New analysis from home equity financing platform Point reveals that many homeowners are overlooking equity as a valuable financial resource, despite it being an important part of their net worth.
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Owning a stable home and building financial security are essential for a smooth transition into retirement. But a new report from home equity investment platform Point reveals that many homeowners are overlooking equity as a financial resource, even though it accounts for a significant portion of their net worth.
Point surveyed more than 1,000 homeowners age 50 and older and found that many Americans nearing retirement feel unprepared for retirement, according to an analysis released Wednesday. According to the survey results, only 46% of participants were confident that they would retire on time, 25% were somewhat confident, and 29% had little or no confidence that they would retire on time. I answered no.
Masaharu Ueki, Point’s chief growth officer, said the link between financial security and retirement is clear, as homeowners who save more for retirement are significantly more optimistic about their retirement abilities.
Masaharu Ueki
“Homeownership is unique in that a home typically serves two purposes at the same time: It is a place to live, and it is also the primary way many homeowners build wealth,” Ueki said. Ta. “Whether you’re looking for extra cash to deal with increased spending or planning for long-term security, this stock offers flexibility and peace of mind. Instead of thinking of it as a location, think of it as one of the most valuable tools in your retirement toolkit.”
Among employed participants, 15% had less than $10,000 saved for retirement, and 88% of them doubted they would be able to retire. Even among those with less than $50,000 in savings, 72% were worried about their retirement, compared to just 25% of those with more than $250,000 in savings.
There is no doubt that financial pressures are exacerbating these concerns.
Individuals age 65 and older have monthly expenses of more than $4,000 and average Social Security payments of $1,907. Additional challenges such as rising housing costs, rising interest rates, inflation, medical costs, and other unforeseen life-altering events further complicate matters.
“Everyone’s situation is different, but it’s important to understand what you need to afford your current and future lifestyle,” Ueki says. “Once you’ve identified your budget and planned for emergencies like unexpected home repairs or medical bills, you may need to tap into things like home equity to cover the shortfall.”
Despite these challenges, homeownership continues to be the cornerstone of economic security for older Americans.
Half of homeowners surveyed believe their home accounts for a significant portion of their net worth. Among retirees, 48% consider their home their primary asset, 23% have home equity of $500,000 or more, and 57% have at least $250,000 or more. Only 12% of retirees have less than $50,000 in home equity.
Unfortunately, accessing housing equity and purchasing a home has become more difficult than ever before. The sales rate in September was the lowest in 14 years, and the inventory of unsold homes increased by 1.5%, highlighting the difficulty in utilizing housing assets, whether through borrowing or selling.
“We find that many homeowners, including those with minimal savings, have significant home equity that they can potentially leverage,” Ueki said. “One of the challenges is that accessibility can be difficult with traditional financial products. For example, our previous research found that nearly 50% of homeowners who applied for a HELOC were denied. (often because your credit score or income isn’t high enough).
Ueki said home equity investing is more accessible, allowing homeowners to access equity without increasing their monthly payments, giving retirees greater financial freedom.
Despite the difficulty in leveraging home equity, home equity remains at an all-time high and provides an important financial lifeline.
“According to the Federal Reserve, Americans have $35 trillion in home equity,” Ueki added. “As of the second quarter of 2024, homeowners across the country have amassed a total of $11.5 trillion in available assets, the highest level in history. And for retirees, that’s a game-changer. It’s a thing.”
