Written

For

The

Australian

-

If

retirement

beckons

but

you’re

still

paying

off

a

mortgage

here’s

what

you

can

do

More than half of Australian homeowners aged 55 to 64 are still carrying a mortgage. That's a 135 per cent jump on 20 years ago — and it's completely reshaping what retirement looks like in this country.

Before anyone starts shaking their head at supposedly reckless Boomers, look at the numbers. House prices are up nearly 200 per cent over two decades while wages have only grown 80 per cent. People are buying later, divorcing more, and helping their kids into property via the "bank of mum and dad." Of course debt is following them into retirement.

So what can you actually do about it?

The most common play I see is downsizing. Selling the family home and buying a townhouse or apartment nearby often frees up hundreds of thousands. And there's a very useful sweetener — the downsizer contribution lets each spouse tip up to $300,000 into super, with no upper age limit, provided you've owned the home for 10 years and are at least 55.

If you'd rather not move, super itself becomes the tool. Once you're 60 and retired, drawing a lump sum to wipe a mortgage gives you what is effectively a guaranteed 6 to 7 per cent return — better than betting on markets. Up to $1.9m can come out tax free. But tread carefully — unexpected medical bills or strata special levies can blow a hole in your plans.

One quirk worth knowing: the aged pension uses an assets test, not a net assets test. Home-loan balances are ignored. So using super to pay down the mortgage can actually improve your pension entitlement.

And for the creative, "granny flat" arrangements — gifting money to your kids in exchange for a right to live in their home — can double as an early inheritance and a Centrelink strategy.

The honest truth? For those nearing retirement, options exist but they involve trade-offs. For younger Australians reading over their parents' shoulders, the lesson is simple: buy earlier if you possibly can.