scam warnings you need to know.
Regulators Warn of Unscrupulous Practitioners
Federal authorities are raising the alarm over a growing number of healthcare providers allegedly exploiting the compassionate release scheme to funnel patients toward cosmetic procedures. The Australian Taxation Office and the Australian Health Practitioner Regulation Agency (AHPRA) say some practitioners are using pressure tactics on patients and, in some cases, inflating the cost of services to maximise the amount drawn from superannuation.
AHPRA CEO Justin Untersteiner said the behaviour was a serious concern. "Encouraging their patients to seek access to superannuation for cosmetic reasons and often even inflating the cost of those services," he said, was contrary to the intent of the scheme.
Untersteiner stressed that the compassionate access mechanism exists for a legitimate purpose. "People do access superannuation early on compassionate grounds, particularly for chronic and acute health conditions, and that's a really important safeguard that we support," he said.
The Long-Term Cost of Raiding Your Retirement Savings
Finance experts are urging Australians to treat early super access as a genuine last resort, warning that what seems like a modest withdrawal now can have an outsized impact at retirement. Research from the Super Members Council found that a 30-year-old who withdraws $20,000 from their superannuation for a non-essential procedure could end up $93,000 worse off by the time they retire, once lost compounding returns are factored in.
The figures underscore the broader pressures bearing down on household budgets, with cost-of-living strains pushing more Australians toward short-term financial decisions that carry significant long-term consequences. Those concerns extend well beyond superannuation, as rising costs continue to shape major financial choices for many households. See also how stamp duty costs are trapping Australians in homes that no longer suit their needs.
