Retirement to be blighted by struggles to pay mortgages
MORE than a quarter of people will still be paying their mortgage after retirement, a survey revealed yesterday.
The daunting figure comes amid a payment arrears crisis, with over-60s making up a quarter of all cases in long-term mortgage arrears, according to recent Central Bank figures.
The situation is worse for women, as they are more likely to be paying their mortgage or rent in retirement – with 28% of them expecting to do so, versus 25% for men. While most people – 60% – with a mortgage expect it will be fully repaid by the time they retire, 27% of those surveyed will still be paying off their mortgage or paying rent in retirement, the Aviva survey found.
The remaining 13% believe they will inherit a property and be living mortgage-free when they retire, with more men than women expecting this, at 17% versus 10%.
The number who believe they will still be paying a mortgage at retirement is highest amongst 35-44-year-olds 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.
Aviva described the findings as ‘stark’ and its head of pensions and investment, Stephen Rice, warned: ‘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.’
He explained: ‘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.’
Of the 27% of those surveyed who will still be to paying their mortgage or pay rent on their homes in retirement, 31% said they had no idea how they will pay; 17% never really considered it; 14% worry about it, while almost a quarter – 22% – would have to depend on State supports. A fifth plan to pay their outstanding mortgage or rent from savings or investment income and 16% said they would pay off their mortgage or continue to pay their rent from their retirement lump sum.
Top of the list of things people were looking forward to in retirement was foreign travel (64%), followed by spending time with family (61%), and with friends (45%).
Mr Rice added: ‘A Central Bank of Ireland report published in July reported that the over-60s 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 ten-year high and with deposit interest rates primarily in negative territory, savers should consider investing their hard-earned savings into their pension.’
The research also found that over a quarter – 26% – of those polled said we all struggle a bit financially in retirement, with their parents making sacrifices due to financial constraints, and an expectation that they will do the same.
Some 44% believe they will have to take up another fullor part-time job to supplement their income in retirement. However, 31% said they will not need to work, and 25% said they may well take up another job, but only be because they enjoy working.
27% will be paying in retirement
‘This figure is likely to increase’