Source: Market Watch PICKS —
It certainly pays to own a home before you reach your golden years. About 80% of Americans age 60 and over are homeowners, with housing wealth accounting for approximately 48% of their median net worth, according to a February 2023 paper published by Vanguard. And tapping into your home equity can provide a lucrative path to retirement (see the best HELOC rates you may get now here) — especially if you move to a less expensive place. About 60% of migrating retirees are moving to less pricey places — and typically extracting $100,000 of home equity in the process.
Where you bought your home matters, a lot. Retirees moving out of their primary residence on the West Coast (Washington, Oregon and California) are most likely to be able to maximize the home equity they built up, and then retire and relocate. Similarly, retirees in the Northeast (New York, Massachusetts, New Jersey, Maryland and Washington DC) are also well positioned to come out of a home sale with cash in hand, the Vanguard report reveals.
This data showcases that if you’re planning to depend on home equity to help fund retirement, where you live now matters. Indeed, selling a home and living off the profits “is very viable for coastal dwellers moving inland to the Midwest,” while it might not be for others, says certified financial planner Derieck Hodges.
Hodges adds: “Since the pandemic, rents have escalated and values of homes to buy have also increased so many homeowners end up downsizing their space but not radically saving that much money after paying for relocation expenses and closing costs on the sale of their home.”
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