More Canadians plan to carry mortgage debt into retirement: Royal LePage
More people are planning to enter retirement while still paying off a mortgage, a new report from Royal LePage says, with affordability and an evolution in when and how people retire among the factors.
A survey conducted for the real estate company found that 29 per cent of the Canadians planning to retire this year or in 2026 will carry mortgage debt into their retirement. Separate data from Statistics Canada show that in 2016, only 14 per cent of senior families had mortgage debt; in 1999 that proportion was just eight per cent.
'In the era of rotary phones and station wagons, burning your mortgage was the economic finish line,' Phil Soper, president and CEO of Royal LePage said in a statement. 'Today's retiree reality is much more nuanced.'
A factor in Canada's housing crisis is the concentration of single-family homes within the Baby Boomer cohort, Soper told Yahoo Finance Canada in an interview.
'We knew that eventually the tide would turn,' he said. 'People would just reach the age where they'd start to exit those family homes.' But, he added, the report shows that Boomers' exodus from property ownership 'has been much delayed compared to previous generations.'
Boomers are subject to the same affordability challenges that define the current housing market in Canada, the report says, which have left many with significant mortgages. The report also notes several demographic trends — some related to affordability — that are likely also factors.
This generation of retirees is entering retirement sort of kicking and screaming, saying, 'I won't go quietly into the night.'Phil Soper, president and CEO, Royal LePage
The age of first-time home buyers has been creeping up, the report says, 'increasing the odds of future generations of retirees carrying a mortgage further into retirement.' In a 2023 report from Royal LePage looking at first-time homebuyers, it found 43 per cent were 35 years old or older — up from 33 per cent in 2021.
The average retirement age has also risen fairly steadily: the age was 61.6 in 2000, according to Statistics Canada data, and 65.3 in 2024. Canadians today are also living 'about 50 per cent more years after turning 65' compared to their grandparents, the report says.
'People are working longer,' Soper said. 'People are staying active longer. The whole Zoomer thing didn't exist for Boomers' parents. They were just expected to retire and spend time with grandkids. … There's obviously exceptions but generally this generation of retirees is entering retirement sort of kicking and screaming, saying, 'I won't go quietly into the night.'
"It's no surprise their attitudes toward home ownership have evolved with the times. With people buying their first homes later and working longer, it's increasingly common for Canadians to carry a mortgage well into retirement, often by choice rather than necessity.'
In a survey of brokers and sales agents across Canada about the attitudes of people in the retirement window, Royal LePage found that 44 per cent saw an even split between people who planned to stay in their home and people who planned to downsize. 28 per cent said a majority were choosing to downsize and 21 per cent said a majority were choosing to stay put.
Those preferences vary in different regions, and Soper said one factor was likely the particularly steep rise in home prices in greater Toronto and greater Vancouver. 'The amount of capital gains you could surface in our two largest cities really dwarfs what you see in other parts of the country,' he said. 'So I think we will see different trends in the GTA and the lower mainland of B.C. than for example what we might see in Halifax or Calgary.'
Smaller Canadian cities may not have as many huge houses and may also have condo options that aren't as compact as many of those available in Toronto or Vancouver, Soper said, making a downsize move less 'dramatic' for someone retiring. Furthermore, someone in Montreal or Toronto contemplating a move into a larger condo may be deterred by the costs, Soper said.
'The price that is demanded for large condos in the city can be so high that once you include condominium fees, if you do the math over 10 or 20 years you're not saving any money by moving to a larger condo in our bigger cities.'
John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jmacf.
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