Almost Four in Ten Would Use Their Super to Clear the Mortgage, Vanguard Finds

Homesafe says the result exposes a gap in retirement planning that neither superannuation nor the Age Pension was built to fill

Almost four in ten Australians who expect to retire still owing money on their home would consider using their superannuation to pay it out, according to Vanguard’s How Australia Retires 2026 report. A finding Homesafe Solutions Pty Ltd says exposes a gap in the retirement system that neither superannuation nor the Age Pension was designed to fill.

Vanguard’s fourth annual report, based on a nationally representative survey of more than 1,800 Australians conducted in February 2026, found 39% of those heading into retirement with a home loan would consider drawing on super to clear it. A further 45% expect to keep making repayments after they stop work.

The data also shows mortgage debt in retirement is not only a problem for younger generations. Almost one in four Baby Boomers (24%) expect to retire with a mortgage, alongside 23% of Gen X, 37% of Millennials and 48% of Gen Z.

“Australia’s retirement income settings were built on the idea that people arrive at 67 with the house paid off. ASFA’s comfortable and modest budgets both assume it. The Age Pension assets test assumes it,” said Dianne Shepherd, Chief Executive Officer and Managing Director of Homesafe Solutions.

“Vanguard has now put a number on how quickly that assumption is falling away, and it is not only the young. A quarter of Baby Boomers are telling researchers they will carry a mortgage into retirement.”

The debt shows up in how people feel about their finances. Among retirees who own their home outright, one in five report low retirement confidence. Among retirees still carrying a mortgage, almost half do.

Ms Shepherd said the instinct to solve the problem with superannuation is understandable, but costly.

“Withdrawing a large lump sum at 65 to clear a home loan swaps a monthly repayment for a permanently smaller income stream. The debt is gone, and so is the compounding. Every dollar that leaves super to cover housing is a dollar that isn’t producing retirement income for the next 25 years.”

On Vanguard’s numbers, that trade-off is often being made without a plan. The report found 45% of working-age Australians have no retirement plan at all, and 62% could not correctly identify the age at which they can access their super.

At the same time, Australians overwhelmingly want to stay put. Around 60% expect to remain in their own home throughout retirement. Only about one in four retirees had sold and moved or planned to, and among those who did, lifestyle and maintenance were more common motivations than money.

“People are being offered a false choice,” Ms Shepherd said. “Sell the house, or run down your super. There is a third option, and it has been operating in Australia for more than two decades.”

Homesafe Wealth Release allows homeowners aged 60 and over to sell a share of the future sale proceeds of their home in exchange for a lump sum today. There are no monthly repayments and no interest accrues, so no debt builds against the property over time. Homeowners continue living in their home and retain the right to do so for life. When the home is eventually sold, by the homeowner or their estate, Homesafe receives its agreed share of the proceeds.

“For more than 20 years we’ve helped homeowners use the wealth in their home to fund retirement and manage housing debt,” Ms Shepherd said. “For some that has meant retiring on their own terms. For others it has meant managing an early retirement they didn’t choose, and keeping a roof over their head. Vanguard is describing the problem. We’ve spent 20 years watching what people actually do about it.”

The position reflects the white paper Homesafe sponsored in October 2025, The Growing Debt Burden of Retiring Australians, which reframes retirement planning through a household balance sheet lens and argues that superannuation funds, advisers and policymakers should treat home equity as a source of retirement funding alongside super balances and the Age Pension, rather than as a last resort.

“The debate keeps returning to whether older Australians should touch the home. Many already do by downsizing, by taking on debt, or by quietly going without,” Ms Shepherd said.

“The question isn’t whether home equity gets used. It’s whether advisers, the superannuation industry and government can work together so that an ageing population knows what its options are, at the point when it needs them.”