‘We Were Meant to Be Debt‑Free’: The Mortgage Burden No One Warned Retirees About
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A generation of Australians once assumed they’d burn their mortgage papers before retirement. They pictured their 60s as a time to relax, debt-free, in the homes they worked so hard to own.
Today, however, a growing number of older Aussies are finding that the mortgage bill follows them right into retirement. Instead of financial freedom, they’re juggling loan repayments, rising living costs, and tough decisions well into their 60s and 70s.
It’s a shift that’s leaving many seniors asking: What happened to the debt-free retirement we were promised?
In 2000, roughly 64% of Australians in that pre-retirement bracket owned their homes outright; by 2020, that figure sank to about 36%. In other words, fewer than four in ten Australians approaching retirement age today are mortgage-free, compared to nearly two-thirds a generation ago.
This dramatic shift means the old expectation of entering retirement with “no more mortgage” is no longer the reality for a large share of the population.
It’s not just the near-retirees. Even many who have already retired are still paying off home loans. Recent research by a major superannuation fund manager found that about 14% of Australians who describe themselves as retirees are still servicing a mortgage debt. Among “pre-retirees” (folks aged 50 to 64), nearly 28% are carrying a mortgage on the journey toward retirement.
These numbers reflect millions of Australians either approaching the end of their careers or already in retirement while still chained to monthly loan repayments. Retiring with a home loan, once a rarity, has become commonplace.
The Yahoo Finance story of a Sydney mother of two crystallised this trend. The 50-something mum (who bought her home 25 years ago) recently confessed on social media that she had just $4,500 in savings and a mortgage still hanging over her head.
“I should have paid it off by now,” she admitted – a rueful acknowledgement that many people aren’t where they thought they’d be financially by this stage of life. Her candid revelation – which quickly resonated with thousands – highlights a tough new reality facing Australians who expected to be debt-free by their 50s or 60s, but instead find themselves still writing checks to the bank.
“Today’s buyers are often purchasing homes at a later age than their parents, who typically entered the housing market in their late 20s or early 30s,” explains Theo Chambers, chief executive of mortgage brokerage Shore Financial. The average age of a first-home buyer is now around 36 nationally – and pushing 40 in Sydney.
This means a typical 30-year mortgage taken out at age 40 won’t be paid off until the borrower is about 70. Contrast that with someone who bought in their 20s a generation ago – they might have been mortgage-free by their 50s. Buying later in life naturally extends mortgage payments into what used to be retirement years.
Why are people buying later? Skyrocketing property prices have played a huge role. Over the past few decades, Australian house prices have soared far faster than incomes. Between 1992 and 2022, the median house value in the capital cities jumped by an astounding 453% (to about $928,000).
In cities like Sydney, the median house now costs around $1.5 million. With such high prices, younger Australians often struggle to save a deposit and secure a home until they’re well into their 30s or 40s.
They also tend to borrow larger amounts and opt for longer loan terms. It used to be common to have 20-year mortgages; now 30-year loans are standard, and some buyers even stretch loan terms further. The result? Home loans are following Australians into their 60s and beyond, simply because they started later and borrowed more.
Another culprit is the rapid rise in interest rates and cost of living in recent years. Many Australians who bought homes or refinanced during the low-rate era of the 2010s are now feeling the pinch of higher interest costs.
The Reserve Bank of Australia embarked on an aggressive series of interest rate hikes starting in 2022. In fact, mortgage holders have weathered 13 interest rate rises since mid-2022, and hopes for relief keep getting pushed back amid persistent inflation. For someone with a variable-rate home loan, those hikes have significantly driven up monthly repayments. Higher interest rates mean each dollar of debt is more expensive to carry.
At the same time, general living costs – from groceries to utilities – have surged. Stubborn inflation has squeezed household budgets, making it harder to throw extra money at the mortgage. One Melbourne woman, 58, told The Guardian that elevated interest rates and high living costs have made it “near impossible” to pay down the loan on her home.
More than half of her salary as a teacher goes straight to the mortgage, yet the balance barely budges. “I have to admit, I didn’t see [rates] going up quite as much as they did,” she said, noting that she never imagined still carrying this debt at her age.
Changing life circumstances and retirement norms also contribute to this trend. Divorce, for example, can derail the best-laid mortgage payoff plans. The Melbourne teacher mentioned above cited a divorce in her 50s as a major setback to her finances. Suddenly a two-income household becomes one, and paying off the house becomes a far heavier lift. Health issues or job loss late in one’s career can have a similar effect – people may pause or refinance their mortgage, or even draw out equity to cover emergencies, thereby prolonging the debt.
Moreover, the very notion of retirement is evolving. Many older Australians are choosing to (or having to) work longer than the previous generation did. Part of this is by choice – staying active and engaged – but for many it’s out of necessity to manage debt. Martin North, a finance analyst and founder of Digital Finance Analytics, notes that more people are remaining in the workforce longer because they have “a significantly higher mortgage liability than they expected.”.
