Australians could have better retirement outcomes if superannuation fund default options were geared towards a whole-of-life investment approach rather than a single strategy, according to new research by Mercer.

According to Mercer's report, 66 per cent of people's retirement income will come from post-retirement returns, whereas 6 per cent will come from contributions and 28 per cent from pre-retirement returns.

"Our modelling proves that individuals could have substantially superior investment outcomes at retirement if they adopted a whole-of-life investment approach and adjusted their investment strategy accordingly to their changing life stages and risk appetite," Mercer region head for Asia Pacific Peter Promnitz said.

Modelling shows if someone in their twenties could gain an additional investment return of 0.5 per cent by choosing a more aggressive strategy, they could have 25 per cent in additional income in retirement.

"Focussing on default options with investment horizons beyond the retirement date will ensure members maximise a higher risk appetite in their younger years and older members will have enough to last them well beyond retirement, and avoid having to make major lifestyle adjustments if short-term market falls severely damage super returns as they approach retirement," Promnitz said.

As a result of these findings, Promnitz urged the government to stop "tinkering around the edges" of superannuation and make some decisive changes.

"It's time to strip the politics out of our retirement income system, and in the eye of this perfect storm for reform, address the systematic risks holistically to create a system that is flexible but robust enough to survive future market cycles and an ageing population," Promnitz said.