Is Home Equity an Underutilized Retirement Asset?

IB#17-6

The brief’s key findings are:

  • Home equity, the largest asset for most households entering retirement, can be tapped by downsizing or by taking a reverse mortgage.
  • Few households currently use either option due to behavioral and informational barriers, a preference to stay in one’s home, and high transaction costs.
  • To the extent that behavioral and informational barriers impede downsizing or reverse mortgages, home equity is an underutilized retirement asset.
  • An open question is whether more retirees will overcome these impediments and tap home equity in response to growing financial pressures.