In a recent survey of over 50,000 Australians, North’s firm found a striking trend: the number of older mortgage holders who planned to retire but then changed their minds doubled in just one year. He says unexpectedly large mortgages are a key reason. “I’m seeing people struggling in Hobart, Adelaide, Brisbane and Perth as well.
So this is a national problem,” North observes – not just a Sydney or Melbourne issue. Higher interest rates, as discussed, are one driver. Another, he points out, is that some people have pulled equity out of their homes – either to fund their own needs or to help their kids buy a house – and now face larger loans later in life.
Indeed, helping adult children into the property market – often dubbed the “Bank of Mum and Dad” – has become a double-edged sword. In an era of sky-high house prices, more young people turn to their parents for financial help with a deposit.
Many parents oblige by tapping into their own home equity or savings. North warns that this well-intentioned assistance can boomerang on the parents’ finances. “It’s changing their own retirement plans,” he says, adding that the Bank of Mum and Dad is “probably the least understood factor” driving both the property market and household debt today.
By acting as a “bank” for their kids, parents may delay paying off their own mortgage. If housing prices were to fall in the future, those parents could find themselves in a vulnerable position – carrying substantial debt later in life with a property that’s no longer worth as much as expected. It’s an intergenerational ripple effect: parents take on more debt to help children, and in turn wind up carrying mortgage burdens for longer than they ever imagined, sometimes right into retirement.
Take the story of Linda Thoresen, a 66-year-old civil servant in Perth. Linda is less than a year away from qualifying for the Age Pension – but instead of celebrating an imminent retirement, she has decided to postpone leaving work so she can keep chipping away at her $170,000 mortgage. “I just decided this morning to make higher fortnightly payments while I’m working,” she told ABC News, hoping to whittle down the balance before she finally retires.
For now, Linda is pouring a sizeable chunk of each paycheque into her home loan. The thought of stepping back from work is certainly tempting, “but unless I have a windfall, I can’t see a solution other than having to sell and find somewhere else to live,” she said candidly.
That’s a jarring prospect – selling the beloved two-storey townhouse in North Fremantle she has called home for over 20 years. When Linda bought that house in her 40s, she was actually a decade older than most of her friends were when they became homeowners. “I did have that trepidation,” she admits – a worry that starting later and carrying a mortgage longer might come back to haunt her – “and so it has turned out.”
Now, facing retirement with a six-figure loan, Linda is determined to keep working as long as it takes. She’s upping her repayment amounts, tightening her belt, and keeping one eye on the real estate market. If things don’t improve, selling her home to clear the debt might be her only way out. It’s a scenario she never envisioned decades ago when she first signed her loan papers.
Linda’s dilemma is increasingly common. Scroll through community forums or financial counseling anecdotes, and you’ll find countless stories of Aussie retirees and near-retirees wrestling with similar worries. In one case, a 50-year-old father from Brisbane (with kids still in school) found himself staring at 28 years left on a $640,000 mortgage.
With rising expenses for tuition, groceries, and utilities, he told The Guardian that he falls further behind each month, watching his savings dwindle. His grim conclusion: “I will be paying this until my death,” he said bluntly. That despairing statement – paying until death – underscores how trapped some feel by their housing debt.
It’s not that these Australians are spendthrifts or irresponsible. Often, they did “all the right things” – worked steadily, bought a home, raised a family – but economic currents shifted in ways they couldn’t control (soaring housing costs, job market changes, interest rate spikes). The outcome is an unexpected mortgage extension on their lives.
Even those actively planning for retirement are feeling the pinch. A recent survey by Colonial First State (a major superannuation firm) revealed that just under one quarter of retired homeowners are using at least part of their Age Pension payments to cover debts – often mortgage repayments. Imagine that: the pension, designed to help seniors cover basic living costs, is being partially redirected to pay the bank for a home that ideally should have been paid off years earlier.
The same survey found 30% of retired non-homeowners (i.e. renters or those in other arrangements) were also using pension income to service debt, such as personal loans or credit cards. These statistics paint a picture of retirees scrambling every fortnight to juggle essential expenses and debt obligations on fixed incomes.
For many, it means cutting back on discretionary spending, delaying travel or hobbies, and in some cases even skimping on essentials. One financial counsellor noted that calls to the National Debt Helpline from older Australians unable to meet mortgage or rent payments are at record highs. “The phones just never stop now,” said Greg, a counsellor who has spent 14 years helping Aussies in debt distress. He’s never been so busy, and a large portion of calls are from seniors panicked about making ends meet once their working income dries up.
