More Australians are entering retirement with a mortgage – but downsizing your home could be the key to a debt-free retirement.

A 2017 report from the Australian Institute of Superannuation Trustees casts a worrying light over the retirement prospects of many Australian home owners.

The report, entitled There’s no place like home, notes that Australia’s retirement income system hinges largely on the assumption that most retirees will own their home outright by the time they hang up their work boots.

But that’s no longer the case. It turns out that the proportion of home owners who own their place debt-free, in other words, who have paid off their mortgage, has dipped from a peak of 61.7% in the mid-1990s to around 46.7% today.

In other words, home owners with a mortgage are now in the majority.

Almost half empty-nesters still have a home loan

The big concern is that many of those people who are paying off a home loan are empty-nesters and even retirees.

The AIST study found 71.4% of home owners aged 44-54 still have outstanding mortgage debt. Almost one in two (44.5%) home owners aged 55-64, typically empty-nesters, are paying off a home loan. Amazingly, one in ten homeowners aged 65 and over are paying down a mortgage.

The report concludes, quite logically, that an increasing proportion of Australians are hitting retirement weighed down by a mortgage. Inevitably, some of these people are likely to use their superannuation savings to discharge that debt.

As it stands, many empty-nesters and retirees don’t have nearly enough in super to fund what is regarded as a high quality retirement. Having to use your super to pay off a home loan only adds to the challenge.

However, there can be a solution.

Downsize to free up funds

Many home owners are sitting on massive amounts of home equity, particularly those who have owned their property for some time.

Downsizing from a high-maintenance family home, doesn’t just provide liberation from the time and costs associated with the property’s upkeep. It can also free up cash to pay off the home loan – and potentially, any other debts. Quite simply, it can be a means to enjoy retirement debt-free.

This can make downsizing a financially savvy strategy. After all, super is an extremely tax-friendly investment, and it doesn’t make sense to deplete this income-generating resource at an early stage given that your retirement could span 20 or more years. 

If you’re an empty-nester still funneling cash into a mortgage each month, it’s worth taking a serious look at downsizing. It can put your assets to work boosting your financial position ahead of retirement, as well as freeing up your lifestyle.


Amanda Graham is Co-Founder and Co-CEO of and