We were all relieved when the Great Recession officially ended, but the housing market has been slow in its recovery. Many homeowners who found themselves “underwater” on their mortgages – owing more on the home than it is now worth – are still waiting on real estate values to rebound. In the meantime, many have lost valuable equity in their homes. Real estate is still moving slowly, because these people cannot afford to sell their homes and prospective buyers are often unable to attain a loan.
The good news is that we are definitely seeing promising signs of recovery, but it will still be a while yet before home values return to their past highs. In the meantime, it’s important to learn a lesson from the housing market crash: Placing too much emphasis on your home’s equity could lead you to underfund your retirement.
Some soon-to-be retirees count upon selling their longtime homes, hoping to utilize the equity to boost their retirement funds. Others want to downsize to a less expensive home, or even move to a retirement-friendly environment, in order to downsize their monthly budgets. Since home values are still drooping, we’ve learned that counting upon home equity to fund retirement is not a reliable plan. And with real estate moving very slowly, we know that no one can count on being able to sell their home when they had hoped.
All of these points underscore the importance of formulating a solid retirement plan which does not include your home’s value. Rather than risk vulnerability to uncertain housing market conditions, talk to your insurance and financial advisor about more secure options in your future.
This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
13386 – 2014/5/2