When it comes to superannuation, it’s only natural to feel a bit jittery when the markets start to wobble.
After all, your super is your nest egg—the foundation of your retirement dreams, whether that’s a lap around Australia in a caravan, spoiling the grandkids, or simply enjoying a well-earned break.
But before you make any knee-jerk decisions, it’s worth taking a deep breath and considering the long game.
Recent market volatility—triggered by everything from global trade wars to Middle Eastern tensions—has left many Australians wondering if they should play it safe and switch their super to cash.
In fact, a recent YouGov poll commissioned by AustralianSuper found that 40 per cent of Aussies think moving to cash or a lower-risk option during a downturn is a good idea.
Among baby boomers, the anxiety is even higher, with one in three considering a switch as they approach or enter retirement.
But here’s the thing: history shows that those who stay the course tend to come out on top.
Why do people panic and switch to cash?
It’s easy to see why the idea is tempting. When the S&P/ASX200 took a 14 per cent nosedive earlier this year, many super fund members felt their hard-earned savings were at risk.
The urge to ‘do something’—to protect what you have—is a powerful one. But as AustralianSuper’s head of asset allocation, Alistair Barker, points out, ‘While it’s tempting to make changes when markets fall, history shows that those who stay the course tend to see stronger long-term results.’
The cost of cashing out
Let’s look at the numbers. Over the past decade, AustralianSuper’s balanced option—which includes a healthy mix of shares and other growth assets—delivered an average annual return of 7.6 per cent.
Funds with a greater exposure to Australian shares returned 9.3 per cent, and those with more international shares did even better at 10.5 per cent. By comparison, cash-only options limped along at just 2 per cent per year.
To put that in perspective: if you’d invested $100,000 in a balanced super fund in 2005, you’d be looking at around $430,000 by 2025.
If you’d switched to cash at the first sign of trouble, you’d have missed out on hundreds of thousands of dollars in growth.
Why does this happen? Because markets are unpredictable in the short term, but over the long haul, they tend to recover and grow.
Bear markets—where shares drop by 20 per cent or more—are a normal part of the cycle, typically occurring every two to three years.
We saw it during the onset of COVID-19 in 2020, and again with the recent volatility sparked by global trade tensions.
Super is built for the long haul
Superannuation is designed to weather these storms. The system is set up to ride out the ups and downs, with diversified investments that spread risk across different asset classes.
As Mr Barker says, ‘These fluctuations are to be expected, and over the long term, superannuation is built to weather these storms.’
Even in the face of global uncertainty—whether it’s Donald Trump’s tariffs, Middle Eastern conflicts, or oil price spikes—the market has a habit of bouncing back.
In May, balanced retirement savings funds delivered a healthy 2.6 per cent return, following a modest 0.6 per cent gain in April, despite earlier market slumps.
The real risk: Missing the rebound
One of the biggest dangers of switching to cash during a downturn is missing the market rebound.
Markets often recover quickly, and if you’re sitting on the sidelines in cash, you can miss out on the best days of growth. Over time, this can have a huge impact on your retirement savings.
What should you do instead?
Stay diversified: Make sure your super is spread across a mix of assets—shares, property, fixed interest, and cash. This helps smooth out the bumps.
Review, don’t react: It’s smart to check your super regularly, but avoid making changes based on short-term market movements.
Seek advice: If you’re feeling anxious, talk to a financial adviser or your super fund. They can help you understand your options and make decisions that suit your long-term goals.
Remember your time frame: Even if you’re close to retirement, your super may need to last 20 years or more. That means you still need some growth to keep up with inflation and fund your lifestyle.
Your say
Have you ever been tempted to switch your super to cash during a downturn? Did you stick it out, or make a change? How did it work out for you? We’d love to hear your experiences and tips in the comments below—your story could help others make smarter decisions about their retirement savings.
Remember, when it comes to super, patience really can pay off. Don’t let short-term jitters derail your long-term dreams.
Disclaimer: This article is general in nature and does not constitute personal financial advice. Please consult a qualified professional for advice tailored to your circumstances.
Also read: Super savings guarantee kicks in 1 July—here’s why it matters to you
