‘I might never pay it off’: The new reality of retiring with debt in Canada

Why are more Canadians retiring with mortgage debt?

According to Statistics Canada, the average retirement age in Canada rose from 64.3 in 2020 to 65.3 in 2024. The housing market has also dramatically changed, particularly in urban centres such as Toronto and Vancouver, where prices have surged.

John Pasalis, president of Realosophy Realty, notes that this isn’t just about individual choice. “Many parents are faced with a difficult choice: borrow to help their kids, or see them move far away,” he told CTV News. He also points out that downsizing doesn’t always mean spending less: “Even though they are downsizing their space, many don’t end up spending less. But they’re choosing lifestyle: No stairs, no maintenance, freedom to travel.”

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Stories behind the numbers: When retirement plans collide with real life

For many Canadians, the dream of a debt-free retirement is being replaced by a more sobering reality: A mortgage that outlasts their career.

Leon Budziszewski of Ottawa thought he had planned well — a paid-off home, a modest trip and savings lined up for retirement at 65. But when long COVID forced him out of work early, everything changed. “The math I used was sound, but life did not cooperate,” he told CTVNews.ca.

Cheryl Maxwell, who moved to Carman, MB, to prepare for retirement, now faces the possibility of never being mortgage-free. She described the impact bluntly in an email to CTVNews.ca: “It is unlikely my mortgage will be paid off during my lifetime.” For her, retirement now means budgeting to the penny, and possibly taking on part-time work just to stay afloat.

These personal stories echo a broader shift. With housing costs still high and interest rates unpredictable, many Canadians heading into retirement are doing so with more financial weight than previous generations — and fewer options for shedding it.

The hidden cost: Emotional strain and family pressure

Beyond the numbers, many older Canadians are carrying emotional burdens that don’t show up on financial statements.

Take Lynne Foster of Winnipeg. At 72, she’s still working full-time, not to support herself, but to cover expenses for six family members, including adult children and grandchildren who live in her home rent-free. “Here I am at 72, supporting everyone... and no one seems to care,” she wrote to CTVNews.ca, capturing the exhaustion that comes from putting others’ needs ahead of your own in retirement.

Whether it’s unexpected caregiving roles, family obligation or simply the rising cost of living, more retirees are discovering that financial independence is harder to achieve, and harder to maintain, than they once imagined.

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What you can do if you’re facing retirement with debt

Retiring with a mortgage or other debt can feel overwhelming, especially when you’ve spent decades working toward the freedom of a debt-free retirement. But if you’re one of the growing number of Canadians facing this reality, you’re not alone, and there are ways to adapt.

Many people in this situation didn’t plan poorly. Life simply had other ideas. Health challenges, family responsibilities and the high cost of living have reshaped what retirement looks like. The good news? With thoughtful planning and a few key strategies, you can regain control of your financial future and protect your peace of mind.

Here’s what you can do to stay financially stable, and emotionally grounded, if you’re heading into retirement with debt:

Reassess your budget and retirement timeline: Life doesn’t always follow the plan — just ask Leon Budziszewski, who was forced into early retirement by long COVID. Build flexibility into your retirement timeline and revisit your budget regularly. If needed, consider delaying retirement slightly or adjusting spending expectations to keep your financial footing secure.

Consider downsizing carefully: Moving to a smaller home might sound like a simple way to cut costs, but as Pasalis points out, downsizing doesn’t always mean saving money — especially in high-cost cities. Instead, focus on the quality-of-life advantages, such as reduced upkeep, easier accessibility and greater flexibility to spend time on what matters most to you.

Explore refinancing options: If you're still carrying a mortgage as you approach retirement, it's wise to review your refinancing options early. Lenders may prioritize stable income sources when assessing applications, which can be more challenging after leaving the workforce. Strengthening your financial profile with multiple income streams, such as part-time work, rental income or investment returns, can improve your chances of qualifying for better rates and terms.

Good options include getting a lower-interest personal loan. This means spending less on interest costs allowing more of your money to go towards paying off the debt. Another option, if you own a home, is to refinance your mortgage. This option also gets you a lower interest rate and lowers your monthly debt payments. One good way to find competitive loan rates is to use a rate consolidator, such as Loans Canada. Using a consolidator allows you to apply once and then compare offers from multiple lenders. For those interested in refinancing their mortgage to reduce debt costs, consider using the Compare Hub by Loans Canada, which allows you to fill out one application to find a short list of best home loan providers.

Build a safety net: Unexpected expenses — medical, housing or family-related — can quickly strain a fixed income. Prioritize building an emergency fund and ensure you have adequate insurance coverage. This financial cushion can prevent short-term setbacks from turning into long-term stress.

Seek professional advice: Retirement planning is more complex than ever. A certified financial advisor can help you map out a plan that fits your personal situation, from mortgage payments to healthcare costs and estate planning.

Plan for income after retirement: Many retirees, like Cheryl Maxwell, find they need to supplement their income with part-time work. Rather than seeing this as a setback, treat it as an opportunity for a phased retirement, easing into your next chapter while keeping financial pressure at bay.

What this means for your retirement security

Carrying mortgage debt into retirement isn’t automatically a mistake — for some, it’s a deliberate decision driven by lifestyle preferences or financial strategy. But it does come with risks. When unexpected health challenges or family responsibilities arise, debt can quickly become a heavy burden, putting your long-term financial security at risk.

Retirement today rarely unfolds exactly as planned. Instead, it requires flexibility, resilience and a willingness to adapt to changing circumstances. The key is staying informed and proactive, making thoughtful choices that balance your financial needs with your desire for comfort and stability. Ultimately, successful retirement planning means managing trade-offs in a way that safeguards both your wallet and your peace of mind.

Sources

1. Royal LaPage: The new real estate reality for retirees: Exiting the workforce with mortgage debt (May 27, 2025)

2. Statistics Canada: Retirement age by class of worker, annual

3. CTV News: ‘I might never pay it off’: Some Canadians retire still in debt (June 2, 2025)