Your House Makes You a Millionaire on Paper — Here’s the Retirement Trap That Creates

A home can push a household into millionaire territory while leaving much of that wealth unavailable for everyday retirement expenses. Planning for how and when to access home equity can make the difference between a strong balance sheet and a workable retirement cash flow – Shutterstock

A $1 million house can make a homeowner a millionaire on paper without putting $1 million in the bank. That distinction becomes much more important after the paychecks stop, because a home can build enormous wealth while producing very little spendable income.

Home equity absolutely counts toward net worth. The Federal Reserve has also identified home equity as an important source of financial security for retirement households. But a retirement plan built heavily around a home’s value faces a basic problem: groceries, property taxes, insurance, utilities, and medical bills do not accept net worth statements as payment.