A Vanguard survey shows one in three Australian Millennials and one in four Gen Xers expect to enter retirement with a mortgage.
That's if they can ever afford to buy a home in the first place.
Vanguard's 2025 'How Australia Retires' report encompassed a survey of 1,800 people aged 18 years and above.
The survey found 36% of Millennials, born between 1981 and 1995, think they will still be paying off their home loan in retirement.
The survey also found that 27% of Gen Xers, born between 1966 and 1980, expect to still be paying off their mortgage in retirement.
A surprising number of baby boomers, born between 1946 and 1965, also expect to retire with a mortgage.
The survey found just under one in four baby boomers expect to still have a home loan in retirement.
The comparison is very unfavourable to the status quo.
Among the 4.5 million retirees in Australia today, only 8% still have a mortgage.
Home ownership 'vital' in retirement
Vanguard said home ownership plays a vital role in Australia's retirement system.
In fact, some experts argue that home ownership should be recognised as the 'fourth pillar' supporting people in retirement, alongside superannuation, the age pension, and private savings and investments.
Vanguard said working-age Australians anticipate "a very different housing reality in retirement".
Working-age Australians are significantly more likely to expect to carry mortgage debt into retirement compared to current retirees.
While the vast majority of Australians continue to value home ownership, the rate of ownership has steadily declined over recent decades.
In 2021, just over half (54.6%) of Millennials aged 25–39 were homeowners (either with a mortgage or owning outright), compared with 62.1% of Generation X at the same age in 2006, and nearly two-thirds (65.8%) of Baby Boomers in 1991.
For many younger Australians, home ownership feels increasingly out of reach.
What do people do if they still have a mortgage at retirement?
Vanguard reported that 47% of survey respondents expected to continue paying off their home loans during retirement.
One in four said they would consider using their superannuation to pay off their mortgage in full.
And 20% said they would consider selling their mortgaged home to repay the debt and buy another property.
Hamish Landreth, Director of Financial Services at Prosperity Advisers Group, said paying off a home loan was an increasingly common consideration for new retirees, as it is generally recommended not to retire with personal debt.
While a person's superannuation savings may provide enough to pay off their home, this strategy is not always appropriate, he said.
Landreth told The Fool:
… there can be reasons to not withdraw superannuation to reduce borrowings, especially when the superannuation investments are consistently earning more than borrowing costs or where there are taxation benefits for maintaining the borrowings.
The Vanguard survey found most Australians intend to keep their family home in retirement rather than downsize to a smaller property.
