How To Manage Debt And Retirement

Debt and retirement aren’t terms that we like to think about together, but this period of your life requires a detailed game plan in order to fully enjoy it.


In Australia, the average retirement age for people aged 45 years and over is 55.3 years – however, this is changing. When you narrow it down to people who’ve retired in the past five years, the average increases to 62.9 years of age.

It’s also worth noting that retirement isn’t necessarily a one-time event, with more than one in four Australians between the ages of 45 and 59 returning to employment each year. For some, it’s boredom, but for others – debt and retirement are simply not a good match, and working again is out of obligation. With that being said, many Aussies are enjoying a comfortable retirement that includes little to no financial restrictions surrounding healthcare, hobbies and even travel – so what’s the secret?

Planning Ahead For Debt And Retirement 

In August 2019, the Australian Housing and Urban Research Institute (AHURI) found that since the mid-1990’s, the proportion of Aussies carrying a mortgage into retirement had more than doubled to 45%. This is also compounded by high levels of personal debt, with the mortgage debt-to-income ratio tripled between 1987 and 2015 – from 71% to 211%.

While house prices tripled, wages certainly did not – meaning that those heading into the twilight years of their lives have to work even harder to ensure that they enter retirement with as little debt as possible. For some, this can feel like moving mountains, but the key to a smooth transition into the next phase of life is linked to smart financial planning well in advance.

Make A Plan – If you haven’t already enlisted the services of a financial adviser or planner, it’s worth doing so. Having a professional insight into your finances can help to provide an unobjective third party perspective and remove any sentimentality when it comes to getting you financially fit for retirement.

Home Loan Health Checks – Being straddled with a mortgage when you’re trying to “scale” back” is one of the biggest hurdles that many Australian retirees face, so it’s important to try to get on top of this decades in advance if you can. Don’t be complacent, and make sure that you’re matched with the right loan product with the most favourable interest rates and terms.

Consolidate Super – Superannuation is your designated retirement nest egg. Having it scattered across multiple funds will result in you paying unnecessary fees, so ensure that you do have these eggs in the one basket. Ensure that your fund of choice aligns with your appetite for risk, and offers insurance options that best fit your circumstances.

Extra Repayments – While you’re still working, try to make extra repayments on what stands out as the obvious link between debt and retirement. Whether it’s your mortgage, a personal loan, or even making voluntary contributions to your superannuation fund, it’s important to try to “get ahead” while you’re able to in order to have a stress free transition into retirement.

Invest In Your Future – Generally speaking, the closer you are to leaving the workforce, the less risk you should take when approaching investments. Many Aussies opt for an investment property or a holiday home in their younger years, while others prefer to dabble in the stock market or other stocks.

Downsize – Downsizing into a smaller and less expensive home could free up a decent amount of cash, which you can put towards paying off your mortgage or invest in your superannuation. Empty nesters have no real need for the large four bedroom home that they once did thirty years ago, so be practical about your needs and be proactive if they have changed.

Where To Seek Help With Debt And Retirement 

If you are ready to “level up” and get financially fit, then it’s never too early to seek professional financial advice. Whether your next goal is to retire early, take a gap year or purchase a home, George Samios and the team at Madd Life are ready and waiting.

With their entire business built on referrals, the team at Madd Loans have taken the mortgage broking industry by storm. Their overwhelmingly positive feedback has helped them to take out numerous industry awards, including the title of “Queensland’s Broker Of The Year” for four consecutive years. However, after working with a broad variety of clients in regards to their mortgage options, it made sense for the team at Madd to have the capacity to offer a full financial planning service.

If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.

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