The Importance of Home Equity in Retirement Planning

Keith Kreis
Published on June 23, 2017

The Importance of Home Equity in Retirement Planning

We often discuss the difference in family wealth between homeowner households and renter households. Much of that difference is the result of the equity buildup that homeowners experience over the time that they own their home. In a report recently released by the nonpartisan Employee Benefit Research Institute (EBRI), they reveal how valuable equity can be in retirement planning.

Craig Copeland, Senior Research Associate at EBRI, recently authored a report, Importance of Individual Account Retirement Plans and Home Equity in Family Total Wealth, in which he reveals:

“Individual account retirement plan assets, plus home equity, represent almost all of what families have to use for retirement expenses outside of Social Security and traditional pensions. Those families without individual account assets typically have very low overall assets, so they have almost nothing to draw from for retirement expenses.”

The report echoed the findings of a working paper, Home Equity Patterns among Older American Households, authored by Barbara Butrica and Stipica Mudrazija of Urban Institute. Fannie Maehighlighted these findings for their blog The Home Story this past winter, quoting Butrica and Mudrazija:

 “For most adults near traditional retirement age, a home is their most valuable asset — dwarfing retirement accounts, other financial assets, and other nonfinancial assets. Although relatively few retirees tap into their home equity, having it provides financial security… In fact, many retirement security experts argue that the conventional three-legged stool of retirement resources — Social Security, pensions, and savings — is incomplete because it ignores the home.” Ask Your buyer agent Keith Kreis

USAToday interviewed two area experts to comment on the EBRI report. Randy Bruns, a private wealth adviser with HighPoint Planning Partners, agreed with the findings:

“Social Security and home equity are major pieces of the retirement puzzle.” Ask Your buyer agent Keith Kreis

Wade Pfau, Professor of Retirement Income at The American College of Financial Services and author of Reverse Mortgages: How to use Reverse Mortgages to Secure Your Retirement, said having the equity without a plan to use it won’t help:

“Home equity is a very important asset for American retirees, and so it is important to think about how to make best use of home equity in retirement planning.” Ask Your buyer agent Keith Kreis

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Bottom Line

Whether you use the equity in your home through a reverse mortgage or by selling and downsizing to a less expensive home, it should be a crucial piece of your retirement planning. source: Real Estate with Keith Kreis


Life After Retirement Require’s The Right House

When you are about 40 or 50 years old, you may still feel as if it is too early to worry about life after retirement. If you are buying a home right now however, and you’re planning to settle down there. You should keep in mind that, the home you select now plays a big role in impacting your options for the future. Below are some considerations that you should make before you buy your next home, especially if you are planning on living there for the rest of your life. Buyer Agent

Can you walk along the neighborhood?

In your later years its important to consider living somewhere that’s centrally located. A place where you can walk or utilize public transit will make your life drastically easier. Buyer Agent

The neighborhood should be walkable, well lit, well maintained and therefore safe for pedestrians. The neighborhood should also have some nearby restaurants, grocery stores and retail stores. It would also be ideal if it wasn’t far from your doctor & a pharmacy. Buyer Agent

Are there local social opportunities?

Life after retirement can be fun if you live in… Read more…

Life After Retirement Require’s The Right House

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