Affect of using Super to pay mortgage upon retirement

*Warning - Anecdata ahead*

Several of my parents friends have recently retired - and withdrawn every bit of their super required to get a part pension to pay down their mortgage. On advice of their financial advisors the past few years they've taken every opportunity to bulk their super out, to now access the tax advantages of a large withdrawal. Several have upgraded everything (car, caravan, couch, etc) and gone all out on a retirement PPOR (Regional areas but premium properties).
It feels as though this is currently playing around the margins of property - however with the increasing number of people purchasing their PPOR later in life (closer to retirement) would this affect become greater?

(somewhat baffled at the fact govt allows large withdrawals from super then people can go on pension).

 

for some people gaining access to super is like winning the lotto - they blow the lot.

 

I think it's wrong, but it's not a crime, while Government allows this people will contnue to take advantage of the system

 

I think its an issue if an increasing number of people reach retirment age and are having to rely on Superannuation to pay out their mortgages on their PPOR.

Once people are in that situation however, they really only have 2 options. Sell and Downgrade or a lump sum Withdrawl from Super to pay out the mortgage.
In this case the Lump Sum makes sense as the average person once they have finished working has no real income to service a mortgage.

The way to clean up the mess however is to include all assets in the pension test, e.g. Super and PPOR.

It's sensible to try and get some of the big purchases out of the way just before/when you retire, so you don't feel the sting later when you can't make up for it. E.g. upgrade the car, expensive holiday, etc.