3 threats to your super to watch out for

Whether you've been growing super for four or 40 years, there is always something new to learn. And recent research highlights evolving threats that could impact our super far more than short-term market downturns.

Here are three potential threats to super that we should all be mindful of.

1. Digging into super for dental treatments

Our health is one of the best uses of our money, and there's no doubt that dental issues can be painful - and expensive.

It's possible to draw on your super early if the money is needed for serious medical procedures, though strict conditions apply.

The thing is, a growing number of Australians have been dipping into their super prematurely to pay for various treatments.

Last year, around 47,400 people accessed their super early to pay medical bills - more than double the number of early withdrawals in 2018-19.

One reason for the jump, according to an investigation by CHOICE and Super Consumers Australia, is the rise of third-party companies that have a financial interest in getting people to make early withdrawals to pay for dental treatments.

These companies may coach consumers on ways to get around the rules for early release of super, and assist with the necessary form-filling - usually for a fee of several hundred dollars.

Paying a third party to access your own super is a bit rich. It costs nothing to complete the paperwork yourself.

The bigger issue - and something many people don't realise - is that if you access super early, and you're under age 60, you could end up paying tax of 17% to 22% on the lump sum received. 

The long-term impact on your retirement savings can be even more damaging. A 40-year-old who withdraws $23,000 from their super to pay for dental work could be worse off by $64,000 by the time they retire at age 65, according to Super Consumers Australia.

I have a lot of sympathy for anyone who can't afford dental care. And it's good to know you may have the money in super to pay for essential treatment. But only use super as a final resort, and if this is necessary, talk to your fund.

2. Cyber attacks

In early April, we saw worrying headlines about cyber-attacks on several of Australia's largest super funds.

The nation's biggest super fund, AustralianSuper, reported that cyber crooks may have used up to 600 members' stolen passwords to log into their accounts in attempts to commit fraud.

This is a serious concern, though it was only a matter of time before hackers turned their attention to Australia's $4 trillion-plus pool of super savings.

There's no doubt super funds have a duty to ensure their systems are as secure as possible but there is plenty we can do as fund members to keep our retirement money safe.

It starts with having a strong, unique password for your online super account(s). Using the same password for all your online accounts just makes life easier for cyber crims.

Where it is available, use multi-factor authentication. That's where your fund sends a code via SMS or email that needs to be used in conjunction with your password before you can access your account.

If your fund tries to get in touch, contact them immediately by looking up their phone number online. Don't respond to a number in a text message.

It's also important to check your super balance regularly. On this score, we are doing better. A survey by Money magazine found two in five (40.7%) Australians check their super balance monthly, up from 7.5% in 2023.

Keeping an eye on your super lets you spot trouble at an early stage. Remember, a fall in your super balance won't always be the result of hackers. It can also reflect a dip in investment markets. But at least if you check your super balance regularly, you can alert your fund early if anything looks amiss.

3.  Financial abuse

Sadly, cyber-crooks aren't always the only ones interested in getting their hands on your super.

The Human Rights Commission points to a rising tide of 'inheritance impatience' - where adult children or even a spouse, may pressure an older relative into handing over part of their nest egg, or even force them to retire early as a way of gaining access to their super.

As we head towards a $3.5 trillion intergenerational transfer, coupled with an environment of high living costs, some experts believe this sort of financial abuse could rise sharply.   

Financial abuse is extremely challenging for anyone to deal with, and women are disproportionately impacted.

Again, there is a lot super funds could do to help members experiencing financial abuse. And the federal government has pledged to look at ways of preventing perpetrators from accessing their victim's super.

In the meantime, there are some steps we can all take to help keep our super safe. Talk to your fund. Let them know what is happening. Change your account password, and add extra security questions that must be answered correctly before anyone can get into your account.

Importantly, think about calling the family and domestic violence hotline on 1800RESPECT (1800 737 732). 

Your super is your money for the future

By the time most of us hang up our work boots, our super could be one of the biggest assets we will accumulate in our lifetime. That makes it worth taking care of.

For more ideas on keeping your super safe, your fund can be a great source of free or low cost advice.