Then there’s the story of the Melbourne single mother in her late 50s, shared anonymously with The Guardian. She has a $454,000 mortgage on a home in Melbourne’s suburbs and two adult children in their 20s whom she still supports. For now, she’s working full-time and managing the hefty repayments (barely). But looking ahead, she’s confronting an uncomfortable choice: retire on time with a mortgage, or keep working past retirement age to finally become debt-free. Neither scenario is ideal. “I’ll go into retirement with zero super,” she says, explaining that her plan is to use her entire superannuation payout to clear the mortgage when the time comes. Wiping the debt with her super will leave her with no retirement savings at all – just the house. That prospect leaves her understandably anxious.
“I worry a bit,” she admits. “Can I stay healthy for the next nine years and then just rely on the pension? It means not having a safety net.” Her voice captures a quiet desperation shared by many: the hope that health holds out and that the Age Pension will somehow be enough, since the nest egg will be gone to the bank. It’s a huge gamble, and one she never thought she’d have to take. “I didn’t foresee that my eldest child would be back home… I have to admit, I didn’t see [interest rates] going up as much as they did,” she reflects, noting the curveballs life threw her way.
But how do you embrace the carefree “golden years” when a mortgage payment is due each month? Many older Australians are having to fundamentally rethink their retirement plans and expectations.
One immediate impact is on mental health and stress levels. It’s hard to feel at ease with the specter of debt looming. Financial counsellors report that the burden of mortgage debt in retirement can lead to intense anxiety and stress for older clients, negatively affecting their well-being.
People who expected to be comfortably retired find themselves losing sleep over money, worrying about interest rates, and constantly budgeting on a fixed income. This stress can manifest in health issues – for example, stress-related illnesses or exacerbated conditions – just at a stage of life when health tends to become more fragile.
The 58-year-old Melbourne mum mentioned earlier voiced exactly this concern: without any savings cushion, she worries about staying healthy long enough to manage her debt and fears “not having a safety net” if something goes wrong. It’s a poignant reminder that financial security and physical health often intertwine.
Lifestyle adjustments are another consequence. To keep up with mortgage payments, retirees are cutting back on discretionary spending that they might have otherwise enjoyed. Big holidays, restaurant dinners, new hobbies – these sometimes take a backseat to just keeping the household budget in the black.
For some, it even goes beyond trimming “luxuries.” There are reports of older Australians foregoing home upgrades, cutting medication costs, or turning down the heater in winter – all to save a bit of cash to put toward the mortgage.
In a very real sense, debt can steal some of the simple joys of retirement. Instead of feeling free, people feel tied down. As one retiree advocate put it, carrying debt into retirement can make your finances feel tight at a time when you want to relax and enjoy life. Every dollar going to the bank is a dollar not available for leisure or comfort.
Family relationships also feel the impact. Traditionally, many Australians hoped to help their children or even grandchildren financially – whether that means contributing to education costs, helping with a home deposit (if able), or leaving an inheritance. But if you’re still paying off your own home at 70, you may have little capacity to support the next generation. In fact, the flow may reverse: we’re seeing instances where adult children pitch in to help their retired parents meet mortgage payments or other bills.
That can be a source of stress or even pride-swallowing for older Aussies who never imagined needing financial help from their kids. On the flip side, as discussed, when parents do help their kids buy a home by leveraging their own property, it can backfire by prolonging the parents’ indebtedness. It creates a delicate balancing act: wanting the best for your children’s future but jeopardizing your own financial stability.
There’s also a broader social and policy implication to consider. If more Australians reach retirement age with significant debt, the burden on public resources could grow. People who use up their superannuation to pay off mortgages will be more reliant on the Age Pension (government support) to cover day-to-day living.
Already, there are warnings about a rising number of retirees who will rely solely or mostly on the pension, without much in savings. One analysis noted that the decline in outright home ownership among older Australians poses a “fiscal risk to Age Pension spending” in the future. Essentially, if owning a home outright (which often reduces living costs) becomes less common, more retirees may qualify for higher pension payments or need additional assistance to get by.
This trend has caught policymakers’ attention: it challenges long-held assumptions about retirement self-sufficiency. Australia’s retirement income system was built on a three-pillar idea – compulsory superannuation savings, voluntary savings (often the family home as an asset), and the Age Pension as a safety net. But if the family home isn’t fully owned, that pillar weakens, and the pressure shifts to the other two.
Some retirees are even entering retirement renting rather than owning, which can be financially precarious in a tight rental market. All of this suggests that the issue of retiree debt isn’t just a personal finance story; it’s one that could shape government policy and community support services in the years ahead.
Home buyers are entering the market later, prices remain high, and loan terms are longer, Day notes – so it’s pragmatic to assume one might still have a mortgage at retirement. His advice for those in that boat is to consider all options, including using superannuation or other assets strategically.
Some choose to withdraw a lump sum from their super to pay off the mortgage upon retirement – essentially trading retirement savings for a debt-free home. This can provide peace of mind (no more loan payments!) but at the cost of depleting the very savings meant to support one’s living expenses. If your superannuation investments aren’t earning as much as your mortgage interest is costing you, it might make sense to clear the debt, Day explains.
