Back to the Basics: How Home Equity Can Support a More Flexible Retirement

In Articles, Articles: Kansas City Office, Articles: Salt Lake City Office, Back to the Basics, SLC Winter 2026, Winter 2026 by Scott Dougan

For many retirees, the home is more than a place to live, it’s one of the largest assets on the balance sheet.

Yet home equity is often overlooked or underutilized in retirement planning. When thoughtfully integrated into a broader financial strategy, home equity can provide flexibility, resilience, and peace of mind throughout retirement.

The key isn’t viewing your home as something you must financially optimize, but rather understanding the options it creates.

1. Home Equity as a Safety Net

Even retirees with well-funded portfolios face uncertainty: market volatility, health events, or unexpected expenses. Home equity can serve as a valuable backstop.

Options like downsizing, selling a second property, or establishing a home equity line of credit (HELOC) before retirement can provide access to liquidity without forcing portfolio withdrawals during market downturns. This flexibility can help retirees avoid selling investments at inopportune times, allowing portfolios more time to recover.

In this sense, home equity acts like an additional financial asset bucket or even a reserve parachute. You hope you won’t need it, but it’s reassuring to know it’s there.

2. Reducing Ongoing Expenses

For retirees carrying a mortgage into retirement, evaluating whether and how to address it can be impactful. Paying off a mortgage – if done without compromising liquidity or triggering a big tax bill – can significantly reduce ongoing monthly expenses and lower the income needed from your portfolio required to support lifestyle needs.

Lower fixed expenses can:

  • Reduce stress during volatile markets
  • Improve cash-flow efficiency
  • Allow for more discretionary spending on travel, hobbies, or family

Importantly, this decision isn’t always about maximizing net worth; it’s about improving sleep-at-night comfort and simplifying retirement cash flow.

3. Downsizing or Relocating Strategically

For some retirees, the family home no longer fits their lifestyle. Downsizing can unlock equity while also reducing property taxes, maintenance costs, and energy expenses.

Relocation can be strategic as well:

  • Moving closer to family or healthcare resources
  • Shifting to a lower-cost-of-living area
  • Choosing a home designed for aging in place

Used thoughtfully, home equity can help retirees ‘right-size’ their living situation without sacrificing quality of life.

4. Funding Care Needs or Aging-in-Place Modifications

As retirees age, housing often becomes a central planning issue. Home equity can help fund:

  • Accessibility upgrades (ramps, walk-in showers, stair lifts)
  • In-home care services
  • Short-term care needs without immediately tapping investment accounts

Planning ahead allows retirees to preserve independence longer and make care decisions proactively rather than reactively.

5. Reverse Mortgages: A Tool Not a Last Resort

Reverse mortgages or Home Equity Conversion Mortgages (HECM) are often misunderstood. While not appropriate for everyone, they can be a useful planning tool in certain circumstances, particularly for retirees who are ‘house-rich and cash-flow light’.

Used carefully, a reverse mortgage or HECM may:

  • Provide tax-free cash flow
  • Reduce reliance on portfolio withdrawals early in retirement
  • Create a buffer during market downturns


Like any financial tool, education and proper planning are essential. The goal is alignment, not obligation.

6. Legacy and Estate Planning Considerations

Home equity also plays a role in legacy planning. Some retirees plan to leave the home to heirs, while others view it as a resource to support their own needs first.

Clarifying this intention matters. A home preserved at all costs may limit flexibility, while a home thoughtfully integrated into the plan can support both lifestyle and legacy goals.

Bringing It All Together

Home equity isn’t just an asset; it’s an option set. It can provide liquidity, reduce risk, support care needs, and create flexibility when life doesn’t follow a straight line.

The most successful retirement plans don’t rely on a single strategy. They blend investments, income sources, tax planning, and lifestyle decisions into a cohesive whole. When home equity is considered early and intentionally, it becomes a powerful ally in designing a retirement that’s resilient, adaptable, and aligned with what truly matters.

After all, home is where the heart is, but it’s also where some money is too.