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Over 60 With Decades Left on the Mortgage: The New Retirement Math

Laura and Bob Bentz were in their early 60s when they got a 30-year mortgage on a small home outside Orlando, Fla.

They don’t like debt but felt they had no choice. Their business selling antique car parts on the internet had gone south in the Great Recession, as did the construction company where Mrs. Bentz worked and the medical-supply company where Mr. Bentz did. A sinkhole had damaged their previous house, and then Mrs. Bentz had to spend several years caring for elderly relatives.

“I’m looking forward to a mansion in heaven,” said Mrs. Bentz, 64. “Maybe it will work out better there.”

A growing number of older Americans are carrying mortgage debt, and it will likely become more burdensome as the coronavirus crisis puts millions out of work and eats away at retirement accounts.

Many are still hurting from the financial crisis, which hit millennials when they were starting their careers and boomers during what were supposed to be their prime earning years.

In the U.S., some 9.18 million homeowners age 65 and over have mortgage debt, according to federal data analyzed by the Urban Institute. That’s up nearly 60% from 5.82 million a decade ago.

Homeowners 65 and over who have mortgage debt owe a median of $72,000, according to separate federal data analyzed by Harvard University’s Joint Center for Housing Studies.

Many bought their first homes when they were young, then traded up to new houses or moved to new cities. When homeowners reset the clock with a new mortgage, they can add years to the life of their loan and end up paying tens of thousands of dollars of additional interest.

Bob Bentz, a retiree who served in the military, has taken out a 30-year mortgage with his wife on their home in Florida.
Bob Bentz, a retiree who served in the military, has taken out a 30-year mortgage with his wife on their home in Florida.


Some refinanced every few years to lower their monthly payments, as mortgage rates fell almost continually in recent decades. Many of those refis reset the mortgage clock, too.

After the financial crisis, when unemployment spiked and rates plummeted, many tapped their homes for cash.

When people approach retirement age saddled with mortgage debt, they are less able to weather job losses or cover unexpected expenses. Many will have to work longer than they planned. Some economists believe they will be more susceptible to foreclosure in old age.

“There are definitely some signs of potential trouble ahead,” said Jennifer Molinsky, senior research associate at Harvard’s Joint Center.

Rising costs and stagnant incomes are already reshaping what retirement looks like for Americans. Many boomers are saddled with expensive medical bills and student loans, both their own and their children’s. Now their long-held financial template—with homeownership as the foundation for savings—is also growing shaky.

Ron Hadley bought his first house when he was in his 20s, in Vermont. But Mr. Hadley, a manufacturing engineer, and his wife, Beth, a teacher’s aide, had to move for his work multiple times. Around 2001, they were living outside Detroit when Mr. Hadley lost his auto-industry job.

They decided to move near Boston to be closer to family. Though they made a profit on the Detroit house, it wasn’t enough for a home in one of the most expensive markets in the country, so they took out another mortgage.

The Hadleys have about 10 years left on their loan. They’d like to pay it off earlier.

Mr. Hadley, now 72, retired in 2015. With the stock market’s recent dive fresh on his mind, he has made a point to not look at the most recent statement from his retirement account. It wouldn’t do any good, he said.

Three decades ago, only about 20% of U.S. homeowners 65 and over had mortgage debt, according to the Joint Center. Economists calculate that about 40% of older Americans today have housing debt, and the median amount they owe has quadrupled after adjusting for inflation.

Laura Bentz retired from substitute teaching in February.
Laura Bentz retired from substitute teaching in February.


The debt burden is following many well into old age. About 26% of homeowners 80 and over have mortgage debt, according to the Joint Center, up from about 11% roughly a decade before. They owe a median of $43,000.

Economists don’t expect those coming up behind them to fare differently.

Martha Trainor, 55, has more than 20 years left on two mortgages—one on the Rhode Island home she shares with her husband, and another on a condo they purchased when he took a job out of state.

The past dozen years had already been upended by a breast-cancer diagnosis that knocked her out of the workforce, caring for her elderly mother who had dementia, and student loan debt for their three daughters’ education. Then coronavirus forced her to shut down her business, a “paint your own” pottery studio, and it pained her to lay off her three employees.

She has no plans to retire, ever. “Up until a month ago, I was holding on,” Ms. Trainor said. “I was juggling everything and then coronavirus hit and now it’s changed.”

Longer term, the shift reflects the changing nature of household finance, as well as broader demographic transformations.

Some boomers are coming to homeownership late and haven’t had time to build up equity. In 2019, 11% of first-time home buyers were 55 or older, the highest in two decades of record-keeping, according to the National Association of Realtors.

Boomers, unlike their parents, didn’t grow up in the Great Depression or celebrate paying off a mortgage with a note-burning party. They are more comfortable with debt as a strategic financial tool and don’t view tapping their homes for cash as the last resort that their parents did.

Still, many assumed they would pad their retirements by downsizing into smaller, cheaper houses. But such homes are in historically short supply.

Others can’t move to smaller homes because their adult children or elderly parents—or both—moved in with them. They’re also less likely than previous generations to be married, which means more are relying on a single income or retirement plan.

Boomers were also the first generation of Americans encouraged to manage their own retirement savings, which means many haven’t socked away enough to carry them through their nonworking years.

In Florida, the Bentzes plan to move again to be closer to grandchildren in Texas, though they don’t know how hard it will be to sell their current home in a pandemic.

Mrs. Bentz’s mother died a few months ago, and she expects to inherit some money that she hopes will buy a home in Texas outright. She retired from substitute teaching in February, shortly before the coronavirus shut down schools.

“One thing at a time,” Mrs. Bentz said. “I’m hoping it will all work out.”

The Bentzes plan to move again to be closer to grandchildren but don’t know how hard it will be to sell their current home.
The Bentzes plan to move again to be closer to grandchildren but don’t know how hard it will be to sell their current home.


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