However, he also cautions that using your super to eliminate debt means you’ll have less money generating income for you in retirement, which could result in a lower standard of living or your savings not lasting as long.
On the other hand, paying off the loan could potentially increase your Age Pension entitlements (since super savings count toward the assets test, whereas a primary home does not). It’s a complex decision with pros and cons, and experts suggest getting personalized financial advice to weigh what’s best for your situation.
Others take the route of continuing to service the mortgage in retirement using income streams from super – for example, keeping their super in an account-based pension and drawing it down gradually to cover living costs and mortgage payments. This way, they maintain a nest egg (invested in super) while slowly paying off the loan.
The risk here is interest rate exposure: if mortgage rates climb faster than the returns on super investments, it can erode your wealth over time. Again, it’s a balancing act that retirees have to approach carefully.
Financial counsellors, for their part, stress the importance of not waiting to seek help if mortgage stress becomes overwhelming. Services like the National Debt Helpline are available for free, and they report that many older Australians reach out only when they are in crisis, whereas earlier advice might have opened up more options.
Counsellors can sometimes negotiate with lenders for hardship arrangements, interest-only extensions, or refinancing opportunities to ease the burden. The key message from experts is that you’re not alone and there are avenues for assistance – but one has to take that first step to communicate with lenders or advisors, rather than suffer in silence.
Economists and housing analysts are also urging a bigger-picture response. As Martin North suggested, the Reserve Bank and policymakers should be examining this rise in retiree debt closely. It’s part of the broader housing affordability puzzle that Australia is grappling with. If the great Aussie dream of owning one’s home outright before retirement is fading, what new measures might help?
Some advocate for more innovative housing models for seniors – such as shared equity schemes, downsizing incentives, or cooperative housing – to provide affordable options for older people who haven’t paid off homes. Others call for age-friendly lending practices, so that older borrowers aren’t automatically written off when seeking to refinance or downsize (a recent report recommended less “ageist” lending policies, noting that many seniors still have the capacity and reliability to manage loans responsibly).
These discussions indicate that solutions will likely need to come from multiple directions: individual actions, financial industry adjustments, and possibly government policy tweaks.
As it stands, the trend of entering retirement with debt looks set to continue – and perhaps even expand with younger cohorts. A projection by Vanguard earlier this year suggested that if current patterns persist, nearly 30% of future retirees could still be paying down mortgages in retirement. That’s a profound shift from the days when owning your home outright by age 65 was almost a given.
It’s neither all doom nor a death sentence – many will manage and still enjoy fulfilling retirements – but it requires adaptation. The more that soon-to-be-retirees acknowledge and plan for this “new normal,” the better they can adjust their expectations and finances.
In the meantime, stories like those of Linda in Perth or the Sydney mum with $4.5k savings are cautionary tales and rallying cries. They highlight the resilience of those who refuse to give up on financial independence, even if it means working a bit longer or tightening the belt. T
hey also remind younger generations to plan carefully: starting a mortgage later or upsizing mid-life can have ramifications decades down the line. No one likes to think of still having a house payment at 70, but it’s becoming part of the reality for many – so it’s best to go in with eyes open.
Australians have long taken pride in home ownership, and for retirees especially, the home is often seen as both a sanctuary and a financial safety net. That isn’t changing – if anything, it’s more important than ever to hold on to that hard-won asset. But the journey to fully owning that home has gotten longer and bumpier for a lot of people.
As we collectively reckon with this shift, perhaps the most important thing we can do is talk about it openly – just as that Sydney mother did – and learn from each other’s experiences. After all, a problem acknowledged is a problem half solved.
Retirement was once dubbed the “debt-free zone” of life – but for many Aussies now, that zone is shrinking. The good news is that awareness is growing, and with it, a range of strategies and support is emerging to help those in their 60s and 70s manage or eliminate debt. The hope is that with prudent planning, community understanding, and maybe a bit of policy help, more Australians will still get to enjoy a financially secure retirement, even if the path to get there looks different than it did in the past.
So, what do you think – is carrying mortgage debt into our later years becoming the new normal, and how might that change our idea of the “golden years” to come?
Today, however, a growing number of older Aussies are finding that the mortgage bill follows them right into retirement. Instead of financial freedom, they’re juggling loan repayments, rising living costs, and tough decisions well into their 60s and 70s.
It’s a shift that’s leaving many seniors asking: What happened to the debt-free retirement we were promised?
A Growing Number of Retirees Still Have Mortgages
An increasing number of older Australians are carrying mortgages into retirement, turning what used to be a “debt-free” phase of life into a financial maze. Over the past two decades, home ownership rates among people nearing retirement have plummeted – the proportion of 55 to 64-year-olds who owned their homes outright has almost halved.In 2000, roughly 64% of Australians in that pre-retirement bracket owned their homes outright; by 2020, that figure sank to about 36%. In other words, fewer than four in ten Australians approaching retirement age today are mortgage-free, compared to nearly two-thirds a generation ago.
