Australians’ lack of engagement with their superannuation is quietly eroding long-term retirement outcomes, according to new research from Colonial First State (CFS), despite growing curiosity about investing more broadly.
Study findings released today show that while 54 per cent of Australians view their super as an investment, that figure falls to 48 per cent among those under the age of 50. Engagement levels remain low across all age groups, with fewer than half of Australians (46 per cent) actively choosing how their super is invested. One in four remain in a conservative default option, while almost one in three say they do not know how their super is invested.
Outside the super system, investment behaviour shows a similar pattern. A national survey of 2,250 Australians found non-super portfolios are heavily skewed towards cash-style products such as high-interest savings accounts and term deposits, which account for more than half of all holdings. Many respondents consider these products investments, despite their limited capacity to deliver long-term growth or keep pace with inflation.
Colonial First State Head of Technical Services, Craig Day, said the research highlighted the risks of inaction.
“Super is one of the most effective ways to build wealth, but too many Australians don’t see it as an investment,” Day said.
“When people stay in the status quo, whether that’s remaining in a conservative default option or a single asset, they risk missing out on significant long-term growth.
“The consequences may not be visible now, but compound over time,” he added.
Property remains the most aspirational asset for many Australians, with one in five saying they would choose property if limited to a single investment. Expectations of annual returns around 9% persist, despite official data showing national house prices rose 3.5 per cent in the year ending 30 June 2025, with rental yields at about 3%.
However, younger Australians appear to be reassessing property’s role in their financial futures. Only 11% of those under 50 expect property to be their largest investment in retirement, compared with 21% of those aged 50 to 64.
Day said diversification was critical to managing risk.
“Property confidence is understandable, but concentration risk, like having all your wealth tied up in one asset like a house, can limit flexibility. That can have a huge impact, particularly for older Australians if life takes an unexpected turn.
“By diversifying across asset classes whether through equities, fixed income or cash, either directly or through managed investments, you spread your risk, which can lead to more stable returns over time,” he added.
Colonial’s research also found growing interest in investing outside super is being held back by low confidence. The biggest concern among respondents was fear of losing money or “getting it wrong”, which was cited by 42 per cent. Market volatility worried 31 per cent, while 26 per cent said they were unsure where or how to begin.
When it comes to superannuation decisions, Day said many Australians were unaware of the availability of affordable advice.
“For those wanting help without the expense of full advice, most funds now provide lost-cost or free intra-fund advice to help guide members on decisions related to their super.”
The opportunity cost of a “set and forget” approach can be significant, according to Day.
A 25-year-old who moves into a higher-growth investment option early in their career and later shifts to a balanced option could retire with about $200,000 more than someone who stays in a balanced option throughout their working life.
“The message is clear – being disengaged with your super comes with an opportunity cost, particularly if you’re not invested in the appropriate investment option.
“Small decisions, made early and reviewed over time, can materially lift retirement wealth. At the very least, check your investment option, take a look at your fees, perhaps make an additional contribution. Even $20 a week can make a major difference to your retirement balance over the long term. Don’t just leave it and do nothing,” he said.
“Super is not just a savings account, it’s one of the most powerful investment tools Australians have.”
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