Really!? Almost one-third of retired Canadians are still paying a mortgage

When you retire you're supposed to have it made, right?

Money, house, cars, holidays, investments -- a nice, cushy nest egg.

Well, it looks like retirees are not immune to the ravages of the housing unaffordability crisis.

A recent Leger survey done for real estate giant Royal LePage found that 29% of Canadians who are planning to retire in 2025 or 2026 will continue to pay down their mortgage.

The survey does not specify how many of these retirees are aged 50, 55, 60 or 65.

However, the survey did point out that Statistics Canada reports the average retirement age in 2024 was 65.3, up from 64.3 in 2020.

Having your mortgage paid off used to be a cornerstone of retirement.

Apparently, not any more.

"Today's retiree reality is much more nuanced," said Royal LePage CEO Phil Soper.

"While previous generations may have viewed mortgage-free retirement as the only option, today's retirees tend to be more open-minded. Traditional employment income may have dried up, but many are still comfortably managing their expenses and servicing mortgage payments, with income from investments, part-time work, or a working spouse."

Paying a mortgage in retirement isn't sustainable long-term.

That's why the same Leger-Royal LePage survey found that 34% of those retiring plan to downsize their home in the next two years.

Such a move could trigger a big payday -- especially if the retirees have lots of equity in their home -- that will cover paying off the mortgage on the old house with enough left over to buy a condominium, townhouse or smaller house outright.

Many retirees may be in a situation where they bought a nice home years ago for $200,000.

That home could be worth $1 million today, but there's still a $100,000 mortgage on it because there may have been equity take-outs along the way for renovations or to put the kids through university.

Sell that home, pay off the mortgage and the retiree still has $900,000 to move on with their life, including buying a smaller place outright or deciding to rent.

Of course, the flip side of this coin is the majority of retirees are living the traditional dream of being mortgage free.

The same Leger-Royal LePage survey found that of those planning to retire this year or next, 51% will have their mortgage completely paid off.

47% of those retirees are not planning to downsize within two years of retiring.

"The benefits of entering retirement as a homeowner with a paid-off mortgage are clear -- more disposable income, insulation from interest rate changes and even the emotional security that comes from knowing you'll always have a place to live," explained Soper.

However, Soper admits today's realities create complications.

"Home price appreciation over the past 25 years has been a double-edged sword for today's retirees," he pointed out.

"On one hand, it has delivered unprecedented financial gains. On the other, this generation is far more likely to have carried mortgage balances that would have been unimaginable to their parents or grandparents. Our research confirms that they are also much more likely to have provided financial assistance to their children to assist in their home ownership dreams."

A previous Royal LePage survey also found that Canadians are entering homeownership later and later, giving them less time to pay off a mortgage before retirement.

Whereas, previous generations may have purchased a home and started paying down the mortgage by age 25, now 43% of first-time homebuyers are age 35 or older.

As well, compared to their grandparents, today's retirees are enjoying about 50% more life after age 65.

"(Today's retiree is) working longer, staying active, and in many ways, continuing the lives they led during their working years -- just without a job," summed up Soper.

"It's no surprise their attitudes toward home ownership have evolved with the times. With people buying their first home later and working longer, it's increasingly common for Canadians to carry a mortgage well into retirement, often by choice rather than necessity."

_{Thumbnail photos by Ester Ann and Logan Weaver on Unsplash.}