This dramatic shift means the old expectation of entering retirement with “no more mortgage” is no longer the reality for a large share of the population.
It’s not just the near-retirees. Even many who have already retired are still paying off home loans. Recent research by a major superannuation fund manager found that about 14% of Australians who describe themselves as retirees are still servicing a mortgage debt. Among “pre-retirees” (folks aged 50 to 64), nearly 28% are carrying a mortgage on the journey toward retirement.
These numbers reflect millions of Australians either approaching the end of their careers or already in retirement while still chained to monthly loan repayments. Retiring with a home loan, once a rarity, has become commonplace.
The Yahoo Finance story of a Sydney mother of two crystallised this trend. The 50-something mum (who bought her home 25 years ago) recently confessed on social media that she had just $4,500 in savings and a mortgage still hanging over her head.
“I should have paid it off by now,” she admitted – a rueful acknowledgement that many people aren’t where they thought they’d be financially by this stage of life. Her candid revelation – which quickly resonated with thousands – highlights a tough new reality facing Australians who expected to be debt-free by their 50s or 60s, but instead find themselves still writing checks to the bank.
Credit: Seniors Discount Club
Why the Debt-Free Retirement Is Slipping Away
Several economic and societal shifts have converged to create this new landscape. One major factor is the rising cost of housing and delayed home ownership. Simply put, Australians today are buying their first homes later in life than previous generations did.“Today’s buyers are often purchasing homes at a later age than their parents, who typically entered the housing market in their late 20s or early 30s,” explains Theo Chambers, chief executive of mortgage brokerage Shore Financial. The average age of a first-home buyer is now around 36 nationally – and pushing 40 in Sydney.
This means a typical 30-year mortgage taken out at age 40 won’t be paid off until the borrower is about 70. Contrast that with someone who bought in their 20s a generation ago – they might have been mortgage-free by their 50s. Buying later in life naturally extends mortgage payments into what used to be retirement years.
Why are people buying later? Skyrocketing property prices have played a huge role. Over the past few decades, Australian house prices have soared far faster than incomes. Between 1992 and 2022, the median house value in the capital cities jumped by an astounding 453% (to about $928,000).
In cities like Sydney, the median house now costs around $1.5 million. With such high prices, younger Australians often struggle to save a deposit and secure a home until they’re well into their 30s or 40s.
They also tend to borrow larger amounts and opt for longer loan terms. It used to be common to have 20-year mortgages; now 30-year loans are standard, and some buyers even stretch loan terms further. The result? Home loans are following Australians into their 60s and beyond, simply because they started later and borrowed more.
Another culprit is the rapid rise in interest rates and cost of living in recent years. Many Australians who bought homes or refinanced during the low-rate era of the 2010s are now feeling the pinch of higher interest costs.
The Reserve Bank of Australia embarked on an aggressive series of interest rate hikes starting in 2022. In fact, mortgage holders have weathered 13 interest rate rises since mid-2022, and hopes for relief keep getting pushed back amid persistent inflation. For someone with a variable-rate home loan, those hikes have significantly driven up monthly repayments. Higher interest rates mean each dollar of debt is more expensive to carry.
At the same time, general living costs – from groceries to utilities – have surged. Stubborn inflation has squeezed household budgets, making it harder to throw extra money at the mortgage. One Melbourne woman, 58, told The Guardian that elevated interest rates and high living costs have made it “near impossible” to pay down the loan on her home.
More than half of her salary as a teacher goes straight to the mortgage, yet the balance barely budges. “I have to admit, I didn’t see [rates] going up quite as much as they did,” she said, noting that she never imagined still carrying this debt at her age.
Changing life circumstances and retirement norms also contribute to this trend. Divorce, for example, can derail the best-laid mortgage payoff plans. The Melbourne teacher mentioned above cited a divorce in her 50s as a major setback to her finances. Suddenly a two-income household becomes one, and paying off the house becomes a far heavier lift. Health issues or job loss late in one’s career can have a similar effect – people may pause or refinance their mortgage, or even draw out equity to cover emergencies, thereby prolonging the debt.
Moreover, the very notion of retirement is evolving. Many older Australians are choosing to (or having to) work longer than the previous generation did. Part of this is by choice – staying active and engaged – but for many it’s out of necessity to manage debt. Martin North, a finance analyst and founder of Digital Finance Analytics, notes that more people are remaining in the workforce longer because they have “a significantly higher mortgage liability than they expected.”.
In a recent survey of over 50,000 Australians, North’s firm found a striking trend: the number of older mortgage holders who planned to retire but then changed their minds doubled in just one year. He says unexpectedly large mortgages are a key reason. “I’m seeing people struggling in Hobart, Adelaide, Brisbane and Perth as well.
