Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Who factors house equity into their 'retirement income'?
Old 03-27-2014, 07:24 PM   #1
Full time employment: Posting here.
 
Join Date: Feb 2014
Posts: 731
Who factors house equity into their 'retirement income'?

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.
__________________

__________________
BBQ-Nut is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-27-2014, 07:30 PM   #2
Full time employment: Posting here.
dtbach's Avatar
 
Join Date: Apr 2011
Location: Madison
Posts: 752
Well, I guess it is part of your portfolio but generally cannot generate income like other assets. Selling and moving to a smaller dwelling would gain you some money however.
__________________

__________________
Wild Bill shoulda taken more out of his IRA when he could have. . . .
dtbach is offline   Reply With Quote
Old 03-27-2014, 07:44 PM   #3
Full time employment: Posting here.
 
Join Date: Feb 2014
Posts: 731
Quote:
Originally Posted by dtbach View Post
Well, I guess it is part of your portfolio but generally cannot generate income like other assets. Selling and moving to a smaller dwelling would gain you some money however.
Well, that is what I meant - if not worded clearly. My bad.

So yes - are you depending on 'cashing out' the equity by selling your home to pay for your retirement, or do people not include it?
__________________
BBQ-Nut is offline   Reply With Quote
Old 03-27-2014, 08:03 PM   #4
Recycles dryer sheets
chris66's Avatar
 
Join Date: Jan 2014
Posts: 78
We don't count it. However, if only one of us is alive, and near the end, and we're running low on money, it's our end of life "emergency fund". Either reverse mortgage (and get in home care), or sell and go into facility. Hopefully, our funds don't run that low, but we do consider it a buffer for at the end.
__________________
chris66 is offline   Reply With Quote
Old 03-27-2014, 08:44 PM   #5
Thinks s/he gets paid by the post
 
Join Date: Sep 2009
Location: Hong Kong
Posts: 1,574
Our home equity is not part of our Plan A retirement assets, but if things go pear-shaped, it's part of either Plan B (if the need arises late in life) or Plan C (if the need arises sooner getting a j*b becomes Plan B and downsizing is Plan C).
__________________
Budgeting is a skill practised by people who are bad at politics.
traineeinvestor is offline   Reply With Quote
Old 03-27-2014, 08:57 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
I consider all assets in our portfolio, including real assets. Plans for utilization vary by asset class.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 03-27-2014, 08:58 PM   #7
Recycles dryer sheets
 
Join Date: May 2011
Location: Austin
Posts: 223
I do, it is a significant number. And I also including my business inventory, although it is even less liquid.
__________________
HillCountry is offline   Reply With Quote
Old 03-27-2014, 09:13 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Posts: 1,649
For retirement income, no our home is not included. Only include it in net worth estimates.
__________________
sheehs1 is offline   Reply With Quote
Old 03-27-2014, 09:20 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,428
Not here. Plan Z would be to sell and rent or reverse mortgage.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 03-27-2014, 09:40 PM   #10
Dryer sheet aficionado
 
Join Date: May 2013
Location: Laveen
Posts: 38
Not here.Wife and I discard the home equity in all equations
__________________
mtheulen is offline   Reply With Quote
Old 03-27-2014, 09:42 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 6,331
No. I would only do that if downsizing an expensive house was part of my financial independence plan.
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 03-27-2014, 09:52 PM   #12
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,107
Quote:
Originally Posted by BBQ-Nut View Post
So yes - are you depending on 'cashing out' the equity by selling your home to pay for your retirement...
No. Cashing out on home equity was a popular retirement funding strategy a few years ago, but largely evaporated in 2008.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 03-27-2014, 09:54 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,326
I use my own spreadsheets with liquid net worth and total net worth. I assume the house will appreciate with inflation.

The house factors into the plan either because we have a mortgage + gain house appreciation, pay rent but have the house value in liquid assets to invest, or pay off the mortgage but then have less to invest and just have house appreciation. I plan it all different ways.

