Nearly 30% of near-retirees will carry mortgage debt, reshaping retirement outlook

Nearly three in ten Canadians expecting to retire in 2025 or 2026 will carry mortgage payments into retirement, according to a recent Royal LePage survey conducted by Leger.  

This shift away from the traditional goal of mortgage-free retirement reflects changing financial pressures and later-life homebuying trends among older Canadians. 

As per Statistics Canada, 14 percent of households led by individuals aged 65 and over had a mortgage in 2016, up from 8 percent in 1999.  

The Royal LePage report found that only 45 percent of those nearing retirement in the next two years have paid off their mortgage, while another 6 percent expect to do so before retiring.  

That leaves 29 percent still making payments past their exit from the workforce. 

According to Royal LePage president and CEO Phil Soper, “The benefits of entering retirement as a homeowner with a paid-off mortgage are clear: more disposable income, insulation from interest rate changes, and even the emotional security that comes from knowing you'll always have a place to live.” 

He added that while paying off a mortgage once symbolized financial completion in an earlier era, today’s retirement landscape is far more complex. 

Soper also noted that today’s retirees are managing ongoing mortgage obligations through diverse income streams such as investments, part-time work, or a working spouse.  

“While previous generations may have viewed mortgage-free retirement as the only option, today's retirees tend to be more open-minded,” he said. 

The average age of retirement continues to increase. Statistics Canada reported that in 2024, the average retirement age rose to 65.3, compared to 64.3 in 2020.  

Meanwhile, Canadians are entering the housing market later in life, increasing the likelihood of carrying mortgage debt into retirement.  

As per Royal LePage’s 2023 report, 24 percent of first-time homebuyers were under 30, 33 percent were between 30–34, and 43 percent were 35 or older. This compares to only 33 percent aged 35+ in the 2021 version of the survey. 

Soper explained that compared to previous generations, today's retirees are working longer, staying active, and often continuing the same lifestyle they had while employed.  

“Compared to their grandparents, today's retirees are enjoying about fifty percent more years after turning 65,” he said. “It's no surprise their attitudes toward home ownership have evolved with the times.” 

Downsizing behaviour among near-retirees remains evenly split.  

According to the same Royal LePage survey, 46 percent of respondents said they will downsize within two years of retirement, while 47 percent do not plan to do so. 

Among real estate professionals surveyed across Canada, 44 percent observed an approximately even split in their markets between those downsizing and those staying in place.  

Another 28 percent said most retirees are choosing to downsize, while 21 percent said the majority prefer to remain in their current home. 

Regional variations show notable patterns.  

In Manitoba and Saskatchewan, 46 percent of real estate professionals reported that most retirees downsize.  

In Quebec and Ontario, the highest proportion of respondents—24 percent in each province—said most retirees stay put.  

In Alberta, 63 percent reported an even division between downsizers and non-downsizers. 

Soper said the choice depends on a combination of personal, economic, and lifestyle factors. 

“Downsizing in retirement is far from a given. For many homeowners, the decision to stay put or move to a smaller property is influenced by a combination of economic realities, lifestyle needs, and personal attachments,” he said.  

Some retirees may choose to sell to unlock equity or simplify their living arrangements, while others stay for reasons such as space, pride of ownership, or continuity. 

Among those professionals who said retirees do downsize, 43 percent identified standard condominiums as the most preferred option.  

This was followed by adult living communities for those 55+ at 25 percent, and detached homes at 16 percent.  

Key features retirees look for include a single-level layout (38 percent), proximity to hospitals and amenities (27 percent), closeness to family and friends (25 percent), paid maintenance services (19 percent), and covered parking (17 percent). 

As retirees prepare to sell their homes, Royal LePage also highlighted practical considerations for closing the chapter on a long-time residence.  

These include notifying utility and subscription providers, forwarding mail, maintaining insurance coverage until the sale closes, and leaving behind appliance manuals, keys, and garage openers for new occupants.  

Sellers are expected to clean the home to a ‘broom swept condition’ and complete a final walk-through to ensure the property is ready for turnover. 

To support a smoother downsizing experience, Royal LePage outlined four preparation steps: 

• Measure furniture to ensure it fits in the new space. 

• Decide which décor items to keep or replace. 

• Clean out the closet by removing unworn clothing. 

• Sort through keepsakes, storing or photographing items that won’t make the move. 

For retirees relocating across provinces, the company advised researching local laws, budgeting for the move, transferring essential services like health care and driver’s licences, and engaging with the new community to ease emotional adjustments.  

As per Royal LePage, Canadians who plan carefully can manage the transition with fewer disruptions, whether downsizing by choice or necessity.