Harry Chemay published an article on Michael West showing data from the latest NAB Wellbeing Survey. It showed how older Australians are carrying significant debts into their retirement years.
“According to the ABS, the most recent estimated average mortgage outstanding for those aged between 55 and 64 is now north of $230,000”, Chemay wrote.
“How are so many older Australians, who would likely have bought their first homes in the 1990s or 2000s at significantly lower prices, still carrying so much mortgage debt in 2024?”
Earlier this year, Vanguard Australia warned that the housing crisis is threatening the country’s retirement system.
Vanguard predicted that an increasing share of Australians would rent in retirement, with 30% still paying down their mortgages.
“Australians have this view that they will own a home and be debt-free when they get to those retirement years”, Vanguard Australia managing director Daniel Shrimski said.
“In actual fact, the research suggests that’s not going to be the case in many instances … it will be a real financial burden”.
According to the Super Members Council of Australia, more than 40% of Australian retirees have mortgage debt, up from 16% two decades ago.
Furthermore, they anticipated that 40% of singles and 33% of couples would utilise their whole superannuation nest egg to repay debt.
Census data also showed that the number of Australians aged 55 to 64 who own their homes entirely has nearly been cut in half over the last 20 years.
Chart by The ABC
Meanwhile, a recent survey by Digital Finance Analytics found over three-quarters of retirees with mortgages owe more than their superannuation balances.
The pattern is projected to continue as the age of first-time home buyers rises, implying that many will use their superannuation to pay off their mortgages and rely on the age pension.
The average mortgage balance in this group was roughly $190,000, with some owing up to half a million dollars.
Chart by The ABC
Given Australia’s diminishing homeownership rate, the above outcomes seem unavoidable.
The share of households renting has risen dramatically, as independent economist Tarric Brooker demonstrates below.
Reflecting the reduction in younger homeownership, the Grattan Institute estimates that the proportion of Australians aged 65 and more who own a home will fall from 76% to 57% by 2056.
There has also been a considerable increase in the number of Australians aged 55-64 and 45-54 with mortgage debt, as well as a smaller increase among those who are already retired (65 and older).
The evidence is clear: an increasing number of Australian seniors will rent in the future, while others will face greater mortgage payments.
Both developments will undermine Australia’s retirement system, which is predicated on the idea that most people will own their homes outright when they retire.
