Mine is a little less than 15% if I include my home's value in my net worth. I think the author must be thinking of Californians.
As a former Californian I wonder if you mean % of assets rather than % of net worth. Most of my neighbors had a huge mortgage liability on their personal balance sheet and little net worth.
Now that you mention it, that sounds more realistic than my former statement. I can't imagine who the article must be referring to, then.
Perhaps people like me who bought into a now-expensive area (in my case Seattle) before it got that way, and as a result are sitting on a large amount of equity. I bought my first house in 1985 for a five digit price, sold it in 1997 for nearly three times what I paid, was able to put about 50% down on the townhouse I live in now, which has also slightly better than doubled since I bought it, even taking the recent downturn into account. Between appreciation and paying down the mortgage, it's now worth about three times what I owe on it, despite the refi I used to replace my car three years ago.
I don't know what the house comes out to as a fraction of my net worth. The mortgage is my only debt, and the equity in the house is a bit less than twice what I have in my retirement accounts, so where does that leave me—about 60% of net worth in my house? I must confess I don't exactly understand how net worth fits into the E-R picture. It doesn't include my pension (or does it), without which it would be impossible for me to retire at all, never mind early! And it does include houses, which are not liquid and which many people are not willing to tap to finance their living expenses in retirement, except as a last resort if they need to move into an assisted living or similar situation.
Personally, I do consider the equity in my current house as part of my retirement resources. At retirement I plan to sell this house, use half the equity to pay in full for a house in a less expensive area, and add the other half to my portfolio. But after that, I will be among those who consider any equity the house accumulates as a "last resort" category. My retirement budget doesn't have room in it for ongoing debt like a HELOC. For me, it'll be cash (or debit card
) on the barrelhead from E-R on out.
I have thought of taking advantage of current low real estate prices by cashing out some of my equity and buying a retirement house now, then selling this one in a few years when prices have (I hope) recovered somewhat. But I couldn't afford the higher mortgage payments and still max out my retirement savings too, so I guess that dog won't hunt. I'm not sure I would do it even if I could make the bigger payments...I don't think it passes the "sleep at night" test.
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