Australians are set to be poorer than they want to be in retirement because they lack knowledge about how "sexy" super can be to them and their lifestyle.

Two-thirds of Aussies aged 45 and over are comfortable that they - and importantly, their super - is ready for them to retire. What shocks people like me is that a whole lot of these people are actually unprepared and poorly educated super members who plan to exit the super system and take a lump sum when they retire.

Before I start to pontificate about how good super is for retirees, I have to reveal this from the AFR’s Lucas Baird:

“The CoreData review – its third annual analysis of the same issues – showed the number of people who planned to take their super out in a lump sum and exit the pension system when they retire had jumped from 44 per cent to 58 per cent since 2022.”

While this isn’t a smart move for most of these people, it’s’ because many of them simply don’t understand super. And it would appear that no-one is making super understandable.

So far, I’ve shown two figures that capture the pathetic state of super education in this country, despite the many media, industry bodies and government agencies that pump out a pile of information on superannuation each year.

The problem is that most Aussies don’t read that ‘stuff’. They care more about the State of Origin, Tik Tok influencers, Instagram posts, Facebook (meta) and pornography!

I’ve always wanted to make super sexy so super members would actually care about arguably their most important asset (or maybe their second most important asset behind their property). However, as home prices keep spiking higher and super now takes 12% of employees’ wages and salaries, super will be the main game in town for millions of Aussies in the future.

Of course, some of those who plan to take their lump sums will want to buy a property. But that means they’ll end up on the pension. That’s about $574 a week for a single or $866 for a couple.

Check out the chart below from CoreData and the AFR:

The above chart tells me the following:

1. 46% of Aussies are smart to look at the pension option from their super as your earnings are tax free.
2. The 16% who want to draw out their super and invest it elsewhere better be suburban Warren Buffett’s or they could lose the lot.
3. While 15% want an annuity that gives income for life, but these can be low payers, you can use the pension system to boost weekly income.
4. Those 13 percenters who want to pay off their mortgages could do OK if their super is big.
5. The 11% who want their super in cash for a better life might find that this only works short term and they end up on the pension.
6. The 21% who have “no idea” really need to grow up and start showing interest in what could be a life maker or life breaker when they retire.

This isn’t inspiring stuff, with CoreData saying 1.7 million Aussies will retire over the next 10 years. Baird concluded that “the data suggested fewer than one in three workers 45 years or older feel prepared for this phase.”

Former Treasurer Wayne Swan recently said super funds need to do more to educate their members. While Swan is right, the quality of that education has to be attractive enough to bring in the eyeballs that are elsewhere on the internet.

Meantime, ASIC is concerned that advisers and competing financial institutions are putting worried super members into high returning but high risk investments.

What needs to be done to make super 'sexy'?

So, what needs to be done to raise the education levels of Aussies when it comes to their super?

“Super Consumers Australia advocates on behalf of workers and retirees, rather than the funds themselves,” Baird reports. “Its chief executive Xavier O’Halloran said funds required more prescriptive regulation to ensure they provided better retirement outcomes for members.”

Yep, that’s right, and it underlines the problem with the finance and education industry. What is “prescriptive regulation”? While I know, most people reading this wouldn’t.

Super has to be made sexy, understandable and even attractive. It has to be linked to a better life. It needs to be portrayed as retirement life when you can afford to travel overseas rather than seeing a night at the RSL a great gift of life.

It will take a quality politician and lots of money spent by the Federal Government that makes us put 12% into super. And then the super funds who go along for the ride and make a pile of money should be made to improve their education communication.

That education should be assessed. And the super funds should be publicly shamed if it’s inadequate.

This super education shortfall needs to be driven by the interesting education carrot and helped by the Government’s big stick!

By the way, the key politician whose job it is to improve this hopeless super story is the Assistant Treasurer and Minister for Financial Services, Daniel Mulino. Good luck, Daniel.