Should You Consider Your Home Equity as You Approach Retirement?
A recurring question we hear from clients as they approach retirement pertains to their personal residence. To borrow (somewhat) from Shakespeare, what we typically hear is, “To sell, or not to sell, THAT is the question!”
It’s a great question that’s often not easy to answer. It is, however, a very significant decision. Consider this: As most people approach retirement, one of their primary assets is their home. According to 2014 U.S. census data, home equity comprised 66 percent of net worth for people between the ages of 65 and 69. With increasing life expectancy, access to this portion of wealth could play a major factor in many people’s quality of life.
How Can You Access the Equity in Your Home?
HERE ARE A COUPLE OF WAYS:
SELLING: After paying taxes that may be due, the proceeds from the sale should pro-vide a cash payout you can invest to provide additional income during retirement. While this approach sounds simple, it often is not. There are many factors to consider when deciding to sell your home, including a few considerations mentioned below:
- Is there a suitable replacement home that meets your needs?
- Are there emotional reasons or family considerations that could create tension if the house is sold?
- Is renting a viable option, and are rental rates affordable?
Determining what to do with a family home is an important decision that will need to be ad-dressed, and the solutions will be different for each person. So don’t be afraid to tackle the question, and most importantly, don’t be afraid to get help from your financial advisor.
MEET THE EXPERT
BARRY PRIM, MBA, SENIOR CLIENT CONSULTANT, WARREN AVERETT ASSET MANAGEMENT
Barry Prim is a Senior Client Consultant for Warren Averett Asset Management.