So this is a national problem,” North observes – not just a Sydney or Melbourne issue. Higher interest rates, as discussed, are one driver. Another, he points out, is that some people have pulled equity out of their homes – either to fund their own needs or to help their kids buy a house – and now face larger loans later in life.
Indeed, helping adult children into the property market – often dubbed the “Bank of Mum and Dad” – has become a double-edged sword. In an era of sky-high house prices, more young people turn to their parents for financial help with a deposit.
Many parents oblige by tapping into their own home equity or savings. North warns that this well-intentioned assistance can boomerang on the parents’ finances. “It’s changing their own retirement plans,” he says, adding that the Bank of Mum and Dad is “probably the least understood factor” driving both the property market and household debt today.
By acting as a “bank” for their kids, parents may delay paying off their own mortgage. If housing prices were to fall in the future, those parents could find themselves in a vulnerable position – carrying substantial debt later in life with a property that’s no longer worth as much as expected. It’s an intergenerational ripple effect: parents take on more debt to help children, and in turn wind up carrying mortgage burdens for longer than they ever imagined, sometimes right into retirement.
“I Can’t See a Solution”: Voices of Older Aussies with Mortgage Stress
Behind all these statistics are real people feeling the weight of mortgage debt in what are supposed to be their golden years. Their stories, while varied, share a common thread of anxiety, resilience, and unexpected challenges in later life.Take the story of Linda Thoresen, a 66-year-old civil servant in Perth. Linda is less than a year away from qualifying for the Age Pension – but instead of celebrating an imminent retirement, she has decided to postpone leaving work so she can keep chipping away at her $170,000 mortgage. “I just decided this morning to make higher fortnightly payments while I’m working,” she told ABC News, hoping to whittle down the balance before she finally retires.
For now, Linda is pouring a sizeable chunk of each paycheque into her home loan. The thought of stepping back from work is certainly tempting, “but unless I have a windfall, I can’t see a solution other than having to sell and find somewhere else to live,” she said candidly.
That’s a jarring prospect – selling the beloved two-storey townhouse in North Fremantle she has called home for over 20 years. When Linda bought that house in her 40s, she was actually a decade older than most of her friends were when they became homeowners. “I did have that trepidation,” she admits – a worry that starting later and carrying a mortgage longer might come back to haunt her – “and so it has turned out.”
Now, facing retirement with a six-figure loan, Linda is determined to keep working as long as it takes. She’s upping her repayment amounts, tightening her belt, and keeping one eye on the real estate market. If things don’t improve, selling her home to clear the debt might be her only way out. It’s a scenario she never envisioned decades ago when she first signed her loan papers.
Linda’s dilemma is increasingly common. Scroll through community forums or financial counseling anecdotes, and you’ll find countless stories of Aussie retirees and near-retirees wrestling with similar worries. In one case, a 50-year-old father from Brisbane (with kids still in school) found himself staring at 28 years left on a $640,000 mortgage.
With rising expenses for tuition, groceries, and utilities, he told The Guardian that he falls further behind each month, watching his savings dwindle. His grim conclusion: “I will be paying this until my death,” he said bluntly. That despairing statement – paying until death – underscores how trapped some feel by their housing debt.
It’s not that these Australians are spendthrifts or irresponsible. Often, they did “all the right things” – worked steadily, bought a home, raised a family – but economic currents shifted in ways they couldn’t control (soaring housing costs, job market changes, interest rate spikes). The outcome is an unexpected mortgage extension on their lives.
Even those actively planning for retirement are feeling the pinch. A recent survey by Colonial First State (a major superannuation firm) revealed that just under one quarter of retired homeowners are using at least part of their Age Pension payments to cover debts – often mortgage repayments. Imagine that: the pension, designed to help seniors cover basic living costs, is being partially redirected to pay the bank for a home that ideally should have been paid off years earlier.
The same survey found 30% of retired non-homeowners (i.e. renters or those in other arrangements) were also using pension income to service debt, such as personal loans or credit cards. These statistics paint a picture of retirees scrambling every fortnight to juggle essential expenses and debt obligations on fixed incomes.
For many, it means cutting back on discretionary spending, delaying travel or hobbies, and in some cases even skimping on essentials. One financial counsellor noted that calls to the National Debt Helpline from older Australians unable to meet mortgage or rent payments are at record highs. “The phones just never stop now,” said Greg, a counsellor who has spent 14 years helping Aussies in debt distress. He’s never been so busy, and a large portion of calls are from seniors panicked about making ends meet once their working income dries up.
