5 Ways to Use Your Home to Help Pay For Retirement

Retirement is a time of life where many individuals find themselves in need of extra cash. While it may seem challenging to generate additional income during this phase, there is one valuable asset that retirees often overlook: their home. Recent economic shifts, such as rising home prices, have actually increased retirement security for older adults by 12%, according to a study by the Center for Retirement Research at Boston College.

There are various ways in which your home can help boost your cash flow in retirement. Selling your home is one option that some retirees consider. While half of older adults are open to the idea of selling their homes, the other half prefer to age in place due to the emotional attachment and memories associated with their homes. However, selling your home can provide financial benefits, such as downsizing to a more manageable property or using the proceeds to cover assisted living expenses.

Another option to consider is a cash-out refinance, which allows homeowners with sufficient equity to replace their existing mortgage with a larger one and receive the extra funds as a lump sum. This can be a cost-effective way to access cash, especially if you can secure a lower interest rate than your current mortgage. Alternatively, a home equity loan or line of credit (HELOC) can provide a lump sum or ongoing access to funds based on your home equity.

For retirees over the age of 62, a reverse mortgage can be a viable option to supplement income. This type of mortgage allows homeowners to receive payments without the need for monthly repayments. While the balance of the loan may grow over time, it is a non-recourse loan, meaning that the borrower or their heirs will not be responsible for paying back more than the home’s value. Renting out a portion of your home, whether through Airbnb, long-term rentals, or home-sharing arrangements, is another way to generate extra income in retirement.

Ultimately, the decision to leverage your home for additional cash flow in retirement depends on your financial goals and personal preferences. By exploring the various options available and considering the potential benefits and drawbacks of each, you can make an informed choice that aligns with your retirement strategy.