Retirement Retired Life

The Hidden Asset Many Retirees Overlook When In Need of Cash

How seniors can estimate their equity and weigh their cash-out options

By Katy Willis , Edited by Lisa Dammeyer

Updated April 5, 2026

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When money gets tight in retirement, most people look at savings first. They may dip into checking, pull from an individual retirement account (IRA), or sell investments. But many homeowners are sitting on a much bigger backup plan.

Baby boomers hold a staggering $1.73 trillion, or 50%, of the nation's home equity. Yet only 9% of boomers surveyed said they planned to use home equity or a reverse mortgage to fund retirement. That leaves a huge store of wealth sitting inside your house when cash feels tight.

Tapping home equity could raise the share of baby boomers on track for retirement from 40% to 60%. That doesn't mean every homeowner should borrow against their house, but it does mean that home equity deserves consideration when setting yourself up for retirement, before you start draining savings or retirement accounts.

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Home equity is an overlooked asset

Seniors often have a lot of money tied up in their home and not much in easily accessible cash. For many retirees, their home equity amounts to 3.8 times their annual income. This explains why so many older homeowners feel house-rich and cash-poor at the same time.

For many retirees, their home is their biggest asset. The problem is, while the value is real, it is not spendable until you decide how to access it. Therefore, even if you own your home outright, it doesn't help pay the bills unless you unlock some of that hidden equity.

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Why your home may be a better cash source

Sometimes using equity can make more sense than pulling money from savings or retirement accounts right away. It may help you cover a big repair, medical bill, or shor- term cash gap without selling investments at the wrong time.

Senior homeowners can use tools like cash-out refinances, home equity loans, and HELOCs to get cash from their equity. The downside is that, if you go this route, your house is on the line, so you need to be very careful about checking the terms or any agreement before you sign.

How much equity do you have?

In simple terms, home equity is the gap between what your home is worth and what you still owe on your mortgage. It's easy to work out roughly how much equity you have in your home.

Your mortgage statement will show you how much is remaining on your loan balance. Then, for a rough estimate of value, look at properties similar to yours in terms of age, size, and quality, and see how much they sold for recently.

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Did you know if your air conditioner stops working, your homeowner’s insurance won’t cover it? Same with plumbing, electrical issues, appliances, and more.

Whether or not you’re a new homeowner, a home warranty from Choice Home Warranty could pick up the slack where insurance falls short and protect you against surprise expenses. If a covered system in your home breaks, you can call their hotline 24/7 to get it repaired.

For a limited time, you can get your first month free with a Single Payment home warranty plan.

Get a free quote

How to estimate your home's value

For slightly more accuracy, you can use an online value estimator. And, for the most accuracy, get a proper appraisal of your property. Subtract your outstanding loan balance from your home's estimated value to get an idea of how much equity you have.

For example, if your home is worth about $400,000 and you owe $150,000 on your mortgage, you have about $250,000 in equity.

How a HELOC can provide ongoing access to cash

A HELOC is a home equity line of credit. It works more like a credit card than a regular loan. It lets you borrow, repay, and borrow again up to a set limit.

The draw period is often around 10 years. This can be useful if you do not need all the money at once, but many HELOCs have variable rates, so the payments can rise later. Again, it's important that you are very clear about the terms.

When a home equity loan makes sense

If you know exactly how much money you need, a home equity loan may be easier to manage. A home equity loan usually gives you a single lump sum with fixed monthly payments.

This option can work well for a major home repair, debt payoff, or another large bill. It is more predictable than a HELOC, but you still need to check the rate, fees, and monthly cost before signing.

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You can also consider a cash-out refinance option

A cash-out refinance is different from a HELOC or home equity loan. It replaces your current mortgage with a larger one, and you receive the difference in a cash lump sum.

This may help if you want one single loan to manage instead of two. But if your current mortgage rate is low, trading it for a higher new rate may cost more over time.

Risks to consider

Some homeowners look at home equity agreements (HEAs) over other options because they may offer cash without monthly payments. But these deals can lead to large payoffs later that depend in part on your home's value.

Homeowners age 62 or older may also look at reverse mortgages. These let eligible older homeowners pull money from home equity while staying in the home, but the balance grows over time and eats into the value you leave behind.

Bottom line

Your home may be more than just the place where you live. For some retirees, it can also be a backup source of cash when other accounts are running low. The key is to compare the real cost, the risk, and how long you plan to stay in the home before making a move.

It's also important to know that lenders usually make you keep 10% to 20% equity while staying in the property. That means you usually cannot cash out all of it. Running the numbers first can help you avoid an expensive mistake if you're thinking of tapping into your home's equity.