This trend has become particularly pronounced among those aged 55 to 64, a demographic that has seen homeownership without a mortgage nearly halved over the past two decades. Many are facing the harsh reality of continuing to work well into their late sixties, driven largely by substantial mortgage debts.
Linda Thoresen, a 66-year-old civil servant, illustrates this struggle. Approaching pension age, she has decided to remain in the workforce to tackle her $170,000 mortgage. Despite her desire to retire, she is concerned about the potential necessity of selling her home for over 20 years if she cannot reduce her debt. This predicament is not isolated; it reflects a broader national issue where many older Australians are confronting similar financial pressures.
Recent census data highlights a worrying trend. The number of Australians aged 55 to 64 who own their homes outright has sharply decreased, with many carrying significant mortgage balances. A survey by Digital Finance Analytics found that the average loan for retirees was around $190,000, with some owing up to half a million dollars. Alarmingly, about 75 per cent of retirees with mortgages owe more than they have in superannuation, creating a precarious financial landscape for those approaching retirement.
The rising burden of mortgage debt is forcing individuals to reconsider their retirement plans. Martin North, a finance analyst, indicates that higher mortgage liabilities are compelling more people to stay in the workforce longer than they initially intended. This trend, initially confined to major cities like Melbourne and Sydney, is now spreading to other regions, including Hobart, Adelaide, and Brisbane.
In addition to the financial strain on older Australians, there are significant implications for future first home buyers. Data shows that the average age of first home buyers is climbing, with an increasing number purchasing homes well into their late thirties. The rising cost of housing, coupled with higher interest rates, means many young buyers are leaning on their parents for financial assistance, further complicating the retirement landscape for older generations.
The challenges extend beyond individual finances. Economic analysts warn that when retirees use their superannuation to pay off home loans, they risk becoming more reliant on government pensions, which could place additional strain on public resources. The recent federal government Intergenerational Report echoed these concerns, linking rising housing costs and stagnant wage growth as contributing factors to the growing debt among retirees.
As this complex situation unfolds, individuals like Linda Thoresen are searching for solutions that allow them to maintain their homes and quality of life. While the prospect of downsizing is emotionally daunting, many are left with few alternatives. For now, postponing retirement and continuing to work appears to be the most viable option for many older Australians facing mounting mortgage debt.
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