New industry research has found low engagement with superannuation and a gravitation toward the conservative investment options on offer from retirement savings vehicles is damaging the long-term financial outcomes of Australians.
Further the study conducted by Colonial First State (CFS) showed 54 per cent of those surveyed considered superannuation to be an investment with this cohort dropping to 48 per cent for individuals below the age of 50.
“Super is one of the most effective ways to build wealth, but too many Australians don’t see it as an investment. 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,” CFS head of technical services Craig Day said.
With regard to investment options the survey indicated 46 per cent of Australians have actively chosen how their retirement savings are invested while 29 per cent don’t know how their superannuation is invested at all. A quarter remain in their fund’s default option.
Day pointed out how critical selecting an appropriate superannuation investment option can be highlighting that a 25-year-old who shifts into a higher-growth super investment option early in their working life, and only moves to a balanced option later, could retire with around $200,000 more than someone in the same situation who stays in the balanced option throughout their career
“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 explained.
At the very least he recommended members should be checking their investment option is appropriate and consider making extra contributions, with an additional $20 a week being able to make a real impact over time.
“Super is not just a savings account, it’s one of the most powerful investment tools Australians have,” he concluded.
The CFS national survey analysed the responses of 2250 Australians.
