Mortgage Stress & Retirees

Hi all, I am worried, I am genuinely concerned for a lot of fellow Australians around my age and older

Why you may ask?  One helluva lot of the people we know, love and care about will not be able to retire or retire in the lifestyle that they worked hard for and so deserve for themselves!

Why am I opportunistic though?  Well, from where I stand, it is never too late to start to plan to minimise the financial impact heading your way or their way … BUT you have to want to take change your mindset and take action! Yes or yes?

How frightening and a necessary wakeup call if you are around 50 as between 1987 and 2015, the average real mortgage debt among older Australians (aged 55+ years) blew out by 600% the new AHURI research data revealed.

Meaning your Debt rose on average from $27,000 to over $185,000 in 2015, while your average mortgage debt to income ratios tripled from 71% to 211% over this period.

The research was undertaken for AHURI by researchers from Curtin University and RMIT University see report : Mortgage stress and precarious home ownership: implications for older Australians investigates the growing number of older Australians who are “having high levels of mortgage debt” into retirement with serious and significant consequences for their wellbeing and the implications of their retirement.

“Our research finds that 28% of older Australian home owners are still paying off the mortgage on their home, says the report’s lead author, Professor Rachel ViforJ of Curtin University. “We know that Mortgage Debt Burden is high because we are also seeing these older Australians’ mortgage debt burden increased to around 30% in the late 1990’s and it has remained at that level ever since.” This is a worrying factor.

“Over this same time period, average annual mortgage repayments have more than tripled from $5,000 to $17,000 in real terms.” You would have to agree that this is significant and has many adverse implications!

It is fact, that when older mortgagors experience difficulty in meeting their mortgage payments, there overall wellbeing declines and stress levels increase, according to the report. Are you noticing this amongst your community?

Having less disposable income means not being able to retire in the lifestyle you deserve and want for yourself. This is problematic and also affects your independent children who won’t see you out on the street. It has become both physically and mentally disturbing and unhealthy in so many ways.

For our older female mortgagors, mental health is more sensitive to personal circumstances than older male mortgagors but not by much. Marital breakdown, ill health and poor labour market engagement all adversely affect older Australians. “These mental health effects are comparable to those resulting from long-term health conditions,” says Professor ViforJ.

“As growing numbers of older Australians carry mortgages into retirement the rising trend in mortgage indebtedness will have negative impacts on the wellbeing of an increasing percentage of the Australian population.” This is a National Problem and should be recognised; but any solution will not be enough for you right now, so best to put in place a viable plan to ensure you minimise the impact on your own situation. Ask us how!

If you choose to ignore this impending issue by burying your head in the sand you would have to turn to the Commonwealth for a rental assistance programme once you have sold your family home and paid off the outstanding mortgage. Is this the solution you really want for yourself? Not much of a life you would agree?

When you sell and pay off the outstanding mortgage, there will simply not be enough left over to buy your preferred downsizer you would be comfortable living in. AND the Commonwealth are already inundated with increasing demand meaning they may just not cope with your application at a time in the future.

Demand for CRA payments to the Federal budget is expected to soar from $972 million in 2016, to $1.55 billion in 2031 because of a rise in demand by an ageing population. Do you want to take a risk that the government will have enough to fund you when you find yourself in this situation because your mindset today is not where it needs to be?

The rising and unmet demand for public housing from private renters aged 55+ years is also expected to climb from roughly 200,000 households in 2016, to 440,000 households in 2031, a whopping 78% increase in demand. There is no way at current construction levels that the government can provide this much public housing! Something has to change.

This report leaves no doubt that “The burden of indebtedness in later life is growing; we now have longer working lives and the use of superannuation benefits to pay down mortgages are increasingly likely outcomes in order to make ends meet – not live!

Do you want and deserve to Live or Exist??  The choice is yours ….

The full report can be downloaded here

Read “Downsize & Retire without a mortgage” here

SteveL

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