As more Australians fall behind the rapid pace of the property market, the question on the lips of many Australians is whether they will ever pay off their debts. The number of mature age Australians who still have mortgage debt in retirement is consistently increasing – and on average, each older Australian with a mortgage debt owes much more relative to their income than 25 years ago.
How many Australians will soon be unable to retire comfortably amidst an international retirement savings crisis, compounded by COVID-19 and further economic uncertainty?
A study by the leading professor of economics at Curtin University found that “more Australians are finding it difficult to pay off their mortgage before retirement.”
Nearly 50% of Australian homeowners aged between 55 & 64 are still paying off their home loans.
People now have to work into their late 70’s, just so they can pay their debts off. In addition to this, there is an increasing number of older Australians who facing the reality that they will not pay off their mortgages before retirement. More than half of the Australian retirees are finding it increasingly harder to pay off their mortgages, and are being forced to rely on the senior’s pension.
The average mortgage debt among older Australians has risen by 600% since the late 1980’s.
With more retirees being unable to service monthly mortgage repayments, a larger number of them are forced to rent; getting stuck in poverty, with no way out. A shocking study by the AHURI found that the surge in mortgage debt among older Australians has outstripped growth in asset prices and incomes… meaning that it is becoming more and more difficult to pay off mortgages among all types of incomes.
Debt-free home ownership used to be a pillar of the Australian retirement strategy. It still can be, with the right support and planning.