Boomers' dilemma

While it wasn't the bloodbath it could have been, the 2011-12 financial year has sounded a clear warning to baby boomers expecting high investment returns to deliver them a comfortable retirement.

Half a per cent. That's what the average super fund returned for the year according to interim figures from research company Morningstar.

And while many investors will be relieved that they didn't suffer another loss, this return did not keep pace with inflation - let alone provide the kick needed to fix the boomer generation's retirement funding shortfall.

Over a challenging 12 months where the Australian sharemarket fell by 7 per cent, Morningstar says super funds generally managed to scrape together a positive result for investors.

The median growth manager in the Morningstar survey returned 0.5 per cent over the year with the best performing growth funds returning less than 3 per cent and the best balanced funds less than 5 per cent.

It found the best growth funds last year were AustralianSuper and REI Super, which both returned 2.8 per cent, followed by AGEST (2.7 per cent), Perpetual (2.3 per cent) and BlackRock (2 per cent).

In the balanced fund category (which is less heavily weighted towards shares) AustralianSuper produced the highest return of 4.9 per cent, followed by AGEST (4.5 per cent), Catholic Super (3.5 per cent), AMP (3.1 per cent) and Energy Super (2.9 per cent).

Longer-term annualised results for the median manager were 6.2 per cent over three years, -0.9 per cent over five years and 4.9 per cent over the 10 years to June 30 this year.

Again the top performers did better with Schroders and REST both returning 8.2 per cent a year over the past three years, followed by AustralianSuper (7.6 per cent), REI Super (7.5 per cent) and Invesco (7.4 per cent).

The low earnings are a concern for the baby boomers who expect to retire with only half the super they will need in retirement.

According to the latest RaboDirect National Savings and Debt Barometer, the average baby boomer expects to retire with about $400,000 in super and to run out of money in their retirement.

With less than a third of boomers surveyed saying they are saving for retirement, RaboDirect says more needs to be done to address their retirement well-being.

"Our most recent Barometer shows that even if baby boomers doubled their superannuation balance between now and retirement, they would still only have approximately half of what they need," says RaboDirect spokeswoman, Renee Amor.

"Australia's ageing population is showing worrying signs about being significantly underprepared for retirement.

"There also seems to be a huge disparity between the returns being made in these markets and what boomers with super believe will happen in terms of retirement funding returns."

The survey found almost 23 per cent of boomers think the government is responsible for ensuring they have a financially comfortable retirement, as well as themselves.

Amor says boomers need to put a savings plan together and to engage with their super fund.

If it isn't performing for you, she says, speak to a professional about which funds and investments best suit your life stage and financial needs.