Empty nester couple take mortgage debt into retirement as Aussies warned over growing trend
Younger Aussies say they expect to retire later than average, and take mortgage debt with them.
Former IT worker Toby was forced to retire earlier than expected due to his declining health. It meant leaving the workforce at 58 while still carrying mortgage debt into retirement. “I was hoping to make it through to 60, but I didn’t quite make it that far,” he said.
He and his wife, now empty nesters, have just downsized to a smaller property in Melbourne with their family home still on the market, getting bridge financing to allow them to make the move. Even after a hopeful sale of their family home soon, he expects the couple will still have an outstanding mortgage balance of about $200,000 to pay off.
“We’ll end up with a small mortgage rather than being mortgage free, as we’d hoped,” he told Yahoo Finance.
It’s an increasingly common situation for older Australians who are heading towards retirement and carrying mortgage debt later in life, with new research showing nearly half of younger Aussies expect to do the same.
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Toby’s wife, also 58, continues to work and the couple will soon be able to tap their roughly $1 million combined superannuation savings to fund their lifestyle and clear debts.
“She was actually the primary breadwinner, so it wasn’t as consequential that I had to retire,” he said.
“I’ve got about $500,000 in super and my wife’s got a little bit more than that. So, between us, I think we’re in pretty good shape.”
The couple have moved part of their super into more conservative investments including bonds and cash, and are yet to decide if they will instantly pay off their mortgage once they have access to it.
“We will look at it carefully and see what we’re earning in super versus what we’re paying on the mortgage. So we probably would pay it off [in a lump sum], but not absolutely guaranteed,” he said.
Toby noted that the couple will need to balance their financial decisions with the expected costs of his healthcare needs going forward but said he was “reasonably comfortable with the retirement plan”.
Young Aussies resigned to retiring later, with a mortgage
As more Australians retire after decades of high levels of compulsory superannuation, and thus bigger balances, it stands to reason that more people will happily take mortgage debt into retirement.
New research by low-cost ETF provider Vanguard shows young Australians expect that to be the new norm by the time they hit 60.
