Cute Fuzzy Bunny said:
Do you sell the house, rent another place to live and eat, or sit in the house and starve?
What I said, CFB, is that "Taking equity out of the house isn't in the retirement funding
plan." And it isn't!
All our plans are calculated on staying in this house as long as we want with a conservatively calculated quantity of non-real assets to back that desire up. We don't list the house as a "retirement asset," even as a fall back retirement asset. This probably caused me to stay hitched to the plow two or three years longer than if I had pencilled in the value of the house as a spendable asset.
On the other hand, we have friends who enjoy their large scale, expensive homes and fully understand that they will be able to downsize and harvest liquid assets to live on later in life. They've built that into their retirement funding plans and it makes sense to me for them to do that.
Because our hobbies, lifestyle, some family matters, etc., are tied to our home, we planned to not "spend" our home but rather to keep it. So that's how we planned, and, yes, even worked extra time to have it work out that way.
You moved the situation from retirement planning to hypothetically dealing with some catastrophe later in life. That isn't what I was talking about. But, of course, if I needed money for my family to survive, I'd do whatever it would take including selling blood plasma, working, liquidating non-financial assests (including the house and furniture) and mooching off whoever I could. Who wouldn't?
But, again, my ER planning was based on not drawing on home equity for living expenses. I wouldn't necessarily recommend this algorithm for everyone.