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Owning a stable home and building financial security are essential for a smooth transition into retirement. However, a new report from home equity investment platform Point reveals that many homeowners overlook equity as a financial resource — even though it constitutes a substantial portion of their net worth.
Point surveyed more than 1,000 homeowners aged 50 and older and found that many Americans nearing retirement feel unprepared to do so, according to an analysis released Wednesday. Only 46 percent of participants felt confident about retiring on time, while 25 percent felt somewhat confident and 29 percent expressed little or no confidence about retiring at all, the findings show.
The connection between financial security and retirement is clear, as homeowners with greater retirement savings were significantly more optimistic about their ability to retire, Point Chief Growth Officer Shoji Ueki said.
Shoji Ueki
“Homeownership is unique in that the home typically serves two concurrent purposes: it’s a place to live, and it’s also the primary way many homeowners build wealth,” Ueki said. “Whether someone is looking for extra cash to handle rising expenses or planning for long-term security, this equity can offer flexibility and peace of mind. So, instead of thinking of the home as just a place to live, consider it one of the most valuable tools in your retirement toolkit.”
Of the employed participants, 15 percent had saved less than $10,000 for retirement, and 88 percent of that group doubted they could retire. Even among those with $50,000 or less saved, 72 percent were concerned about retirement, compared to only 25 percent of those with over $250,000 in savings.
Financial pressures have undoubtedly exacerbated these concerns.
For individuals over 65, monthly expenses exceed $4,000, while the average Social Security payment sits at $1,907. Additional challenges such as high housing costs, rising interest rates, inflation, medical bills or other unexpected life-changing events compound the issue.
“Everyone’s situation will be different, but understanding what you need to afford your lifestyle now and into the future is crucial,” Ueki said. “Once you’ve identified a budget and planned for contingencies for things like unexpected home repairs and medical costs, you may need to leverage something like home equity to make up a shortfall.”
Despite these challenges, homeownership continues to be a cornerstone of financial security for older Americans.
Half of homeowners surveyed view their home as a significant part of their net worth. Among retirees, 48 percent view their home as a major asset, with 23 percent holding $500,000 or more in home equity and 57 percent having at least $250,000. Only 12 percent of retirees have $50,000 or less in home equity.
Accessing home equity and purchasing a home has unfortunately become increasingly difficult compared to previous years. September marked the slowest sales rate in 14 years, accompanied by a 1.5 percent increase in inventory of unsold homes, highlighting the difficulties in leveraging home equity, whether borrowing or selling.
“We found that many homeowners — including some with minimal savings — had substantial home equity that they could potentially tap into,” Ueki said. “One challenge in doing so is that accessibility can be challenging via traditional financial products. For example, our previous research found that nearly 50 percent of homeowners who apply for a HELOC are rejected (often due to insufficiently high credit scores or income).”
According to Ueki, home equity investments can help homeowners access equity without increasing monthly payments and with greater accessibility, which will provide retirees greater financial freedom.
Despite difficulties tapping into home equity, it remains at an all-time high and offers a vital financial lifeline.
“According to the U.S. Fed, Americans are sitting on $35 trillion in home equity,” Ueki added. “As of the second quarter of 2024, homeowners nationwide had collectively amassed $11.5 trillion in tappable equity — the highest level ever recorded. And for retirees, that’s a game-changer.”
