We often discuss the difference in family wealth between homeowner households and renter households. Much of that difference is the result of the equity buildup that homeowners experience over the time that they own their home. In a report recently released by the nonpartisan Employee Benefit Research Institute (EBRI), they reveal how valuable equity can be in retirement planning.
Craig Copeland, Senior Research Associate at EBRI, recently authored a report, Importance of Individual Account Retirement Plans and Home Equity in Family Total Wealth, in which he reveals:
“Individual account retirement plan assets, plus home equity, represent almost all of what families have to use for retirement expenses outside of Social Security and traditional pensions. Those families without individual account assets typically have very low overall assets, so they have almost nothing to draw from for retirement expenses.”
The report echoed the findings of a working paper, Home Equity Patterns among Older American Households, authored by Barbara Butrica and Stipica Mudrazija of Urban Institute. Fannie Maehighlighted these findings for their blog The Home Story this past winter, quoting Butrica and Mudrazija:
“For most adults near traditional retirement age, a home is their most valuable asset — dwarfing retirement accounts, other financial assets, and other nonfinancial assets. Although relatively few retirees tap into their home equity, having it provides financial security… In fact, many retirement security experts argue that the conventional three-legged stool of retirement resources — Social Security, pensions, and savings — is incomplete because it ignores the home.”
USAToday interviewed two area experts to comment on the EBRI report. Randy Bruns, a private wealth adviser with HighPoint Planning Partners, agreed with the findings:
“Social Security and home equity are major pieces of the retirement puzzle.”
Wade Pfau, Professor of Retirement Income at The American College of Financial Services and author of “Reverse Mortgages: How to use Reverse Mortgages to Secure Your Retirement,” said having the equity without a plan to use it won’t help:
“Home equity is a very important asset for American retirees, and so it is important to think about how to make best use of home equity in retirement planning.”
Bottom Line
Whether you use the equity in your home through a reverse mortgage or by selling and downsizing to a less expensive home, it should be a crucial piece of your retirement planning.
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Published by Eddie Yandle
Eddie and Shanna Yandle are the owners and founders of Executive Construction Homes. Eddie Yandle has been in the building industry his entire life. In 1985, Eddie started working full time with his father, George (Butch) Yandle, in the underground utilities business.
Eddie built his first personal home in 1989, soon after that he met his wife, Shanna. They quickly built four homes together and Eddie started the beginning of Executive Construction Homes, LLC. Eddie Yandle became focused on building with superior quality and enduring value. Shanna now serves as office manager while Eddie keeps busy in the field. Staying involved in the building process is very important to Eddie Yandle. From designing the home, to personally inspecting the details, Eddie ensures the home is what the customer expected at their purchase contract. Eddie and Shanna are now raising two beautiful children.
Continuing to be a responsible contributor to the community, Executive Construction Homes supports a variety of organizations.
Executive Construction Homes is recognized in the Directory of Professionals with Home Building Designations with the National Association of Homebuilders and received many endorsements and recommendations from their clients.
In 2012, Eddie Yandle has met all the requirements for membership and has been voted by the Master Builder Committee to be accepted as a Certified Master Builder of South Carolina (CMB). In order to reach this level, Yandle had to participate in 20 hours of continuing education, provide reference letters from customers and business associates, assure a one-year warranty on all his homes and show at least five years’ experience in home building. The education alone sets him apart from all other builders because the state of South Carolina does not require licensed builders to maintain any level of continuing education.
Eddie Yandle, of Executive Construction Homes is now one of the select groups of professionals nationwide to earn the Certified Green Professional (CGP) educational designation, identifying him as an Owner/Homebuilder with the skills and the best strategies for incorporating green building principles into new home and remodeling projects. The CGP curriculum includes three days of training from leading building industry practitioners and academics on a range of topics, including strategies for integrating green building principles into homes using cost-effective methods of construction.
Continuing to create custom homes, Executive Construction Homes is a builder in Columbia, Elgin, Lexington, Lake Murray, and Irmo. The professional staff works with a variety of floor plans, neighborhoods and is a respected homebuilder in South Carolina.
Executive Construction Homes, LLC is a multi award-winning builder being recognized by the Greater Columbia Home Builders Association. Eddie spends his free time not only with his family but other community related functions. Together the Yandles’ involvement in the Columbia, SC area has brought over 600 new homes to families as of January 2014.
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