For many retirees, homeownership is far more than a place to live. It has become the cornerstone of financial security, often representing the single largest component of net worth. With baby boomers sitting on a staggering 19 trillion dollars in real estate wealth nationwide, home equity now exceeds traditional retirement savings for many seniors.
At Boutique Realty, we understand the vital role real estate plays in long-term financial planning. Whether buying, selling, or leveraging property, homeowners in Los Angeles can use their real estate strategically to support retirement goals.
Home Equity: The Retirement Safety Net
According to the National Institute on Retirement Security, home equity accounts for approximately one-third of retirees’ financial assets. By comparison, median retirement savings in accounts like 401(k)s or IRAs is just one-quarter of that value. For many, this means their primary residence is not only a home but a critical financial reserve.
Senior economist Jake Krimmel explains, “Seniors do not necessarily want to draw down on their home equity through costly products like home equity loans or reverse mortgages. Instead, this equity can be tapped in emergencies, passed on to heirs, or accessed when downsizing.”
This perspective highlights why fixed-rate mortgages are considered “good debt.” Unlike other liabilities, paying off a mortgage builds equity while providing stable housing, helping seniors maintain financial flexibility and predictability.
Homeownership vs. Renting: The Retirement Advantage
The study finds nearly 80 percent of adults over 65 live in homes they or a household member own, while only 17 percent rent. Senior homeowners tend to have higher overall net worth and roughly four times the balance in retirement accounts compared with renters.
Fixed mortgage payments shield homeowners from year-to-year increases in housing costs that renters often face, providing financial stability. Seniors carrying a mortgage typically have predictable payments that allow for consistent budgeting and continued retirement contributions.
Even retirees who still have housing debt enjoy significant advantages. Among households aged 65 to 79, roughly 40 percent still carry a mortgage. While this might seem burdensome, mortgage debt is low-cost, appreciates over time, and is tied to an asset that grows in value—unlike consumer debt.
Turning Bricks and Mortar Into Retirement Income
While home equity represents a massive portion of retirement wealth, accessing it requires careful planning. Strategies include selling, downsizing, renting, or borrowing against equity. For higher-income retirees, housing wealth can make up over 80 percent of total net worth, offering flexibility if leveraged wisely.
However, tapping into home equity often involves lifestyle changes, such as relocating or renting, which are not suitable for all retirees. Boutique Realty specializes in guiding homeowners in Los Angeles to make informed decisions that protect both their lifestyle and long-term financial security.
The Stability of Real Estate in Retirement Planning
Home equity offers a unique form of stability because it is largely illiquid. It cannot be spent impulsively and serves as a reserve for unforeseen expenses. This stability can be especially valuable in high-cost markets like Los Angeles, where housing affordability and cost-of-living factors are critical considerations for retirees.
Krimmel emphasizes, “Home equity is not the most liquid asset, which makes it a good nest egg. The fact that many retirees are not drawing it down signals financial stability for the majority.”
Boutique Realty: Your Partner in Retirement-Ready Real Estate
Owning a home in Los Angeles provides both lifestyle and financial benefits. From building long-term equity to supporting retirement income, real estate remains a cornerstone of wealth and security.
At Boutique Realty, we help homeowners understand the full value of their properties, whether for selling, downsizing, or leveraging home equity. Our expertise ensures clients make strategic real estate decisions that enhance financial stability and protect lifestyle goals.
Connect with Boutique Realty today to explore how your home can support retirement planning and maximize its long-term value.