Selling your home could boost your nest egg — but is it worth it?
By Kate Ashford | NerdWallet
A 2023 report from investment firm Vanguard estimates that about a quarter of Americans age 60 and over could move to a cheaper housing market and use the equity in their homes to upsize their retirement savings — making retirement more secure and enjoyable.
Those with home prices near the national median could have cleared about $99,000 in equity, on average, in 2019 (the year the data was gathered). Homeowners in top-priced markets could have cleared an impressive $346,000, on average.
“We’re at a peak of where housing prices have been, ever, in history,” says Matthew Gottshall, a certified financial planner in Westlake, Ohio. “It’s been more and more common for people to weigh the option of, ‘Do I downsize? Do I take the equity that’s grown in my house?’”
Here are the steps to take as you consider the option.
Assess the market
Selling (and potentially downsizing) your home and pocketing the equity is a good strategy in a market where you can make it work. This is easier in pricier housing areas, when you may be able to trade your high-value home for a smaller place in a more affordable market. Vanguard’s analysis noted that relocators in California, for instance, were more successful at clearing equity in their homes than those in lower-priced markets like New Mexico and Texas.