30% expect to have a mortgage during retirement: Survey

Recent research from financial services company Vanguard Australia (Vanguard) has revealed that the majority of working-age Australians think that it is likely they will own a home; however, 30 per cent expect to still be paying a mortgage into their retirement.

The research was conducted in March 2024 in which Vanguard surveyed a nationally representative sample of 1,800 Australian adults aged 18 years or older.

The survey found that 77 per cent of Millennials (those aged 28–42) believe that it is extremely likely or likely that they will have purchased a home by the time they retire. Vanguard continued that 74 per cent of Baby Boomers (those aged 58–77) believed they would own a home by the time they retired, followed by 73 per cent of Gen X (those aged 43–57).

Gen Z (aged 18–27) were the least optimistic about their home buying prospects, with only 62 per cent believing that they are likely or extremely likely to own a home by retirement.

Vanguard’s research revealed that Gen Z was also the most likely generation to believe that they will be paying off a mortgage in retirement, with 45 per cent of Gen Z respondents who expect to own a home thinking that it is extremely likely or likely that will still be paying off their home loan in retirement.

The report found that 32 per cent of Gen X respondents who own a home or believe they will own a home think that it is extremely likely or likely that they will still be paying a mortgage into retirement, while only 29 per cent of Millennials believed the same.

The financial services company said that this was of “most concern” as more Gen X than Millennial respondents believed they would still have mortgage repayments to make in retirement despite having less time to repay their loans before they approach retirement age.

Vanguard found that 38 per cent of Gen X respondents who expect to still have a mortgage in their retirement will continue to repay their loan, while 18 per cent said they would consider selling their home to relinquish themselves from a mortgage.

A further 25 per cent of respondents said they would access their superannuation to pay off their mortgage in a singular transaction once they reach retirement age.

Daniel Shrimski, managing director of Vanguard Australia, said: “Housing is either the largest or second-largest asset held by Australian households, so it’s also one of the most important contributors to a secure retirement. This is a bit of a sleeper issue when it comes to retirement.

“We tend to presume we’ll be home owners and mortgage-free – but having unresolved debt or needing to draw down on savings to pay rent is likely to be a big financial burden for many, especially if full-time paid work is no longer an option.

“This is why it’s so important that a robust superannuation balance is part of a ‘whole of wealth’ retirement plan, so Australians can have confidence and security in retirement.”

Australian attitudes towards the family home

The survey investigated home owner attitudes toward their homes and found that 34 per cent of working-age Australians and 41 per cent of retired Australians plan to keep their homes until they die.

Vanguard said that this demonstrates a “significant emotional attachment to the family home”.

A further 27 per cent of working-age respondents and 28 per cent of retirees saw their home as a place they would like to ultimately live in, however, also believe that the home could fund aged care or other unexpected expenses if needed.

The research revealed that 19 per cent of working-age respondents said that they view the family home primarily as a source of funding and would be willing to sell the home or use home equity release schemes or reverse mortgages to fund their retirement, compared to only 7 per cent of retirees who believed the same.

Fewer working-age Australians (12 per cent) considered their family home as an inheritance for their children or beneficiaries than retired Australians (17 per cent).

The data from Vanguard follows research from financial services group AMP that found retirees close to half of those aged 50 and over would consider passing home equity value to their children if they could stay in the family home.

[Related: Retirees consider passing home equity to children: AMP]