As retirement costs surge, more homeowners turn to their equity

Americans may need about $2.57 million to retire comfortably by 2043, rising from about $1.75 million projected for 2033. Inflation has increased housing, health care, and everyday expenses, with annual spending for households headed by someone 65 or older reaching about $122,000 versus roughly $60,000 in 2000. Home equity can supplement retirement income through options such as reverse mortgages and home equity investments, but it should not be the primary strategy. Many retirees are “house rich, cash poor,” owning valuable homes without dependable income or liquid savings. Property taxes, insurance, and maintenance can strain budgets even when homes are paid off. Home equity cannot directly pay property taxes or medical expenses without specific access methods that carry conditions.

"Americans may need roughly $2.57 million to retire comfortably by 2043, up sharply from the $1.75 million projected for 2033, according to a 2025 Goldman Sachs retirement survey. The increase reflects years of inflation that have driven up the costs of housing, health care and daily expenses. Households headed by someone 65 or older now spend about $122,000 annually, compared with roughly $60,000 in 2000, the survey explained."

"Financial experts told Realtor.com that home equity can help supplement retirement income through tools such as reverse mortgages and home equity investments, but they caution against relying on it as a primary strategy. The $2.57 million number from Goldman Sachs isn't meant to be paralyzing, said Alex Langan, chief investment officer of Langan Financial Group. It's meant to be a wake-up call. The gap between what most people are saving and what retirement actually costs is real and it's widening."

"Many retirees are house rich, cash poor, meaning that they own homes with significant value while lacking dependable income or liquid savings, Realtor.com explained. Unfortunately, this is common among people over 65. On paper, they have significant equity in their homes, but not enough liquid savings or dependable income to comfortably support their retirement, said Pam Krueger, founder and CEO of Wealthramp in San Francisco."

"Langan said many clients incorrectly assume their homes alone can fund retirement. You can't pay your property tax bill with home equity, he said. You can't cover a medical expense with it. You can't use it to get through a rough patch without doing something specific to access it. And every way to access it has strings attached."

Read at www.housingwire.com