I notice that retirement/financial advisers don't seem to consider home value when tallying retirement savings. Why is this?

Not having to pay rent every month is a huge advantage during retirement. And having a house paid off is great if you choose to sell it when you're too old to live independently.

I know that home values can fluctuate, so you wouldn't want to depend on the full value. But not counting it at all seems strange to me.

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    I think it depends on what you're reading. I'm sure if you sat down with a financial adviser to work out a specific plan for yourself your home value and mortgage would be part of the discussion.
    – quid
    May 25, 2017 at 0:56
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    I can see them not counting it as retirement savings, but they should certainly be considering it when calculating how much you'll need in retirement.
    – Hart CO
    May 25, 2017 at 1:32

3 Answers 3


As part of retirement you need to arrive at a corpus [fund] that would generate enough income for the rest of your life.

The first step is how much is your spend. This depends on lifestyle, have a house reduces rental expense and minimizes risk. Generally a financial advisor will not help you arrive at your spend. The best way is to keep track of expenses and determine which expenses will not happen or reduce in retirement.

The retirement corpus / funds needed will not count the house you are living in as it is not generating any income. Apart from house everything will get counted and then one can determine if the funds are sufficient or not.

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    I like this answer. Sounds like not counting it as part of "savings" is logical under your explanation. But counting in the form of reduced spending requirements sounds fair. I guess my point is that it realistically should be counted SOMEWHERE. That's what's important.
    – NL3294
    May 25, 2017 at 19:05
  • @NL3294 - it counts to your heirs. It saves you some on rent, but costs you, property tax, repairs, insurance. But you're in it already, and would have that history. And you have a budget your retirement plan needs to consider. Unless you plan to downsize or take on a reverse mortgage, the house is not part of the retirement planning. (Unless you can rent rooms?) May 26, 2017 at 20:43
  • That's the standard line I keep hearing. By that logic, if I have a million dollar home paid off, I can instantly be considered "better off" by simply thinking about getting a reverse mortgage. That reverse mortgage is an option that gives you flexibility down the road regardless of whether or not you're thinking about it today. Similarly, if two people have bricks of gold, is the one who anticipates selling it considered better off? I propose "no", because both of them have the same flexibility to sell it down the road, regardless of whether or not they're thinking about it today.
    – NL3294
    May 30, 2017 at 23:15

We had a similar question "how to calculate net worth", and in my answer I noted that for me, the answer would be different if the number was "retirement saving" vs "amount my kids will get when I die."

In the case of retirement savings, I suggested that one's house and any non financial assets should not be included. Consider, you have a house worth $500K. If you plan to use the 4% rule of withdrawals, it would appear to yield $20k/yr of income. The house doesn't do that. Nor does your cars, coin collection, or painting on your wall. A prudent planner wouldn't include any of these in the retirement plan. Owning the house might lower your budget as you have no rent, but it also has costs that add up each year and have to be included in your spending budget.

The above aside, you might insist that you plan to downsize in X years. Going from an expensive area, say NYC or Boston, to a lower cost one, say Austin, and that might give you a one time lump sum. In this case, a planner might include the possibility of that extra money, but until it actually happens, it's not real.

The other "net worth" would include every last possession, and that would be net worth that the kids might get after liquidating your estate.


Because retirement savings is all about "deferred spending", and you can't spend a house.

Well, you can, but it gets tricky:

  • Downsize to a smaller house, and bank the difference.
  • Get a reverse mortgage (which can be expensive and irk your children).

Either way, tell your financial advisor about your plan, and then they will take that into account.

EDIT: The value doesn't matter when determining whether or not rent must be paid, since -- expensive or cheap -- if you own it free and clear you don't pay rent.

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    I changed my child's diaper. I paid for their schooling. I helped them when they couldn't make their rent payment. They have no right to be irked :P
    – Lan
    May 25, 2017 at 2:19
  • @Lan people have lots of feelings that they have no right to have. But they have them anyway... :) You just tell them to stuff it, because it's your house, not theirs!
    – RonJohn
    May 25, 2017 at 2:21

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