Will your properties leave you in debt when you retire?

Will your properties leave you in debt when you retire?
Jennifer DukeDecember 7, 2020

The number of Australians over 65 with a mortgage increased by 54% in four years to 2011/2012, according to the Australian Bureau of Statistics, meaning that many will be left facing property debt after retirement.

This totals 142,000 aged households with mortgages, compared to 92,700 in 2007/2008, according to Finder.com.au money expert, Michelle Hutchison.

But the results look even more depressing when considering that two in every five credit card holders are aged over 55, found a survey commissioned by Finder.com.au through ‘pureprofile’.

Hutchison said that this trend is set to continue. 

“It's a real concern because it shows that older Australians are taking on more debt and heading into retirement with a mortgage, which places greater pressure on them to work longer or be supported by their families. And the fact that almost half of Australians who have a credit card are older than 55 shows the increased risk of debt they may be exposing themselves to,” she said.

“While it was good to see that seniors are generally more responsible with their credit cards, as our survey showed those over 55 are more likely to pay off their credit card balance each month, any debt is still a greater risk as their income can be more limited than those in the workforce.”

With many more now purchasing property later in life, this may exacerbate the trend, meaning that good financial management is becoming increasingly crucial even if the expectation is to work until the age of 70.

“Seniors may be holding onto their mortgage for longer because they have taken on more debt from refinancing, upsizing or renovating. Or even accessing their equity through a reverse mortgage to go on a holiday. But your retirement isn't the time to put your finances at risk,” she said.

“We've seen more demand for reverse mortgages by Australians, with a 17% increase in Google searches for reverse mortgages over the past two years. Seniors should be careful as these types of loans are higher risk and can be more expensive than standard loans.”

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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