For decades, Australians have been told a simple story about retirement. Work hard, build your super, pay off the mortgage and retire debt-free.
That vision has shaped everything from financial advice and retirement calculators to the way Australians think about financial success itself. Owning a home outright by retirement has been more than an aspiration. It has been an assumption.
But our research for Vanguard’s How Australia Retires 2026 report suggests the traditional expectation of a mortgage-free retirement may no longer hold for many younger Australians.
Nearly half of Gen Z Australians and more than one-third of Millennials expect to retire with a mortgage. Even among Generation X and Baby Boomers, almost one in four believe they are likely to carry housing debt into retirement.
These findings suggest that one of the foundations underlying traditional retirement planning may be shifting.
How housing pressures are reshaping retirement
Much of Australia's retirement system evolved in an era when housing debt was typically paid off before retirement. But younger generations are navigating a very different housing market. They are buying later, borrowing more and carrying debt for longer, raising the likelihood of entering retirement without a paid-off home.
That matters because a household entering retirement with a mortgage faces very different choices and spending pressures from one that owns its home outright.
It is no surprise, then, that younger Australians generally believe they will need significantly more income in retirement than today's retirees.
Australians under the age of 45 estimated they would require more than $90,000 a year in retirement, compared with around $60,000 reported by Australians aged 65 and over.
Our research also found that housing status was closely linked to retirement confidence.
Australians who owned their home outright reported the highest levels of retirement confidence, while confidence was lower among those with a mortgage and considerably lower among renters.
The trade-offs of carrying a mortgage into retirement
Among those expecting to retire with a mortgage, 45% expect to continue repayments in retirement, while 39% expect to use superannuation to pay off their mortgage in one transaction.
For those that have the choice, both approaches can be entirely reasonable, but neither is without compromise.
Using super to clear a mortgage can ease financial pressure, but it also reduces the savings available in retirement for lifestyle and other spending. Holding on to those savings means keeping more money invested but also means living with debt for longer.
These are not simple decisions. For a growing share of Australians, they will become central retirement-planning questions.
The role of planning in retirement confidence
When it comes to retirement confidence, one factor stands out clearly: planning.
Nearly half of working-age Australians have no retirement plan. Yet Australians with a clear retirement plan report much higher levels of confidence than those without one.
75% of Australians who know exactly what they need and how to achieve it report high retirement confidence compared with just 4% of those with no plan.
While no one can predict future house prices, interest rates or living costs, the research highlights that taking small, consistent actions can help people build confidence and feel better prepared for the retirement they want.
As retirement continues to evolve, our assumptions need to evolve with it. Having a plan and engaging early may matter more than ever.
Osei Wiafe, PhD is a Retirement and Superannuation Research Specialist with Vanguard's Investment Strategy Group and lead researcher on the How Australia Retires 2026 report. Vanguard is a sponsor of Firstlinks.
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Notes: All data sourced from Vanguard's How Australia Retires 2026 report, based on a survey of a nationally representative sample of over 1,800 Australians aged 18 years and over in February 2026. Read the report on Vanguard’s website.
This article contains factual information of a general nature only and does not contain financial product advice. It has not been prepared taking into account your objectives, financial situation or needs and may not be applicable to your circumstances. Before making financial decisions, consider your circumstances and seek professional advice from a suitably qualified adviser.
The survey results presented in this article reflect respondents’ self-reported expectations, intentions and confidence at the time of the survey. They are illustrative only and should not be taken as estimates or forecasts of individual retirement outcomes.