Report: Some U.S. Homeowners Are Making a Big Retirement Mistake

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If you’re thinking about using your home to fund your retirement, you might want to explore other options. The reason is that the place you live may not be as viable a retirement strategy as you think.

Money expert Clark Howard is a big fan of saving to fund your retirement. He says the key is to save through the right vehicle so that you get the best returns over time.

Why Banking on Your Home for Retirement Isn’t a Safe Bet

For millions of Americans, using the house they live in — or any home they own — is not a solid retirement plan. But knowing that may not keep people from trying.

A report from co-investment firm Unison indicates that an overwhelming majority of Americans (90%) view their home as a financial asset. In fact, one in 10 say their home is the biggest part of their retirement plan.

According to the study, nearly a quarter of Americans (25%) don’t know how to leverage their homes in their financial portfolios.

Here are some other key findings from the report:

  • Nearly three-fourths of homeowners (70%) think their home’s value will greatly appreciate by the time they retire
  • 17% say their home represents half or more of their retirement nest egg
  • 38% say their plan is to sell their home and relocate to a cheaper area

While these illusions of grandeur may be appealing, you also need to consider the nature of home values.

The Truth About Home Values

The median sale price of an existing home in the United States is expected to rise more than 3% to $270,400 in 2020, according to the Washington Post.

But upward trends could change quickly. Namely, your home could depreciate in that same time span.

The economic downturn of 2007 to 2009 — a period Clark calls a “fever pitch speculative era” — shows what can happen if we begin to treat our homes like an ATM.


So, the up and down nature of the housing market is the #1 reason why the majority of Americans should consider other options to fund their retirement.

Clark’s Take: Make Saving for Retirement a Priority

Clark says the most successful savers are those who have made it important to them.

“For most of us, it’s all a matter of priorities,” Clark says on his podcast. “We choose whether we want to spend money for today or save it for tomorrow — and that is completely your choice.”

For working folks, Clark recommends saving for the future by funding a retirement account through your employer. Not only can it be done passively, but you also can build a sizable nest egg with the right investments.

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