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Old 05-10-2013, 07:55 PM   #21
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Katsmeow's Avatar
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Originally Posted by Tom52 View Post
As a reference our retirement home will be valued at approx. 15% of our net worth, but the home will not be included in our net worth calculation. Hope that makes sense.
I would suggest that your home is most certainly part of your net worth. It is an asset which has a value. However, I would suggest that most would not consider the value of the home as part of your portfolio.

That is, yes, equity in a home is part of net worth. However, in determining a withdrawal rate for a portfolio I would not include the equity of the home.

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Old 05-10-2013, 08:40 PM   #22
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An additional concern that might affect the purchase value...
Consider the home value as a reserve in case of one spouse requiring long term care and depleting the retirement assets. The surviving spouse may remain in the home with medicaid taking over nursing home payments. in most cases, upon the death of the other, the surviving spouse may keep the house up to reasonable limits. Renting does not provide this "reserve". A five year "lookback" is the qualifier.

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