Retirement costs are skyrocketing—for this generation and the next.
The Goldman Sachs Retirement Survey 2025 estimates it could cost roughly $2.57 million to retire by 2043, up from $1.75 million in 2033.
The reason behind these alarming figures? Inflation. Due to the rising costs of housing, healthcare, and virtually everything else, households ages 65-plus now spend roughly $122,000 per year compared with about $60,000 in 2000.
If you’re a homeowner who’s worried about saving enough for retirement, you may wonder whether your home equity could be your safety net.
Experts agree that while it could help supplement your income once you’re out of the workforce, it’s not a complete solution on its own.
“The $2.57 million number from Goldman Sachs isn’t meant to be paralyzing. It’s meant to be a wake-up call. The gap between what most people are saving and what retirement actually costs is real and it’s widening. Your home is a meaningful part of the answer for a lot of people. It just can’t be the only answer,” explains Alex Langan, chief investment officer of Langan Financial Group in Harrisburg, PA.
Why you need more than just home equity
Your home equity is valuable, but using it as your primary retirement strategy can lead to the “house rich, cash poor” trap.
“Unfortunately, this is common among people over 65. On paper, they have significant equity in their homes, but not enough liquid savings or dependable income to comfortably support their retirement,” says Pam Krueger, founder and CEO at Wealthramp, a fee-only financial adviser referral service in San Francisco.
That said, homeownership can still play a vital role in building long-term wealth. The Realtor.com® 2026 generational wealth report found that buying a home from ages 28 to 32 is associated with about 22.5% higher net worth by age 50—or roughly $119,000 more wealth—compared with waiting until your 40s to buy a home.
Just remember that a paid-off home doesn’t equal a healthy retirement, especially when inflation squeezes cash flow even tighter. And of course, higher property taxes, insurance premiums, utilities, and repair costs don’t make things any easier.
Langan pushes back with clients who come in thinking the house is going to fund their retirement. He reinforces the fact that an asset and an income plan are not the same thing.
“You can’t pay your property tax bill with home equity. You can’t cover a medical expense with it. You can’t use it to get through a rough patch without doing something specific to access it. And every way to access it has strings attached,” Langan explains.
Downsizing often seems like the most straightforward way to improve retirement security but it doesn’t always work out. A lot of people do the math on paper and then get surprised when the actual numbers come back.
“After everything it costs to sell and buy, the gap between what you sell for and what you spend on the next place is often narrower than expected. And if smaller homes in your area have appreciated too, you may not be walking away with as much as you planned,” adds Langan.
Home equity products may help but come with trade-offs
Though it’s risky to solely rely on home equity during retirement, home equity products may offer supplemental income and flexibility in some situations.
“Home equity belongs in a retirement plan. Just not as the foundation. Think of it as a layer, a strategic option you might use at the right time on your own terms,” says Langan.
As with all financial products, however, home equity options come with pros and cons that are important to weigh before using them. Here’s a closer look at each one:
Home equity loans and home equity lines of credit
These traditional loans come with a monthly payment. If you’re retired, you may not be able to, or want to, take on an additional monthly payment.
With a home equity loan, you receive a set amount of money with a fixed interest rate, meaning it—and your payments—stay the same over the full term of the loan. With a home equity line of credit or HELOC, you qualify for a designated amount, and are able to draw on it as you need it.
While some fixed-rate HELOCs are available, most have variable rates. That means your monthly payment can change over the life of the loan and bring some unpredictability into your finances.
For both a home equity loan and a HELOC, you have to qualify, based on your credit, your home’s loan-to-value ratio, and your debt-to-income ratio. If you don’t have any income coming in, this can be a problem. Plus, both use your home as collateral. If you miss payments, you risk losing your home.
Reverse mortgages
A reverse mortgage is a good option for some homeowners, but it comes with a number of risks and downsides.
Available only to those over 62, a reverse mortgage involves a bank paying you a monthly amount in exchange for an increasing share of your home’s equity. While you retain the title, you can lose it if you get behind on home insurance or property tax payments, let the home fall into disrepair, or move out for any reason (including dying).
Note that a reverse mortgage is still a mortgage, and comes with the typical associated costs.
“Closing costs can be higher than those with traditional mortgages, and there are origination fees, loan servicing fees, interest, monthly mortgage insurance premiums, and an upfront mortgage insurance premium,” explains Michael Micheletti, chief communications officer at Unlock Technologies in San Francisco.
You’ll also need to go through a federally approved counseling session with a nominal cost.
Home equity agreements
A home equity agreement (HEA) is a newer alternative for accessing home equity.
“It’s gaining interest among retirees because of the different qualification criteria and the fact that there are no monthly payments,” says Micheletti.
An HEA lets you access a portion of your home’s equity, without monthly payments, without refinancing, and without selling. When the agreement ends—by selling, buying out the HEA provider’s share, or reaching the end of the term—you make a settlement payment based on the home’s value at that time.
Credit scores as low as the 500s may qualify, and income requirements are flexible, meaning they can work well if you’re retired. The main downside is an HEA requires you to give up a portion of your home’s future value and you might owe significantly more when your agreement ends.
Ways to diversify your retirement safety net as a homeowner
These tips can strengthen your retirement plan and resilience in retirement, even with sky-high inflation and rising living costs.
Start with your income picture, not your asset picture
The goal in retirement is having money coming in that you can count on without needing to sell something or borrow against something every time a bill arrives. Knowing what that baseline looks like and building toward it matters more than the number on your net worth statement. Work with a financial adviser or planner if you need guidance.
Think carefully about Social Security
This is one of the most consequential decisions you can make for your baseline monthly income, and getting the timing right matters more than most people realize.
“Even delaying Social Security by a few years can meaningfully increase your guaranteed monthly income for life, and that reduces pressure on everything else, including your home,” says Sara Kermenski, a financial planner and founder of Spring Hollow Financial in Marlboro, VT.
Don’t overfill the house bucket
Work on filling your other buckets instead, like pretax investments, Roth, and a taxable brokerage account.
“Account location matters more than most people realize, and having all three gives you real flexibility to manage your tax burden in retirement year by year,” Kermenski explains.
Keep enough liquid reserves
The goal is to ensure one bad year or one unexpected expense doesn’t put you in a position where you’re making reactive decisions about your home.
“Needing to sell or borrow under pressure is how good assets produce bad outcomes,” Langan explains.
Use home equity strategically
If you have meaningful home equity, treat it as a planned component of your overall strategy, not as a last resort you’ll sort out later. There’s a real difference between choosing to downsize on your own terms at the right time versus being pushed into it by circumstance.
“One of those conversations is about opportunity. The other is about damage control,” notes Langan.
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