Recently the ABC shared a story on the study of mortgage debt and older Australian’s. We think it’s important to share this with our clients as we are also noticing a greater number of older Australians with debt heading into their retirement.

The article raised the issue of older Australian’s with increasing debt towards retirement age. With many facing serious repayment risk in the event that they were to lose their income, whether it is driven by retrenchment, health or other reasons.

In addition, many are facing challenges in retirement planning, as their initial plans for a debt free retirement have changed.  As such, an adjustment to how to fund retirement needs to be made.  This situation is stressful and is having a profound impact on the mental health of many older Australians who are concerned that they will not be able to fund their retirement.

The ABC report followed a recent study for the Australian Housing and Urban Research Institute which has shown that over the past three decades, the real mortgage debt of older mortgagors aged 55+ increased by 600 per cent, while average mortgage debt to income ratio has tripled, from 71 per cent to 211 per cent over the same period.  This has resulted in a severe increase in repayment risk.

In addition, data from the Bureau of Statistics shows that the proportion of homeowners aged 55-64 with outstanding mortgages increased from 14% in 1990 to 47% in 2015.

 

This situation has been caused by a range of factors, whether they be economic factors such as growing house prices in capital cities and stagnant wage growth, personal factors such as marriage breakdowns whereby older Australians have to re-enter the housing market a second time, or lifestyle factors with evidence that older Australians are using flexible mortgage products with redraw facilities to fund their lifestyle rather than paying down debt.

This situation has been caused by a range of factors, whether they be economic, such as growing house prices in capital cities and stagnant wage growth, personal, such as marriage breakdowns whereby older Australians have to re-enter the housing market a second time, or lifestyle with evidence that older Australians are using flexible mortgage products with redraw facilities to fund their lifestyle rather than paying down their debt.

The potential impacts are large, we believe that it is important to map out your goals and to plan financially for them.

If you feel that you or someone you know is already facing this situation and looking for some financial assistance and guidance, we are here to help.  The wonderful organisations below can also provide emotional and wellbeing assistance.

If you or anyone you know needs help:

  • Lifeline on 13 11 14
  • Kids Helpline on 1800 551 800
  • Mensline Australia on 1300 789 978
  • Suicide Call Back Service on 1300 659 467
  • Beyond Blue on 1300 22 46 36
  • Headspace on 1800 650 890
  • ReachOut at au.reachout.com

Source:
http://theconversation.com/more-people-are-retiring-with-high-mortgage-debts-the-implications-are-huge-115134

https://www.ahuri.edu.au/__data/assets/pdf_file/0025/44953/AHURI-Final-Report-319-Mortgage-stress-and-precarious-home-ownership-implications-for-older-Australians.pdf

https://www.abc.net.au/news/2019-08-27/mortgage-debt-causing-older-australians-distress-study-finds/11450958