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Old 03-28-2014, 05:51 AM   #21
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We view our home as a necessary expense since we have to live some place. If we choose to sell at some point the money will just be used to buy/rent another place. I guess it's part of our net worth, but not a part of our investable assets, so we only consider it as an expense.
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Old 03-28-2014, 08:55 AM   #22
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Originally Posted by BBQ-Nut View Post
Does anyone here use/factor/depend on the equity of their home as part of needed income later in retirement?

Does your long term plan envision not being able to live 'alone' (even with a spouse), and so selling the house and cashing out the equity can be used for moving into a retirement community or even assisted living?

Also - has anyone considered or is using a 'reverse mortgage'?

At some point the family or the law is going to take my keys away, and my spouse, and we may need add'l assistance for everyday living - which makes living in our house unrealistic.

For me, I have *not* included our house equity in our retirement savings calculations - so it's nice to know it is a 'buffer' in case we need it.
No, I do not and will not use home equity to plan for retirement. If we downsize or move, that'll be gravy.
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Old 03-28-2014, 09:07 AM   #23
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I do not count it in my portfolio. House is all I'm planning to pass to my kids when/before I depart - hopefully a nice chunk of down payment for their own house. I'll then rent/buy a small condo.
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Old 03-28-2014, 09:16 AM   #24
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I do not.
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Old 03-28-2014, 09:40 AM   #25
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We plan to move and downsize at retirement. I count the equity in excess of what we believe will be the cost of the retirement home as part of the portfolio starting then. Probably right at $100K will go into the portfolio assuming no real estate crash.

The equity in the new home isn't accounted for anywhere except in net worth. It's a cushion via reverse mortgage if ever needed
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Old 03-28-2014, 09:56 AM   #26
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The concept of retirement income is meaningless without accompanying expenses. Equity in a home reduces retirement expenses.

I would count equity as a 0% real return bond making the assumption that houses generally will keep up with inflation as the world population increases.
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Old 03-28-2014, 10:08 AM   #27
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I never counted house equity as part of the retirement portfolio before we retired.
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Old 03-28-2014, 10:10 AM   #28
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Well, maybe, sort of.

While it's not liquid the house is an asset that does have marketable value and can be sold. The way we're leaning now is when we do move it will be to a CCRC and the house equity more or less covers the entrance fee that in turn gets monthly housing expenses down to about what they are now. With the benefit that all maintenance issues go away.

That reminds me, Monday is April 1st and we were going to call and do "The Tour" of one and get a package with all the fine print.
Maybe sooner than later. March has 31 days. April 1st is Tuesday.
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Old 03-28-2014, 10:26 AM   #29
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We have a modest mortgage. The part that goes to pay down principle is not counted as spending. The part for interest is counted. Others may question this but that's my view.

As others above have said, the overall house equity is our Plan B parachute. I don't expect another 2008-2009 to come on top of a possible need to move due to health issues later in life. Currently happy in our home.
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Who factors house equity into their 'retirement income'?
Old 03-28-2014, 10:40 AM   #30
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Who factors house equity into their 'retirement income'?

Not me. Like others here, I regard my house as simply a place to live, one requiring fairly minimal cost right now since it is paid off.

In answer to the OP's other question, I don't plan to get a reverse mortgage. If things got THAT bad, I would probably sell and use the proceeds to rent a small apartment in a cheap location. However I can't forsee that ever happening.

I might feel differently about all this if my house was a huge part of my net worth. It's not.
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Old 03-28-2014, 10:41 AM   #31
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No, but it's a safety net. I can downsize if I have to at some point. It was helpful for me to retire early knowing I have this option.
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Old 03-28-2014, 11:01 AM   #32
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For income, no. It is figured into LTC. We self insure. We have LTC covered for one, however, is the other one of us had to go at either the same time or shortly after, we would come up short. Our home equity would be used to offset the additional expense.
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Old 03-28-2014, 11:13 AM   #33
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My house equity is factored in as the last bucket before survivor Medicaid.
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Old 03-28-2014, 11:33 AM   #34
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Years ago when in the retirement dreaming stage I would count every asset. Now it's only those that generate income or can be converted to cash quickly. Our plan C is to sell our lake house and stay put in our primary as long as possible. While it is quite large my downsizing calculations don't really save that much. Plan D may involve a reverse mortgage, but a lot bad things would have to happen first.
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Old 03-28-2014, 11:38 AM   #35
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I don't count it as part of my portfolio but I count on having equity money from this house to move to another home or buy into a planned continuing care place.
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Old 03-28-2014, 11:44 AM   #36
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Does anyone here use/factor/depend on the equity of their home as part of needed income later in retirement?
It appears that most do not consider the value of the house as needed, later in retirement.

Inasmuch as these amounts seem to be surplus, this old curmudgeon would be most happy to accept the ownership of the home, and would in return, allow your free occupancy for the balance of your life. (exclusive of fees, maintenance and taxes)

If enough people will sign on, I would draw up the papers, and begin the transition. I know your question is: "What's in it for you (meaning me)".
I shall set up an "imoldernu" trust, to provide my extended family with a dynastic legacy for the coming century.

Yours, in hopeful anticipation,
imoldernu
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Old 03-28-2014, 12:23 PM   #37
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As I have pointed out before, if you follow the philosophy that you don't count your home equity as part of your retirement income assets, then if you rent instead of own, you should allocate an amount equal to the cash it would take to buy your rental property and not count it in your retirement income assets.
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Old 03-28-2014, 12:53 PM   #38
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As I have pointed out before, if you follow the philosophy that you don't count your home equity as part of your retirement income assets, then if you rent instead of own, you should allocate an amount equal to the cash it would take to buy your rental property and not count it in your retirement income assets.

Home equity does not create income nor is it an expense. If the home is sold the equity is converted to cash and is moved into an income producing asset. Rent is an expense. There's no reason to not count it as a retirement income asset since it does produce income to offset the expense of rent.
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Old 03-28-2014, 01:03 PM   #39
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I live in a co-op studio apartment with no mortgage. What could I downsize into?
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Old 03-28-2014, 01:04 PM   #40
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As I have pointed out before, if you follow the philosophy that you don't count your home equity as part of your retirement income assets, then if you rent instead of own, you should allocate an amount equal to the cash it would take to buy your rental property and not count it in your retirement income assets.
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