Aviva Research: Over 25% will still pay mortgage or rent in retirement

While most people (60%) with a mortgage on their homes expect it will be fully repaid by the time they retire, over 783,000 people (27% of those surveyed) will still be paying off their mortgage or paying rent in retirement.  This is highest amongst those aged between 35-44 years at 36.5%.  However, 21.5% of those surveyed aged 55+ also expect to be paying off their mortgage or continuing to pay rent in retirement.  Women are more likely than men to be paying their mortgage or rent in retirement at 28% v’s 25%.  These are some of the stark findings from new research from Aviva Life & Pensions Ireland DAC (Aviva), one of Ireland’s leading insurers.  The remaining 13% of those surveyed believe they will inherit a property and will be living mortgage free when they retire, with more men than women having this expectation (17% v’s 10%).

Almost half (44%) of those surveyed believe that they will most likely have to take up another full or part-time job to supplement their income in retirement, 10% of whom will be seeking a full-time position.   While 31% of respondents claimed that they won’t need to work in retirement to supplement their income, 25% said that, while they may well take up another job, it would only be because they enjoy working.

Looking to the 27% of those surveyed who will continue to pay a mortgage or to pay rent on their homes in retirement, the research explored how they planned to continue to pay these big-ticket items in retirement:

  • Most respondents (31%) said they had no idea how they will pay, 17% of whom have never really considered it, whilst the other 14% worry about it.
  • 22% suggested that they would have to depend on State support
  • 20% plan to fund their outstanding mortgage or their rent from their savings/investment income
  • 16% said they would pay off their mortgage/continue to pay their rent from their retirement lump sum

The research probed respondents further on their views as to whether they thought their parents are/were better off financially in retirement than they expect to be, to varying responses:

  • 32% believe their parents are/were less well off than they will be
  • 29% believe their parents are/were much better off
  • 26% claimed that we all struggle a bit financially in retirement, with their parents making lots of sacrifices due to financial constraints, with the expectation that they will do the same
  • And an optimistic 13% think that not much has changed, and we will all live relatively comfortably in retirement.

Our research findings highlight some very real societal issues that need to be debated at policy and governmental level if we are to avoid people living in poverty in retirement or being forced to work well beyond their normal retirement age. The expectation with previous generations was that they would work hard, save up and buy their own homes and, by the time they retired, their mortgage would be fully repaid. As such, they believed that their day-to-day expenses would plummet in retirement. However, the landscape has changed dramatically as, with rising house prices, high rents, and the need for a substantial deposit, those lucky enough to be able to get on the property ladder are doing so later and with extended mortgage terms that they are likely to be paying off into retirement. It is also likely that the number of long-term renters will continue to grow as they simply can’t get on the property ladder and will continue to have to pay rent, up to and including in retirement.

Stephen Rice, Aviva

A Central Bank of Ireland report* published in July reported that the over-60’s currently represent a quarter of all cases in long-term mortgage arrears.  The reality is that this figure is likely to increase further as will the incidents of people struggling financially in retirement unless people begin to save for their retirement earlier and take advantage of the tax benefits that are available to pension savers.  With inflation in Ireland currently running at a 10-year high and with deposit interest rates primarily in negative territory, savers should consider investing their hard-earned savings into their pension” concluded Stephen Rice.

Finally, respondents were asked what the top three things they were most looking forward to in retirement, with foreign travel topping the list at 64%, followed by spending time with family (61%) and with friends (45%).  Other popular choices included eating out (36%), hiking and walking (30%), gardening (26%), DIY activities in the home (20%), playing golf (11%) and other sporting pursuits coming in at 8%.  

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