Nearly half of Gen Z expect to retire with a mortgage, Vanguard finds

The prospect of retiring mortgage-free is slipping away for many younger Australians, with new Vanguard research showing almost half of Gen Z expect to carry housing debt into retirement.

The findings, released in Vanguard's 2026 'How Australia Retires' report, show 48% of Gen Z respondents and 37% of Millennials expect to still be paying off a home loan when they retire.

By contrast, seven in 10 Baby Boomers surveyed (71%) already own their homes outright.

The nationally representative survey of more than 1,800 Australian adults suggests housing debt is becoming an increasingly important part of retirement planning, particularly for younger Australians facing higher property prices and longer repayment periods.

"Higher housing costs, bigger debts and cost-of-living pressures are changing what retirement looks like, and what it will take to fund it," said Daniel Shrimski, Vanguard's Managing Director of Asia Pacific.

A growing retirement challenge

The research found Australians expecting to retire with a mortgage are planning several different strategies to manage the debt.

Among those expecting to retire with a home loan, 45% expect to continue making mortgage repayments during retirement, while 39% expect to use their superannuation balance to pay off their mortgage in a single transaction.

The findings highlight a growing tension in Australia's retirement system.

Superannuation is designed to provide income in retirement, but if large chunks are directed towards clearing housing debt, retirees may have less available to fund day-to-day living expenses.

Mr Shrimski said younger Australians may accumulate larger super balances, but warned those gains could be reduced if much of their retirement savings is needed to pay down housing debt.

"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," he 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?"

Retirement expectations differ sharply by age

The report also uncovered a sizeable generational gap in expectations about retirement spending.

Australians aged under 45 estimated they would need more than $90,000 a year in retirement, while Australians aged 65 and over reported needing around $60,000 annually.

The gap may reflect differences in housing costs, lifestyle expectations and concerns about future living expenses.

It also suggests younger Australians may be planning for a retirement that is significantly more expensive than the one experienced by many current retirees.

Home ownership linked to retirement confidence

Housing status emerged as one of the strongest indicators of retirement confidence in the survey.

Australians who owned their homes outright reported the highest confidence levels, while confidence fell among mortgage holders and dropped further among renters.

The finding reinforces previous research showing housing costs remain one of the biggest financial pressures in retirement.

Beyond housing debt, Vanguard's research found many Australians are still not actively preparing for retirement.

According to the report, almost half of working-age Australians have no retirement plan in place.

Mr Shrimski said Australians who have started planning for retirement tend to be more confident about their financial future.

"Nearly half of working-age Australians have no retirement plan, yet our research shows those who have started planning are significantly more confident about their future," he said.