Fewer than half of all Australians have actively chosen how their super is invested, with nearly one in three unaware of how it is invested at all, research by major superannuation fund Colonial First State shows.
Being disengaged with your super comes with an opportunity cost, particularly for those not invested in the appropriate investment option, said Craig Day, head of technical services at Colonial First State.
"You're potentially missing out on those small differences in returns and contributions over a very long period of time, which can add up to be a really significant amount that retirement," he said.
For example, a 25-year-old who shifts into a high-growth option early in their working life and then moves into a "balanced" option later would do much better than someone who stayed in a balanced option their entire working life.
Based on the long-term average returns for both portfolios, the first saver would retire with around $200,000 more than the second one, even though they made the same contributions.
"What we're saying here is that the lack of engagement with super, or this idea that superannuation isn't somehow an investment, potentially has big consequences," Mr Day told AAP.
"If you're not making sure that it's invested into the right kind of risk profile for your age and circumstances, then it may look like a small difference in returns in one particular year, but when you compound that over 20 to 30 years, it can add up to a very large sum."
The Australian Prudential Regulation Authority says about two-thirds - 65 per cent - of all superannuation members are in default "MySuper" funds.
While 24 of the 52 MySuper funds use "lifecycle" strategy to automatically adjust their investment mix based on a member's age, the rest use a one-size-fits-all approach for all their members, regardless of how close or far away from retirement age they are.
Typically those funds use a "balanced" approach that mixes growth assets such as shares with "defensive" investments such as bonds, which are less volatile but offer lower returns.
"For someone in their 20s with a 45-year investment horizon, for them to invest into something that's quite conservative, is actually counterintuitive, that's actually quite high-risk," Mr Day said.
"It increases the risk that you're not going to actually achieve your retirement objectives over the longer term."
Defensive investments are more suited for people closer to retirement age, who need to be wary that the market might crash just as they are about to start drawing down their funds, he explained.
Australians who are overwhelmed by the vast array of superannuation options can always take advantage of the simple financial advice that most super funds provide to make sure their members are in the most appropriate funds for their specific circumstances.
"A lot of funds don't even charge for the provision of that kind of advice, because it helps the members achieve their retirement objectives," Mr Day said.
Beyond that, Mr Day advised Aussies to consider making additional contributions to their super.
Because superannuation offers tax advantages, an additional $20 a week contribution will only reduce the take-home pay of a worker making an average salary by around $12 or $13, he said.
"Just getting used to doing that when you're young, you won't even miss the money anymore," he promised.
"It becomes an automatic thing, and if that compounds over a significant period of time, that can make a significant difference."
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