GENERATION X is too focused on paying off their home loans, which could impact them come retirement, experts warn.
Shaving down property debt is the number one priority for Australians aged 35-49, new research released by REST Industry Super today shows.
But that diligent focus on reducing mortgage balances could impact life after work, some experts believe.
About 71 per cent say paying off the home loan is the number one priority and only one in three say long-term savings is their top financial goal.
Reserve Bank of Australia figures show Australians are an average of more than two years ahead on their mortgage repayments as they take advantage of historically-low interest rates.
REST Industry Super’s chief executive officer Damian Hill said while culling home loan debt was a good financial plan of attack, many would end up relying solely on compulsory employer contributions which currently sit at 9.5 per cent and would rise to 12 per cent by 2025.
‘In one sense you can understand people are so focused on paying off their mortgage, it’s a big debt,” he said.
‘It’s never too early to focus on super … the mortgage shouldn’t be the focus of the long-term savings because of the other opportunities.”
He said it can be too late to try and tip money into super in a person’s final working years because of the power of compound interest.
The RBA is set to meet tomorrow to make their November rate announcement, and it’s strongly predicted the cash rate will stay on hold at 2.5 per cent – where it has sat since August last year.
Consumer finance expert Lisa Montgomery said splitting a financial plan of attack between paying off a mortgage and tipping money into super was a good idea.
‘Paying less interest on your mortgage now when rates are low is a good plus right now, the less interest you pay is vital,” she said.
‘I think there needs to be a balance – pay off as much of your mortgage as you can while also planning for the future.’
The research also showed 30 per cent of generation X women have no savings at the end of the month compared to just 23 per cent of men.