In recent years we had a number of patients asking about the release of their Super to cover the cost of dental treatment. More often than not we recommended against this as a person can only take out their Super once before retirement age, and with some in their 20s and 30s this could set them up for financial failure.
Our Principal dentists, Dr Marc and Dr Charles read the below article and wanted to share the repercussions of the early release of Super for a young person.
“Australians withdrew $817.6 million from their superannuation to cover dental treatment in 2024–25, with new analysis warning the long-term cost of accessing retirement savings early could substantially exceed the amount taken out.
ATO data cited by financial broker Savvy showed dental treatment accounted for about 58 per cent of the $1.416 billion approved for early super access on compassionate grounds during the financial year, with an average of $24,889 withdrawn for dental costs.
The figures represent a sharp increase from five years earlier, when Australians withdrew $108.2 million from their super for dental treatment in 2020–21. At the time, dental expenses accounted for around 23 per cent of total funds withdrawn on compassionate grounds, compared with about 58 per cent in 2024–25.
While accessing super can provide funds to meet the immediate cost of major dental work, Savvy’s analysis focused on the investment earnings that could be forgone by removing money from super years before retirement.
According to the modelling, a 30-year-old withdrawing the average $24,889 for dental treatment would have $85,906 less in super by the time they reached age 67.
Savvy compared that outcome with financing the same $24,889 expense through a five-year personal loan, which it calculated would require repayments of $591 a month and result in $10,598 in total interest. The calculation was based on Savvy’s average medical personal loan interest rate of 14.95 per cent.
After accounting for the cost of the loan, the analysis estimated a 30-year-old who borrowed rather than accessed their super would still be $75,308 better off at retirement.
The projected impact declined for people making the withdrawal later in life, with Savvy estimating a $24,889 withdrawal at age 40 would leave an individual $61,463 worse off at age 67.
Under the same modelling, a withdrawal at age 50 would reduce the projected retirement balance by $43,975, compared with the $85,906 reduction for someone accessing their super at age 30.
Savvy managing director Bill Tsouvalas said the potential impact on retirement savings meant Australians should approach early access cautiously.
“Aussies should treat their super like they’re putting money into a padlocked safe and have thrown away the key,” he explained. “There are obvious exceptions to this, namely the First Home Super Saver scheme, but it should otherwise remain untouched unless absolutely necessary.
“If you’re considering accessing it to cover the cost of expensive dental treatment, it should only be a ‘break glass in case of emergency’ solution if you’re unable to fund it yourself or obtain any other form of finance.
While Tsouvalas acknowledged borrowing would not be an option for every household, he said those able to meet the additional repayments should weigh the immediate financing cost against the potential long-term effect on their super.
“Not every family is in a position to take out a loan, of course, but for those that can afford around $150 extra per week to their budget, it’s a small price to pay for the tens of thousands you’ll save for retirement.””
– https://www.superreview.com.au/dental-super-withdrawals-surge-as-retirement-costs-mount/