With interest rates back in the spotlight and cost-of-living pressures rising, many Australians are feeling uneasy about their finances. Recently on Mornings with Doug, financial adviser Jason Featherby from Leeuwin Wealth joined the conversation to unpack what’s really going on with superannuation – especially so-called balanced funds.

Interest Rates and Household Pressure

Jason says another Reserve Bank interest rate rise was all but inevitable. Inflation remains stubborn, and that puts pressure on mortgage holders.

“So, for an average family with a $500,000 mortgage, even a quarter-percent rise can mean around $1,000 extra a year,” Jason explained. “That’s after-tax money, which makes it even harder.”

Therefore, with the possibility of multiple rate rises, now is a good time to review your overall financial position – starting with super.

What Is a Balanced Super Fund?

The term balanced fund sounds reassuring, but Jason warns it can be misleading. “There are no hard rules. A fund can be called ‘balanced’ simply because the provider names it that way,” he said.

Traditionally, balanced funds were closer to a 50–60% mix of growth assets (like shares and property) and safer assets (like cash and bonds). However, many balanced funds today hold 75% or more in growth assets, which carries much higher risk.

That risk matters more as you get older.

Why Risk Matters More Near Retirement

If you’re in your 30s or 40s, market ups and downs are usually manageable because you have time to recover. But, for those approaching retirement – or already drawing a pension – risk becomes far more serious.

Jason highlighted sequencing risk, which is the danger of retiring just as the market takes a downturn. “If you’ve got too much exposure to growth assets and the market falls, you don’t have time to recover,” he said. “You might even have to go back to work.”

Don’t Be Fooled by Big Returns

High returns don’t always mean a better fund. “If one balanced fund returns 10% and another returns 8%, but the first is taking far more risk, the 8% fund may actually be the better option,” Jason explained.

In other words, the key is understanding what’s under the bonnet, not just the headline return.

The Growing Importance of Insurance in Super

A powerful reminder came from a listener who shared how she lost her income after an injury – only to discover she no longer had income protection insurance through her super. Jason explained that rule changes mean insurance is no longer automatically included.

“If your super becomes inactive, your insurance can be cancelled without you realising,” he said. “And once it’s gone, it can be very hard – or impossible – to get back.”

Therefore, income protection, Jason stressed, is life-changingly important for anyone who relies on their income.

So, What Should You Do Next?

Jason’s advice is simple: start now.

  • Log in to your super and check your asset allocation
  • Look beyond the fund name and review how much is in growth versus defensive assets
  • Compare your fund’s performance and risk against industry averages using ASIC’s MoneySmart website
  • If something doesn’t feel right, seek advice sooner rather than later

“Don’t be ignorant of where your money is,” Jason said. “It’s your future.”

You can check out the full chat with Jason Featherby below.