Low engagement with super is limiting Australians’ long-term wealth as CFS research has highlighted missed growth and persistent property bias.Australians’ low engagement with their super has quietly eroded long-term retirement wealth, according to new findings from Colonial First State (CFS), which warned that many continue to overlook “one of the most powerful investment tools they already own”.
The research showed that while 54 per cent of Australians considered their super an investment, this dropped to 48 per cent among those under-50.
Less than half of Australians (46 per cent) had chosen how their super was invested, one in four (25 per cent) remained in conservative default options, and nearly one in three (29 per cent) were unaware how their super was invested.
A similar pattern appeared outside super. A survey of 2,250 Australians found non-super portfolios heavily skewed to cash-style products, with high-interest savings accounts (30 per cent) and term deposits (20 per cent) making up more than half of holdings.
These vehicles were not designed for long-term wealth creation and often failed to keep pace with inflation.
Craig Day, head of technical services at CFS, said the findings underscored a powerful message.
“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”.
Property remained the leading aspirational investment for many Australians. One in five said it would be their preferred single asset, and many still expected returns of around 9 per cent a year.
This contrasted with ABS data showing national house prices rose just 3.5 per cent in the year to 30 June 2025, with rental yields at roughly 3 per cent.
However, younger Australians were shifting their expectations. Only 11 per cent of Australians under 50 expected property to be their largest investment in retirement, compared with 21 per cent of those aged 50–64.
This change came even as many continued to overestimate long-term returns.
Day said the recalibration was 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.”
He further stated diversification remained key to better outcomes.
“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.”
Interest in investing outside super had grown, but many Australians still hesitated due to fear, uncertainty or a lack of knowledge. The research found 42 per cent feared “getting it wrong”, 26 per cent were unsure where to begin, and 31 per cent were wary of market volatility.
A lack of confidence affected super decision-making too. Day said many Australians did not realise support was available.
“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 noted that small early decisions could meaningfully lift retirement outcomes. A 25-year-old shifting into a higher-growth option early and moving to a balanced option later could retire with around $200,000 more than someone who stayed in a balanced option throughout.
“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,” Day said. “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.”
“Super is not just a savings account, it’s one of the most powerful investment tools Australians have,” he concluded.
