Among married couples, non-financial assets (mostly home equity) represent about 70 percent of total assets. That figure will vary from one couple to another but it’s likely that your house is a major asset for you. Therefore, it should be a factor in your retirement planning.
How can you plan to use home equity? Weigh which of these choices is most likely to work for you:
* Sell your present home and buy a less expensive one. You’ll probably get a low price if you sell now but you also may find a good buy when you purchase your new place. For each $100,000 that you walk away with, you’ll probably be able to increase retirement spending by about $5,000 a year.
* Sell your present home, invest the proceeds, and then live in a home you’re renting. You’ll probably want to make certain you have enough income from the investments you make to cover your rental costs.
* Stay in your present home and borrow against it. This plan allows you to stay in your home. Make sure you can afford to pay any debt service. If you are considering a reverse mortgage, which does not require repayment while you live in the house, it may be worth paying the upfront fees if you expect to stay there for several years.