Almost a third of working Australians expect to still be paying a mortgage in retirement, according to research from Vanguard Australia.

However, the ‘How Australia Retires’ report noted expectations amongst working-age Australians of home ownership in retirement are generally high amongst all generations.

“Compared to older generations, however, Gen Z are the least optimistic about their chances of home ownership in retirement,” the report said, noting only 62 per cent of Gen Z find it “extremely likely or likely”, compared to 77 per cent of Millennials, 74 per cent of Baby Boomers and 73 per cent of Gen X.

However, a third of Millennials and 45 per cent of Gen Z who expect to own a home believe they will still be paying off a mortgage in retirement.

Some 32 per cent of Gen X respondents who currently own home or expect to in retirement also expect they will be paying off a mortgage in retirement.

“…Despite approaching the traditional age of retirement and therefore likely to have the least amount of time (when compared with other generations) to pay off debts before retiring,” the report said.

Source: Vanguard

When asked about their plan to pay off their mortgage, 38 per cent of Gen Xers said would keep paying their mortgage in retirement, while 18 per cent would consider selling their home to repay their mortgage.

Another 25 per cent said they had plans to use their superannuation to pay off their mortgage in one transaction.

But working-age Australians who believe they won’t own home in retirement are also more likely to not have a clear plan for retirement (55 per cent versus 33 per cent who own a home in retirement).

The research adds further context to the growing debate over using superannuation member funds for housing, with Coalition’s super for housin policy touting to allow Australians to access up to $50,000 of their super to buy their first home.

The research found nearly one in five (18 per cent) retired Australians are renting.

“Given those who rent in retirement are more likely to exhibit lower retirement confidence than those who own their home outright, a lack of home ownership remains a key issue, considering its impact on retirement savings and financial security,” the report said.

A further 8 per cent of retired Australians own their own home, but still have a mortgage.

“The percentage of retirees renting or with a mortgage is significantly higher (31 per cent) for those who are not in a relationship (separated, divorced, widowed or never married) than those with a partner (8 per cent),” the report said.

Only one in seven see housing as a source of retirement funding, showing hesitancy over using the family home to help fund retirement. “Most Australians believe the family home is where they will age,” the report said.

Some 34 per cent of working age Australians and 41 per cent of retirees said they intend to keep the family home until death.

However, 27 per cent of working age Australians view their family home as where they want to live in retirement but also believe it can fund aged care or “unexpected expenses” if needed.

The research also found half of Australians don’t know if their money will last in retirement, with the majority believing they’ll likely outlive their retirement savings.

Some 37 per cent of advised Australians feel “highly confident” about retirement compared to 24 per cent of non-advised.

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