How Home Equity Can Help Fuel Your Retirement

How Home Equity Can Help Fuel Your Retirement

If retirement is approaching, it’s time to start planning your next chapter. Ensuring you’re financially comfortable is key to living the retirement lifestyle you’ve envisioned.  

What you might not realize is that your home could be a hidden goldmine. According to data from the Federal Housing Finance Agency (FHFA), home values have increased nearly 60% over the past five years (see graph below):

And that appreciation gave your net worth a big boost. According to Freddie Mac, over the same five-year period:

“ . . . Boomer overall wealth increased by $19 trillion, or $486,000 per household, half of which is due to house price appreciation.”

If you’ve been in your home even longer, you likely have even more equity built up. To access more of the wealth you’ve accumulated over the years, it may be worth considering selling your house to downsize.

Why Downsizing Might Be the Right Move

Selling now and downsizing into a smaller home, or moving to a more affordable area, could unlock your home equity, giving you the financial confidence to retire. Whether your goal is to travel, spend quality time with family, or simply feel more secure, accessing your home equity can make a significant impact. As Chase explains:

“Retirement is an exciting time. Selling your home to take advantage of the equity or to downsize to a more affordable home can open up additional options for your future.”

Here are just a few of the ways a smaller home can fuel your retirement:

1. Cut Your Cost of Living

According to data from AARP, the top reason adults aged 50 and older move is to reduce their cost of living. Downsizing to a smaller home or relocating to a more affordable area can help lower monthly expenses such as utilities, property taxes, and maintenance costs.

2. Simplify Your Life

A smaller home typically means less maintenance and fewer responsibilities, giving you more time and energy to focus on what truly matters in retirement.

3. Boost Your Financial Flexibility

Selling your home allows you to access your equity and turn it into cash. Whether you choose to invest, pay off debt, or build a financial cushion, it can create new opportunities for your future.

The First Step Toward Your Next Chapter

If downsizing is on your mind, partnering with a real estate agent is the next step. They’ll help you determine your equity and explore how to use it. Beyond that, they’ll guide you through selling your current home and finding a new one, ensuring a smooth transition into your next chapter.

Bottom Line

If you're planning to retire in 2025, now may be the ideal time to downsize and tap into the equity you've built in your home. Let's start planning your move now, so you’re ready to make every day feel like a Saturday.