And the answer is….. 21%! While most Americans expect to have their mortgage paid off by retirement, more than one in five of those individuals are still paying off their homes at age 75.
The share of US homes without a mortgage jumped five percentage points from 2012 to 2022 to a record near 40%, Bloomberg reported. More than half of those homeowners are at retirement age.
A higher percentage of homeowners are retiring with a mortgage than was the case 30 years ago. A recent Harvard University study found that 46% of homeowners between ages 65 and 79 carried a mortgage in 2016, almost twice as many as the 24% of homeowners in this age group who carried a mortgage in 1990.
Because so many retirees have little to no savings, it's not too surprising that the majority are carrying debt. The most common types of debt held by retirees are credit card debt (49%), mortgages (24%), car payments (20%) and medical bills (18%).
Mortgage-Paying Habits of Average Americans
For example, according to the Census Bureau, fewer than 28% homeowners below retirement age have paid off their homes completely, as opposed to almost 63% of those 65 or older.
Another study revealed that 44% of 60- to 70-year-old homeowners are carrying mortgage into retirement, and 32% expect it will take them more than eight years to pay it off. Your mortgage is a factor in your retirement income plan and can affect your quality of life.
A financial advisor can help you make critical decisions in retirement, like where to live and how much to spend on housing. Over 79% of Americans ages 65 or older own their home, according to Statista, meaning approximately 21% are renters. Ownership can helps you build equity and wealth.
The median household income for Americans aged 65 and over was $50,290 in 2022, according to the most recent Census Bureau data. That breaks down to an average of $4,190.83 a month. In 2024, the social security benefit will increase by 3.2% — matching the rate of inflation in October.
This demographic often finds it difficult to keep up with payments. Among retirees, 71% have debt not related to their mortgage with an average balance of $19,888, according to the 2023 State of Retirement Finances report from Clever Real Estate.
Continuing to make monthly mortgage payments makes sense for retirees who can do it comfortably and benefit from the tax deduction. If you're retiring within the next few years and have the cash to pay off your mortgage, it may make sense to do so, particularly if the funds are in a low-interest savings account.
Other types of debt—personal loans, credit cards, and auto loans, for example—tend to have higher interest rates and lack any potential tax benefits. These kinds of debt should "retire" before you do, because they can eat into your savings and reduce your standard of living.
Nationally, a little more than 15 million homeowners 55 to 74 years old don't have a mortgage compared to about 17.7 million who do. For comparison, about 9.6 million homeowners 65 and up have a mortgage, while more than 16 million (16,184,634) don't.
Average Retirement Debt: The Numbers
Three in 10 devote more than 40% of their monthly income to debt and a quarter have a mortgage with more than 20 years remaining on it. More than half say they intend to enter retirement debt free, but only one-quarter of retired Boomers actually are debt free.
About 27% of people who are 59 or older have no retirement savings, according to a new survey from financial services firm Credit Karma. To be sure, that's the same share as the overall population, yet boomers have less time to save for retirement given that the generation is now between the ages of 59 to 77 years old.
At the same time, real estate prices surged after the Great Recession making homes even more valuable. The number of mortgage-free, single-family homes and condos increased by 7.9 million from 2012 to 2022, to 33.3 million, according to Census Bureau data analyzed by Bloomberg.
If you have more than $1 million saved in retirement accounts, you are in the top 3% of retirees. According to EBRI estimates based on the latest Federal Reserve Survey of Consumer Finances, 3.2% of retirees have over $1 million in their retirement accounts, while just 0.1% have $5 million or more.
There are guidelines to help you set one if you're looking for a single number to be your retirement nest egg goal. Some advisors recommend saving 12 times your annual salary. 12 A 66-year-old $100,000-per-year earner would need $1.2 million at retirement under this rule.
As of December 2023, the average check is $1,767.03, according to the Social Security Administration – but that amount can differ drastically depending on the type of recipient.
The average American spends $4,345 per month in retirement, according to the Bureau of Labor Statistics. That's $52,141 per year.
What Is the Average Retirement Income? The average monthly retirement income adjusted for inflation in 2023 is $4,381.25, according to a 2022 U.S. Census Bureau report. The average annual income for adults 65 and older in 2023 is $75,254 – or $83,085 when adjusted for inflation.
An increasing number of Americans have realized the dream of owning a home without the burden of a mortgage. Nearly 40% of homeowners in the country now own their homes outright, marking a record high in mortgage-free ownership as of 2022, Bloomberg reported Friday (Nov.
Renting is often smart if you expect to move again within a few years. Buying and selling homes is expensive, and your home may not rise in value fast enough to offset those costs.
More Than 10 Million People 65 and Older Have a Mortgage — Here's Where They Make up the Largest Share of Homeowners. Jacob Channel is a Senior Economist for LendingTree.