The New Real Estate Reality For Retirees: Exiting The Workforce With Mortgage Debt

A recent Royal LePage survey, conducted by Leger, suggests a new housing reality for older Canadians is taking shape. According to the survey, nearly three in ten Canadians (29%) who are planning to retire in 2025 or 2026 say they will continue to make mortgage payments on their primary residence into retirement. The trend seems to be accelerating, as affordability continues to challenge Canadians of all ages: only half as many senior households had mortgage debt approximately ten years ago. According to Statistics Canada, 14 per cent of households with income earners aged 65 and over had a mortgage in 2016, up significantly from eight per cent in 1999.

“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. In the era of rotary phones and station wagons, burning your mortgage was the economic finish line. Today’s retiree reality is much more nuanced,” said Phil Soper, president and CEO, Royal LePage.

Nearly half of those planning to retire in 2025 or 2026 (45%) say that their mortgage is currently paid off, while another six per cent say their mortgage will be paid off before retirement.

Forty-six per cent of respondents approaching retirement say they will downsize their home within two years of ending full-time employment, while 47 per cent say they will not.

“Home price appreciation over the past 25 years has been a double-edged sword for today’s retirees,” said Soper. “On one hand, it has delivered unprecedented financial gains. On the other, this generation is far more likely to have carried mortgage balances that would have been unimaginable to their parents or grandparents. Our research confirms they are also much more likely to have provided financial assistance to their children to assist in their home ownership dreams.

“While previous generations may have viewed mortgage-free retirement as the only option, today’s retirees tend to be more open-minded. Traditional employment income may have dried up, but many are still comfortably managing their expenses and servicing mortgage payments, with income from investments, part-time work, or a working spouse.”

The average age of retirees in Canada has been gradually increasing. Statistics Canada reports the average retirement age was 65.3 in 2024, up from 64.3 in 2020.³ At the same time, Canadians are entering the housing market later, increasing the odds of future generations of retirees carrying a mortgage further into retirement. A 2023 Royal LePage report⁴ states that 24 per cent of first-time homebuyers were under the age of 30; 33 per cent were aged 30-34; while 43 per cent were aged 35 or older. Compared to the results of the same survey in 2021 – which found that only 33 per cent were aged 35 and up – it is clear that Canadians are buying their first homes later in life.

“Compared to their grandparents, today’s retirees are enjoying about fifty per cent more years after turning 65. They’re working longer, staying active, and in many ways, continuing the lives they led during their working years – just without the job. 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.”

Retirees split on downsizing versus staying put

The decision to downsize in retirement is a highly personal one based on lifestyle preferences, and Canadians are largely divided on the matter, according to a recent Royal LePage survey of real estate professionals across the country.⁵ Nationally, 44 per cent of respondents say that, in their respective markets, there is an approximately even split between those looking to downsize and those choosing to stay in their current homes; 28 per cent say that a majority of people nearing or entering retirement are downsizing to a smaller home; 21 per cent say that a majority of retirees are choosing to remain in their current home.

In Manitoba and Saskatchewan, the highest percentage of respondents in Canada (46%) say the majority of retirees are choosing to downsize. Meanwhile, Quebec and Ontario have the highest percentage of respondents who say the majority of retirees are choosing to remain in their current homes, each at 24 per cent. Sixty-three per cent of respondents in Alberta say there is an even split between those downsizing and those opting to stay in their current homes.

“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,” said Soper. “Some see a smaller home as a practical and liberating choice – less maintenance, more liquidity to fund travel or to support their children’s home ownership journey. But for others, there’s no compelling financial reason to move. They enjoy the space that comes with a detached home – for gardening, entertaining, or simply storing the gear that goes along with their hobbies. Many take pride in the home they’ve worked decades to own outright, and see no reason to give it up.”

Of those Royal LePage experts who say that a majority of people nearing or entering retirement are downsizing, 43 per cent say that standard condominiums are the most popular property type among this cohort, followed by adult living communities that cater to those aged 55 and up (25%), and detached properties (16%).

When it comes to the features that are most important to downsizers, 38 per cent of respondents say a single-level layout is a priority; followed by proximity to hospitals, community amenities and services (27%); proximity to family and friends (25%); paid maintenance services (19%); and, covered parking (17%). Respondents were able to select more than one answer.