Fiction: If I have to, I can use my house to finance my retirement.

Fact: It's great that you've completed your estate plan, but this is one of those things that is always evolving and never completely done.

For many people, their home is their single largest asset and largest portion of their net worth. This does not mean you can base your retirement on that asset, however.

You have to live somewhere, and most retirees prefer to stay put. Therefore, the best way to look at your house is as a place to live, not a retirement account. So in the years leading up to retirement, you may not want to overinvest in your home with the idea that you can get that money back later. A good rule of thumb is to keep your mortgage and other housing expenses to no more than 28 percent of your income and not prepay your housing costs instead of saving for retirement.

If you do decide to turn your equity into cash, you can sell and then rent, move to a cheaper area, or downsize. There may be other options as well.


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