Then there’s the story of the Melbourne single mother in her late 50s, shared anonymously with The Guardian. She has a $454,000 mortgage on a home in Melbourne’s suburbs and two adult children in their 20s whom she still supports. For now, she’s working full-time and managing the hefty repayments (barely). But looking ahead, she’s confronting an uncomfortable choice: retire on time with a mortgage, or keep working past retirement age to finally become debt-free. Neither scenario is ideal. “I’ll go into retirement with zero super,” she says, explaining that her plan is to use her entire superannuation payout to clear the mortgage when the time comes. Wiping the debt with her super will leave her with no retirement savings at all – just the house. That prospect leaves her understandably anxious.
“I worry a bit,” she admits. “Can I stay healthy for the next nine years and then just rely on the pension? It means not having a safety net.” Her voice captures a quiet desperation shared by many: the hope that health holds out and that the Age Pension will somehow be enough, since the nest egg will be gone to the bank. It’s a huge gamble, and one she never thought she’d have to take. “I didn’t foresee that my eldest child would be back home… I have to admit, I didn’t see [interest rates] going up as much as they did,” she reflects, noting the curveballs life threw her way.
The Broader Implications: Lifestyle, Health, and Family
Carrying a mortgage into one’s 60s and 70s isn’t just a financial issue – it has ripple effects on lifestyle, health, and even family dynamics. Retirement is traditionally portrayed as a time to enjoy the fruits of decades of labor – to travel, pick up hobbies, spend time with grandkids, or simply relax without worry.But how do you embrace the carefree “golden years” when a mortgage payment is due each month? Many older Australians are having to fundamentally rethink their retirement plans and expectations.
One immediate impact is on mental health and stress levels. It’s hard to feel at ease with the specter of debt looming. Financial counsellors report that the burden of mortgage debt in retirement can lead to intense anxiety and stress for older clients, negatively affecting their well-being.
People who expected to be comfortably retired find themselves losing sleep over money, worrying about interest rates, and constantly budgeting on a fixed income. This stress can manifest in health issues – for example, stress-related illnesses or exacerbated conditions – just at a stage of life when health tends to become more fragile.
The 58-year-old Melbourne mum mentioned earlier voiced exactly this concern: without any savings cushion, she worries about staying healthy long enough to manage her debt and fears “not having a safety net” if something goes wrong. It’s a poignant reminder that financial security and physical health often intertwine.
Lifestyle adjustments are another consequence. To keep up with mortgage payments, retirees are cutting back on discretionary spending that they might have otherwise enjoyed. Big holidays, restaurant dinners, new hobbies – these sometimes take a backseat to just keeping the household budget in the black.
For some, it even goes beyond trimming “luxuries.” There are reports of older Australians foregoing home upgrades, cutting medication costs, or turning down the heater in winter – all to save a bit of cash to put toward the mortgage.
In a very real sense, debt can steal some of the simple joys of retirement. Instead of feeling free, people feel tied down. As one retiree advocate put it, carrying debt into retirement can make your finances feel tight at a time when you want to relax and enjoy life. Every dollar going to the bank is a dollar not available for leisure or comfort.
Family relationships also feel the impact. Traditionally, many Australians hoped to help their children or even grandchildren financially – whether that means contributing to education costs, helping with a home deposit (if able), or leaving an inheritance. But if you’re still paying off your own home at 70, you may have little capacity to support the next generation. In fact, the flow may reverse: we’re seeing instances where adult children pitch in to help their retired parents meet mortgage payments or other bills.
That can be a source of stress or even pride-swallowing for older Aussies who never imagined needing financial help from their kids. On the flip side, as discussed, when parents do help their kids buy a home by leveraging their own property, it can backfire by prolonging the parents’ indebtedness. It creates a delicate balancing act: wanting the best for your children’s future but jeopardizing your own financial stability.
There’s also a broader social and policy implication to consider. If more Australians reach retirement age with significant debt, the burden on public resources could grow. People who use up their superannuation to pay off mortgages will be more reliant on the Age Pension (government support) to cover day-to-day living.
Already, there are warnings about a rising number of retirees who will rely solely or mostly on the pension, without much in savings. One analysis noted that the decline in outright home ownership among older Australians poses a “fiscal risk to Age Pension spending” in the future. Essentially, if owning a home outright (which often reduces living costs) becomes less common, more retirees may qualify for higher pension payments or need additional assistance to get by.
This trend has caught policymakers’ attention: it challenges long-held assumptions about retirement self-sufficiency. Australia’s retirement income system was built on a three-pillar idea – compulsory superannuation savings, voluntary savings (often the family home as an asset), and the Age Pension as a safety net. But if the family home isn’t fully owned, that pillar weakens, and the pressure shifts to the other two.
Some retirees are even entering retirement renting rather than owning, which can be financially precarious in a tight rental market. All of this suggests that the issue of retiree debt isn’t just a personal finance story; it’s one that could shape government policy and community support services in the years ahead.
