More Australians are heading into retirement with mortgage debt, a trend attributed to soaring property prices and the ongoing cost-of-living crisis. According to research, this number could double in the coming years, adding further financial pressure on retirees.
However, experts believe that with the right strategies, older Australians can navigate this challenge and secure a more stable financial future. As reported by 9News, effective financial planning may offer solutions to help alleviate the growing debt burden.
Rising Mortgage Debt Among Retirees
In Australia, as property prices continue to climb, more and more retirees are finding themselves with mortgage debt as they enter their later years. Jeff Rose, aged 63, only paid off his mortgage last week, a milestone that brought him a great sense of relief.
When you’re young, you don’t think about the future as much, but once you have those financial commitments, the reality hits that if something goes wrong, it can be financially devastating – Rose explained
He and his wife celebrated the moment with a boat cruise and a bottle of wine, marking the relief of finally being debt-free.
Research indicates that 14% of retirees currently have mortgage debt. However, this number is significantly higher among Australians aged 50-64, where the figure rises to 28%.
This shift points to a growing trend where entering retirement with debt is becoming an unfortunate reality for many older Australians.
Soaring property prices, combined with an increasingly challenging cost of living, have made it more difficult for homeowners to pay off their mortgages before reaching retirement.
The Role of Financial Advice
One key factor in whether Australians can retire without debt is the availability of sound financial advice. The research suggests that 45% of homeowners believe they will be able to retire debt-free.
However, this figure jumps to 63% once individuals seek professional guidance. Financial advisor Sikander Khan explained that, although the financial solutions may seem straightforward, they are often complicated by people’s tendency to overthink.
The problem isn’t the solutions themselves, but the way they are often overcomplicated – Khan noted
Superannuation: A Critical Tool for Managing Debt
For many Australians, superannuation—Australia’s national retirement savings system—is one of the most significant assets they have. Financial experts believe it can play a crucial role in helping retirees manage mortgage debt.
Craig Day from Colonial First State highlighted two primary strategies: accessing a lump sum from superannuation to pay off the debt or using the retirement income stream from super to repay the loan over a longer period.
Day emphasized that superannuation is a powerful tool in managing financial obligations during retirement. “It’s one of the most critical assets you have,” Day said, underlining its importance in reducing debt burden for retirees.
