Yes, most current retirees have their homes paid off (e.g., around 66% of recent retirees in Australia and nearly 80% of those aged 65 and over in the U.S. own their home, with many owning it outright). However, this trend is shifting, and more people in younger generations are expected to retire with mortgage debt.
Back in 1981, the average Australian paid off their mortgage by age 52. By 2015, that had jumped to 62, and the gap keeps widening. Research from the Australian Housing and Urban Research Institute (AHURI) shows that in 2019, 54% of Australians aged 55–64 still had mortgage debt, compared to just 18% in 1996.
The biggest retirement mistake is often failing to plan adequately, which includes underestimating expenses (especially healthcare), ignoring inflation's impact on purchasing power, not starting savings early enough to benefit from compound interest, and leaving retirement savings in the wrong place (like not converting super to a tax-free pension), leading to running out of money or living a constrained lifestyle. A lack of a clear budget, not understanding investment options, and neglecting lifestyle/purpose planning also rank high.
Key Takeaways
The average retiree household spends about $60,000 annually, with housing (36%), transportation (15%), healthcare (13%) and food (13%) taking the largest shares of the budget.
45% of Australians have a mortgage
According to a 2024 InfoChoice survey, 44.8% of Australians have a mortgage while another 16.6% own a home and have fully paid off their mortgage.
Data collected by NASDAQ suggests that while only 28% of homeowners below retirement age have paid off their homes, nearly 63% of those 65+ have done so. These statistics highlight Americans' importance in entering retirement with freedom from what is usually their highest monthly fixed cost.
Mortgage debt is impacting the confidence of many retirees
More than one in three Millennials (36%) expect to have a mortgage when they retire, compared to 27% of Gen X and 24% of Baby Boomers. In contrast, the report found that only 8% of those who had already retired were still paying a mortgage this year.
Housing remains their largest expense and accounts for about one-third of their total spending.
Fewer people have $1 million in retirement savings than commonly thought, with around 4.6% to 4.7% of U.S. households having $1 million or more in retirement accounts, according to recent Federal Reserve data (2022), though this percentage rises for older age groups, with about 9% of those aged 55-64 reaching that milestone. However, the median retirement savings are much lower (around $88,000-$200,000), showing a large gap between averages and reality, with many retirees having significantly less, notes.
Retirement Regrets: Top 15 Things Retirees Wish They Had Done Differently
The golden rule of saving 15% of your pre-tax income for retirement serves as a starting point, but individual circumstances and factors must also be considered.
To retire on $70,000 a year in Australia, you'll generally need a superannuation balance ranging from around $1.1 million to over $1.5 million, depending heavily on your age at retirement (older is less), lifestyle, and whether you own your home outright (which significantly reduces the amount needed). For a comfortable lifestyle, a single person might need roughly $1.2-$1.4 million, while a couple needs less, possibly around $800,000 to $1.1 million, assuming home ownership and eligibility for the Age Pension.
While the possibility of job loss can trigger financial panic, Orman advises against rushing to drain your savings to pay off your mortgage early. Even if you have enough money saved to wipe out your mortgage, don't pull the emergency cord until absolutely necessary.
Yes, retiring comfortably with $500,000 is achievable. This amount can support an annual withdrawal of up to $34,000, covering a 25-year period from age 60 to 85. If your lifestyle can be maintained at $30,000 per year or about $2,500 per month, then $500,000 should be sufficient for a secure retirement.
A wealthy retiree in Australia is generally someone with substantial assets, often defined as having over $1 million in investable assets (excluding the family home) or a total net worth exceeding that, allowing for a very comfortable lifestyle well above basic needs, potentially generating $150,000+ annual income, though "wealthy" is relative, with many considering >$1M or a significant super balance as rich.
While exact real-time figures vary, recent analyses suggest hundreds of thousands of Australians hold over $1 million in superannuation, though it's a minority, with estimates from around 2021 pointing to over 400,000 people, a number that has grown significantly due to investment returns, though many still don't reach this milestone. About 2.5% of the population held >$1 million in super as of mid-2021 (around 417,000 people), with forecasts indicating a larger number, while projections suggest over 10% of women and 15% of men retiring by 2060 could reach this goal, and recent studies highlight that a large majority (around 94%) of retirees don't hit $1 million.
Eliminating a big debt early on could save you thousands of dollars in interest, freeing up money that could be added to your retirement savings and start gaining compound interest instead. Another thing to consider is that keeping up with large debts becomes more difficult in retirement.
The $1,000 a month rule for retirement is a simple guideline: save $240,000 for every $1,000 you want in monthly income, based on a 5% annual withdrawal rate ($240,000 x 0.05 = $1,000/month). It's a popular tool for estimating total savings needed, but it doesn't fully account for inflation, healthcare, or taxes, so it serves as a starting point rather than a definitive final number for a personalized plan.
Believe it or not, data from the 2022 Survey of Consumer Finances indicates that only 9% of American households have managed to save $500,000 or more for their retirement. This means less than one in ten families have achieved this financial goal.
The #1 top regret of retirees is not saving enough money, with 76% wishing they had saved more consistently. In addition, 68% of retirees wish they would have been more knowledgeable about retirement saving and investing, and 49% waited too long to concern themselves with saving for retirement.
Surveys have found that the number of Americans without retirement savings is between 20% and 46%. Low-income households are most likely to lack savings, often because of limited access to retirement plans. Older Americans without savings face the highest risk, since they have little time left to catch up.
The average age to pay off a mortgage in Australia has risen significantly, with estimates placing it between 60 and 65, often extending into retirement, up from around 52 in the 1980s, due to higher house prices and later first-home purchases, with many Australians now facing debt into their 60s and even 70s, making debt-free retirement a challenge.
The main pitfalls of retirement villages involve complex contracts and high exit fees, which can drastically reduce your return when you leave, sometimes leaving insufficient funds for future care. Other issues include restrictive rules (pets, visitors), demographic mismatches, hidden costs, and the fact that they are generally a lifestyle choice, not a financial investment, with operators recovering costs through fees.