Should you view your home as a retirement asset? || Thomas callaway


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If you are a homeowner, there is a good chance that your equity has increased in the past year. Soaring home prices caused by a pandemic-fueled real estate frenzy has led to a scenario in which homeowners in the United States are sitting on a record $ 22.7 trillion in net worth, according to a new report. their house..1 Watching your home’s estimated value increase on real estate websites can be exciting, especially if you’re relying on that money to someday help you fund your retirement lifestyle. But it’s important to remember that real estate is a more complicated asset than cash. Keep these factors in mind when considering how the value of your home can be used to fund your retirement.

  1. You need a place to live. Whether it’s in your current home or elsewhere, you need a roof over your head, and it usually comes at a significant cost. Many people who downsize their homes underestimate how much they will end up spending on a smaller condo or on living in a retirement community. In fact, some end up realizing that their new homes are comparable or even Following expensive than their previous homes – especially since they may end up spending two or three decades in retirement there. Whatever your situation, do the math to find out what you are getting into financially and how that will be factored into your retirement plans.
  1. Selling your home might not be as easy as you think. With the high demand and shortage of homes on the market, you might see homes selling at lightning speed in your local community – but it’s important to remember that there are has no warranty. In some parts of the country, hot real estate markets are starting to cool. Therefore, you might be disappointed with the price you are able to generate when you sell your property. Many people have been disappointed to find that their home is not as valuable as they might have expected. It’s important to keep the pulse of the housing market in your area to help you determine what you might get for your home.
  1. Determining the value of a home can be difficult. Compared to a stock, bond, or mutual fund that can easily be priced in the market and bought or sold on a daily basis, a house is a different type of investment. The value cannot be determined with precision and it is not considered a liquid asset. If you are seriously considering selling your home, it may be worthwhile to hire a professional appraiser to give you a realistic idea of ​​how much you can expect a buyer to pay you for it.

With these factors in mind, it is important to maintain a good perspective on the value of your home in the context of your overall financial situation. Be careful not to overestimate a home’s contribution to your retirement security based on its current valuation, as these numbers can change. Even if your home is rising in value, be diligent about saving for retirement through other means, such as through a workplace savings plan or an IRA.

Talk to a financial advisor about your retirement plans and the potential value of your home in your overall portfolio. A qualified financial advisor can recommend strategies for generating income in retirement and provide advice on how to increase your home equity, regardless of your home’s value. Then any funds you generate from your home will be an additional retirement bonus.


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