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A high number of people plan to use super to extinguish their mortgage as more people expect to retire still holding that debt.

A significant number of Australians below the age of 35 expect to retire with mortgage debt, with many planning to use their superannuation to clear it, new research released by Vanguard has found.

The “2026 How Australia Retires” report released yesterday stated 48 per cent of gen Z Australians and 37 per cent of millennials expected to retire with a mortgage compared to 23 per cent of gen X and 24 per cent of baby boomers.

The figures were drawn from a survey carried out in February of a nationally representative sample of more than 1800 Australians aged over 18 that also found of those carrying a mortgage into retirement, 39 per cent planned on using superannuation to pay off their mortgage in one transaction.

A further 45 per cent would continue to make repayments, 16 per cent would sell their home and use the proceeds to pay out their mortgage debt, while 14 per cent were unsure how they would deal with the issue.

“These findings highlight a clear generational pattern, with younger Australians more likely to expect housing debt in retirement,” the report stated.

“This is consistent with the trend of more Australians carrying housing debt for longer. Australian Bureau of Statistics data shows that between 2000 and 2020, the proportion of Australian households with a mortgage increased from 32 per cent to 37 per cent, while the proportion owning their home outright fell from 39 per cent to 30 per cent.

“The fact that many younger Australians expect housing debt in retirement has important implications for retirement planning.

“It may also influence how superannuation is used, with some Australians likely to draw on their super to repay housing debt, rather than relying on it solely as a source of retirement income.”

Vanguard Asia-Pacific managing director Daniel Shrimski added the benefits of life-time super could be undermined by housing costs.

“Younger Australians may accumulate larger super balances than previous generations, thanks to higher contribution rates and more years in the system, but if a greater share of those savings is needed to pay down housing debt or cover ongoing housing costs, the boost to retirement income may be smaller than many people expect,” Shrimski said.

“It also raises an important question: how will Australians fund the dignified retirement they’ve worked hard for if a significant portion of their super is needed to pay off their home?”

The report also noted younger Australians believe they will need more income in retirement, with those under 45 estimating an annual retirement income of more than $90,000 compared with around $60,000 reported by those aged 65 and over.

By: Jason Spits | August 27, 2026 | smsfadviser.com