The cost of no action: disengagement with super is quietly eroding Australians’ retirement wealth

Tuesday 06 January 2026 

Australians are more curious about investing than ever, yet many still overlook one of the most powerful investment tools they already own - their super. New findings from Colonial First State (CFS) show that low engagement, combined with a bias towards property and conservative default settings for super options, is materially limiting long-term financial outcomes.

While 54% of Australians consider their super to be an investment, this drops to 48% among those under 50. Engagement is also strikingly low: less than half of Australians (46%) have actively chosen how their super is invested, one in four (25%) remain in their fund’s conservative default option, and nearly one in three (29%) don’t know how their super is invested at all.

Outside of super, the pattern is similar. Based on a national survey of 2,250 Australians, non-super portfolios are heavily concentrated in cash-style products, with high-interest savings accounts (30%) and term deposits (20%) making up more than half of their holdings. Many view these as investments despite the fact they are savings vehicles that struggle to keep pace with inflation and are not designed for long-term wealth creation.

Craig Day, Head of Technical Services at CFS, says the research highlights a simple truth, “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.”

“The consequences may not be visible now, but compound over time,” he adds.

Australia’s property bias remains strong — but younger investors are shifting

While super remains underutilised, property continues to be the most aspirational investment amongst Australian investors.

One in five Australians say that if they could only invest in one asset, they would choose property — and many still expect returns of around 9% a year, despite ABS data showing national house prices rose just 3.5% in the year to 30 June 2025 and rental yields sitting at roughly 3% (IBISWorld).

But attitudes among younger Australians are changing. The research reveals only 11% of Australians under 50 expect property to be their largest investment in retirement and half the level of those aged 50–64 (21%). This shift comes even as many continue to overestimate long-term property returns.

According to Mr Day, this recalibration is healthy, “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 says.

“Super works best when people actively engage with it. Checking how it’s invested in and making sure that choice is appropriate for your life stage and time horizon, is essential to maximising your financial position at retirement. Professional advice can further strengthen your strategy and ensure it stays on course.”

Aussies want to invest but confidence is the barrier

Outside of super, more Australians are becoming interested in investing but are hesitant to begin due to fear, uncertainty or a lack of knowledge.

The research found respondents were most concerned about ‘getting it wrong’ and losing money (42%). Other factors preventing non-investors from making a start were uncertainty about where or how to begin (26%), and a wariness of market volatility (31%).

Common to both non-investors and investors was a lack of confidence in making independent investment decisions. When it comes to decisions about super investments, Mr. Day says many Australians are unaware of how to access advice inexpensively,

“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,” he says.

The opportunity cost of a ‘set and forget’ mindset

According to Mr Day, a 25-year-old who shifts into a higher-growth option early in their working life and then moves to a balanced option later could retire with around $200,000 more than someone with the same contributions who stays in a balanced option the whole way through.[1] It’s a powerful reminder that small decisions made early can compound into very large differences over 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. 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 says.

“Super is not just a savings account, it’s one of the most powerful investment tools Australians have,” Mr Day concludes.

Steven Reilly, Director External Communications, Colonial First State

steven.reilly@cfs.com.au