It’s highly likely, that the days of a mortgage free retirement are increasingly ‘unlikely’.
A new study has found the burden of mortgage debt is leading to mental distress for older Australians, with many relying on the aged pension after using their superannuation to pay off their mortgage.
Since the late 1980s average mortgage debt among older Australians has blown out by 600% and nearly half of all homeowners aged 55 to 65 are still paying off a mortgage, up from just 14% 30 years ago.
Rachel Ong ViforJ, Professor of Economics at Curtin University and lead author of the study for the Australian Housing and Urban Research Institute (AHURI) says,
“These statistics are quite shocking.”
The study also points to a sharp rise in the number of older Australians stuck in the private rental market either because they can no longer service a mortgage, or because they couldn’t afford to buy a home in the first place.
Professor Ong says the current situation is likely to have huge implications for future Commonwealth budgets, with a growing share of retirees likely to be relying on the aged pension.
By 2031, there could be a 60% rise in the number of people eligible for Commonwealth rent assistance, to more than 400,000.
National Seniors Chief Advocate, Ian Henschke says there is no coincidence that people aged 55 to 64 also represent the largest age group on Newstart.
“Older Australians right now, face the perfect storm of rising debt, job insecurity caused by ageism, and pension poverty.”
“There are 184,790 Australians aged 55 to 64 on Newstart and on average they stay there for three and a half years.”
Mr Henschke is urging the Federal Government to rethink its refusal to include Newstart as part of its upcoming review into retirement income.
It’s never too late to take action and as we reported here, consider downsizing earlier to relieve the stress of mortgage debt in later life.