Experts Weigh In: Advice and Warnings
Financial experts and counsellors are increasingly urging older Australians to plan for the possibility of carrying debt into retirement, and to make informed choices about how to manage it. Craig Day, Head of Technical Services at Colonial First State, observes that mortgages are set to become a fixture in the retirement planning process, given current trends.Home buyers are entering the market later, prices remain high, and loan terms are longer, Day notes – so it’s pragmatic to assume one might still have a mortgage at retirement. His advice for those in that boat is to consider all options, including using superannuation or other assets strategically.
Some choose to withdraw a lump sum from their super to pay off the mortgage upon retirement – essentially trading retirement savings for a debt-free home. This can provide peace of mind (no more loan payments!) but at the cost of depleting the very savings meant to support one’s living expenses. If your superannuation investments aren’t earning as much as your mortgage interest is costing you, it might make sense to clear the debt, Day explains.
However, he also cautions that using your super to eliminate debt means you’ll have less money generating income for you in retirement, which could result in a lower standard of living or your savings not lasting as long.
On the other hand, paying off the loan could potentially increase your Age Pension entitlements (since super savings count toward the assets test, whereas a primary home does not). It’s a complex decision with pros and cons, and experts suggest getting personalized financial advice to weigh what’s best for your situation.
Others take the route of continuing to service the mortgage in retirement using income streams from super – for example, keeping their super in an account-based pension and drawing it down gradually to cover living costs and mortgage payments. This way, they maintain a nest egg (invested in super) while slowly paying off the loan.
The risk here is interest rate exposure: if mortgage rates climb faster than the returns on super investments, it can erode your wealth over time. Again, it’s a balancing act that retirees have to approach carefully.
Financial counsellors, for their part, stress the importance of not waiting to seek help if mortgage stress becomes overwhelming. Services like the National Debt Helpline are available for free, and they report that many older Australians reach out only when they are in crisis, whereas earlier advice might have opened up more options.
Counsellors can sometimes negotiate with lenders for hardship arrangements, interest-only extensions, or refinancing opportunities to ease the burden. The key message from experts is that you’re not alone and there are avenues for assistance – but one has to take that first step to communicate with lenders or advisors, rather than suffer in silence.
Economists and housing analysts are also urging a bigger-picture response. As Martin North suggested, the Reserve Bank and policymakers should be examining this rise in retiree debt closely. It’s part of the broader housing affordability puzzle that Australia is grappling with. If the great Aussie dream of owning one’s home outright before retirement is fading, what new measures might help?
Some advocate for more innovative housing models for seniors – such as shared equity schemes, downsizing incentives, or cooperative housing – to provide affordable options for older people who haven’t paid off homes. Others call for age-friendly lending practices, so that older borrowers aren’t automatically written off when seeking to refinance or downsize (a recent report recommended less “ageist” lending policies, noting that many seniors still have the capacity and reliability to manage loans responsibly).
These discussions indicate that solutions will likely need to come from multiple directions: individual actions, financial industry adjustments, and possibly government policy tweaks.
Credit: Seniors Discount Club
As it stands, the trend of entering retirement with debt looks set to continue – and perhaps even expand with younger cohorts. A projection by Vanguard earlier this year suggested that if current patterns persist, nearly 30% of future retirees could still be paying down mortgages in retirement. That’s a profound shift from the days when owning your home outright by age 65 was almost a given.
It’s neither all doom nor a death sentence – many will manage and still enjoy fulfilling retirements – but it requires adaptation. The more that soon-to-be-retirees acknowledge and plan for this “new normal,” the better they can adjust their expectations and finances.
In the meantime, stories like those of Linda in Perth or the Sydney mum with $4.5k savings are cautionary tales and rallying cries. They highlight the resilience of those who refuse to give up on financial independence, even if it means working a bit longer or tightening the belt. T
hey also remind younger generations to plan carefully: starting a mortgage later or upsizing mid-life can have ramifications decades down the line. No one likes to think of still having a house payment at 70, but it’s becoming part of the reality for many – so it’s best to go in with eyes open.
Australians have long taken pride in home ownership, and for retirees especially, the home is often seen as both a sanctuary and a financial safety net. That isn’t changing – if anything, it’s more important than ever to hold on to that hard-won asset. But the journey to fully owning that home has gotten longer and bumpier for a lot of people.
As we collectively reckon with this shift, perhaps the most important thing we can do is talk about it openly – just as that Sydney mother did – and learn from each other’s experiences. After all, a problem acknowledged is a problem half solved.
Retirement was once dubbed the “debt-free zone” of life – but for many Aussies now, that zone is shrinking. The good news is that awareness is growing, and with it, a range of strategies and support is emerging to help those in their 60s and 70s manage or eliminate debt. The hope is that with prudent planning, community understanding, and maybe a bit of policy help, more Australians will still get to enjoy a financially secure retirement, even if the path to get there looks different than it did in the past.
So, what do you think – is carrying mortgage debt into our later years becoming the new normal, and how might that change our idea of the “golden years” to come?
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