When we talked to a financial adviser years ago, he said they don't factor home value into the retirement plan, which especially in California seemed a bit bizarre. Person A could have zero savings and a paid off house worth $500K and person B could rent and have $500K in savings, so by their logic person B could be prepared for retirement and person A would have to work until he drops. That makes no sense, to me to not include the house, as A and B would have more or less the same net worth.
__________________
daylatedollarshort is offline   Reply With Quote
Old 03-27-2014, 10:03 PM   #14
Thinks s/he gets paid by the post
jollystomper's Avatar
 
Join Date: Apr 2012
Posts: 1,361
We do not. Our only consideration for it is downsizing to something smaller, and the amount of equity we get out of it would dictate the choice of a new place. Other than that, as was mentioned above, it is more an end of life "Emergency Fund", if needed.
__________________
Current target FIRE date: Under negotiation, can happen anytime.
jollystomper is offline   Reply With Quote
Old 03-27-2014, 10:59 PM   #15
Thinks s/he gets paid by the post
imoldernu's Avatar
 
Join Date: Jul 2012
Location: Peru
Posts: 4,616
Quote:
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?
I do.... Explained here in some detail as phase II (post #115)
Sharing 23 years of Frugal Retirement

I did not understand your post as a question about using house equity as part of an investment portfolio.
__________________
imoldernu is offline   Reply With Quote
Old 03-27-2014, 11:33 PM   #16
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,044
When I was a homeowner, I did not include home equity in my retirement plan. We lived in a cheap house and including home equity would have made little difference. Now, if I were to spend a sizable amount of money for a house in a prime real estate market, I might look at how home equity could play a role as a backup.

My MIL is using a reverse mortgage on her house. She was facing a retirement budget deficit even after annuitizing her meager savings, so she had no choice but to "pawn the house".
__________________
FIREd is online now   Reply With Quote
Old 03-27-2014, 11:45 PM   #17
Full time employment: Posting here.
 
Join Date: Nov 2010
Posts: 588
I don't, but have had family members who would move into an unfinished house, finish it (painting, carpeting, drapes, landscaping ...) while living there, sell it and repeat the process. If you don't buy too high, it is like any investment.
__________________
devans0 is offline   Reply With Quote
Old 03-28-2014, 04:19 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,412
since i can't sell off my living room it plays no part in my retirement income.

only what is not being consumed by me counts.

actually owning a home mostly serves to reduce housing costs. it adds zero to the income side . it improves cash flow.

unless you sell and rent or sell and down size study after study shows home ownership allows someone to retire because it cuts housing costs and allowed them to retire on less income.

whether a home is worth 100k or 1 million if you are consuming it to live in then its value is a moot point. all it represents is an expense, some higher ,some lower but it represents your housing costs.

that isn't to say it isn't part of your net worth like your car, your jewelry ,your furniture if you are inclined to throw it in , it just matters for what purpose are you counting it.
__________________
mathjak107 is offline   Reply With Quote
Old 03-28-2014, 05:30 AM   #19
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,455
We don't factor any equity from our primary residence or consider it part of the portfolio. Even downsizing is costly, real estate transaction fees and moving costs consumer much of the potential cash benefit. Reverse mortgages are no great deal either.
__________________
MichaelB is offline   Reply With Quote
Old 03-28-2014, 05:35 AM   #20
Moderator
Walt34's Avatar
 
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 16,539
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.
__________________

__________________
I heard the call to do nothing. So I answered it.
Walt34 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
A discussion on SWR & factors that affect it walkinwood FIRE and Money 14 10-04-2012 09:57 PM
Factors to consider in Planning: Run with me? HsiaoChu Life after FIRE 3 03-02-2010 07:38 AM
Factors that influence your annuity rate of return? skyvue FIRE and Money 3 02-03-2010 03:52 PM
Guidelines, Notes or factors to consider for ER maxer FIRE and Money 0 10-13-2007 02:49 PM
Reaches into their stomachs and saves their lives~Wow! mickeyd Other topics 0 12-14-2006 11:11 AM

 

 
All times are GMT -6. The time now is 10:21 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.