Your Home May Not be the Asset You Think

For most people, their home is their biggest investment. When housing prices are rising, that’s great – but if your retirement plan includes money you can draw from your home, falling prices can dramatically impact your retirement.

Most experts recommend that home equity not be considered an asset for retirement. One reason is the volatility of the real estate market, but there is another, more practical reason: We all need to live somewhere. If you sell your home to tap the equity, you will still have to find other accommodations, even if they are cheaper. (Although if you downsize you should be able to reduce your monthly utility and maintenance expenses.) If at all possible, create a plan that allows your home to be the icing on your retirement cake.