The financial situation in Australia is dire as millions have rushed to access their superannuation early, writes Sophie Elsworth.
The financial situation in Australia is dire as millions have rushed to access their superannuation early, writes Sophie Elsworth.

Early release of super scheme signals financial pain

ANALYSIS

THE mad rush to withdraw money from superannuation since the start of this month proves just how tough cash-strapped Australians are doing it right now.

Within hours of the Australian Taxation Office's website opening up for applications on July 1 for the second round of early release payments the site crashed.

Many were trying to urgently get their hands on another $10,000.

Throw into the mix Australians also trying to lodge their tax returns for the 2019/20 financial year and the ATO's system was always going to struggle.

As the nation slowly starts to get back to some type of normal during the coronavirus pandemic - except for those in Victoria - there's still a lot of financial pain still be felt in the coming months.

We have about 780,000 Australians who have taken out loan deferrals - of these 485,000 are mortgage customers - because they simply cannot meet their repayments.

And there's also a big chunk of business loans - 216,400 of these have been deferred.

While banks have already started contacting customers to see when they can start making repayments again, for those trying to maximise the grace period this is due to end in September.

Financial institutions have signalled they will look at each customer's situation on a case-by-case basis and not just switch them back to making payments if they simply cannot afford it.

We are sitting in an interest rate environment that is at record lows - many deals are in the two per cent range - but those large amounts of people accessing repayment holidays shows just how tough it is out there.

Many Australians are stressed out by their financial situation after being hit hard during the Covid-19 pandemic.
Many Australians are stressed out by their financial situation after being hit hard during the Covid-19 pandemic.

October undoubtedly is the month when the real state of the nation's finances will shine through - JobKeeper is due to end, the repayment holidays wind up and Federal Treasurer Josh Frydenberg will unveil the delayed 2020 budget.

And we also have the free childcare system winding up on July 12 - JobKeeper payments for childcare workers will end on July 20.

Just last month there was a glimmer of hope for some following reports Australians on unemployment benefits could also see a $75-a-week rise to their payments, rising from $565 to $715.

Despite this the Federal Government quickly hosed down these claims and said it wasn't the case so that remains to be seen.

And for those Australians who do receive a tax return in the coming weeks or months it will be a nice little windfall that will hopefully help them make ends meet.

But if anything, with the latest financial year now behind us, now is a critical time to review your incoming and outgoing expenses and see where cuts can be made.

For many who have battled their way through the pandemic the economic pain is far from over.

Make sure you are not letting money roll out of your household's pocket that could easily be saved by reviewing what deals you are on.

sophie.elsworth@news.com.au

@sophieelsworth

Originally published as Early release of super scheme signals Australia's financial pain



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