Many Aussies don’t know how their superannuation is invested, with some still in their fund’s default option. (Source: AAP/Getty)
Australians could be missing out on as much as $200,000 at retirement by making one common superannuation mistake. Superannuation is a long-term investment, but many Aussies simply “set and forget” and overlook it.
Only 46 per cent of Aussies have actively chosen how their super is invested, new findings from Colonial First State revealed. Meanwhile, 25 per cent of people admitted they are still in their fund’s conservative default option, while 29 per cent don’t know how it is invested at all.
Most super funds will offer a range of investment strategies, ranging from lower to higher growth. They can have names like growth, balanced and conservative, which cater to different risk tolerances and investing timeframes.
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Colonial First State’s head of technical services, Craig Day, said there can be a huge opportunity cost to being disengaged with your super.
“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,” he said.
“The consequences may not be visible now, but compound over time.”
According to Day, a 25-year-old who shifted into a higher-growth option early in their working life and then moved to a balanced option later could retire with around $200,000 more than someone with the same contributions who stuck with a balanced option the whole time.
“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,” he said.
“Small decisions, made early and reviewed over time, can materially lift retirement wealth.”
Day recommended people check their investment option “at the very least”, along with looking at fees and considering extra contributions.
“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.
The Super Members Council is also urging Aussies to engage with their super, with its analysis finding eight out of 10 Aussies believed super would be critical to their retirement.
It shared these simple steps for people to help get the maximum benefit from their super: