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Nine in ten Australians will retire with mortgage

Oksana Patron13 December 2023
Blue and red house figures sitting on stacks of coins

Australians aged 50 and over believe they will retire with higher levels of debt and will continue to pay off their mortgage while in retirement, according to the new research from AMP.

The study has confirmed that a majority of homeowners will face ‘debt cliff’ heading into retirement, which will significantly impair their chances to achieve financial confidence, later in life, and become a new challenge in financial planning for retirement.

This will also leave older Australians more vulnerable to interest rate fluctuations, further undermining their financial security.

According to the research, fewer than one in 10 Australians aged 50 and over expect they will have enough savings for retirement and one in nine expect to have more than $250,000 in unpaid debt when they retire.

Further to that, two in five surveyed Australians said they would opt to sell and downsize to reduce their debt, to grow their chances to have a comfortable lifestyle in retirement.

But, at the same time, three in five respondents over 50 believed that staying in their family home was more important than a higher income in retirement and over half were prepared to change their lifestyle to save more money in retirement.

AMP has stressed in its research that a rising household debt was a real worry, given that Australians were living longer and levels of outstanding debt on assets like the family home meant many were facing a looming debt cliff once they hit retirement.

According to data from the Australian Bureau of Statistics (ABS), average household debt levels have quadrupled over the past 20 years for older Australians aged 55 and over, rising from $62,000 in FY03-04 to $242,000 in FY21-22.

AMP’s director, Ben Hillier, has stressed that debt-free home ownership has been always an important part of “Australian dream” and offered the financial foundation for a retirement.

“Rising retiree debt needs to be acknowledged as an issue by industry, Government and regulators so that we can work together to provide Australians with greater financial confidence in their retirement,” he said.

“Central to this is providing easier access to more affordable financial advice, which, encouragingly, is being addressed by the Quality of Advice Review.

“Industry also needs to innovate to develop solutions which unlock the full value of a retiree’s balance sheet to maximise income, taking into account home equity values, superannuation balance and household debt.”

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