4 Best Practices for Using Housing Wealth in Retirement

| April 26, 2018
Share |

Home equity represents nearly two-thirds of the average 65-year-old couple’s total wealth, making it one of the most important retirement assets, along with Social Security. (1) Despite its importance, housing wealth is an often ignored topic, and is rarely considered a financial asset, let alone a potential source for income.

Many CRNAs don’t realize that home equity can serve four unique functions during their retirement, and we’ll review each of them here.

1. Profit or Rental Income

While the most important function of home ownership is the housing services it provides, a CRNA can use their home equity as retirement income to support their desired standard of living. For one, many CRNAs downsize when they retire. Once the kids have gone off to college, many couples find they don’t need as large of a home. Selling their home and buying a cheaper one frees up some of their home equity to spend on their retirement needs.

Alternatively, some may choose to rent out their home to generate income and purchase a second, smaller home in which to live. Or, they may rent out a guest house or mother-in-law suite to enable saving even more.

2. Long-Term Care Funding

Someone turning 65 today has almost a 70% chance of needing some type of long-term care services and 20% of 65-year-olds will need long-term care for longer than five years. (2) It is important to consider how long-term care will affect your overall retirement plan. As many people don’t have long-term care insurance, your home can act as a tool to fund long-term care also.

Should you or your spouse need to move into a nursing home or assisted living facility, you may consider selling the home in order to support the costs of the care. While this may not be an appealing option for everyone, it does provide an alternative for those hesitant to invest in long-term care insurance.

3. A Legacy Asset

Many CRNAs want to leave a legacy to their loved ones. If the home is the largest asset, it may serve as the greatest legacy to pass on to heirs. Often, adult children don’t want to live in or keep their parents’ home. Rather, they may choose to rent it out for an income or sell it.

Regardless of what they do with the home, it can serve as a valuable asset to leave to your children or loved ones.

4. Income Diversification

Lastly, housing wealth can support a CRNA’s retirement income plan by diversifying their income sources. Many CRNAs rely on Social Security and withdrawing from their investment portfolio for their income. However, if the market drops, selling their investment assets may significantly reduce the lifespan of the investment portfolio.

By setting up a line of credit, you can incorporate another asset and use it during down markets to help prolong your retirement investment portfolio.

Next Steps

When used correctly, housing wealth can help CRNAs feel more confident in their retirement and income. Like any financial strategy, there’s no one-size-fits-all approach for utilizing housing wealth in retirement. Rather, it’s important to speak with a financial professional on whether or not it makes sense for your situation, circumstances, needs, and goals.

Working with a trained and competent financial professional is a great place to start. It’s important to work with a CERTIFIED FINANCIAL PLANNER™ practitioner who specializes in serving the unique needs and circumstances of CRNAs.

At CRNA Financial Planning®, we specialize in helping CRNAs, like you, work toward retirement. To find out whether you’re on track, let’s meet to discuss your plans and how we may be able to help. Call our office at 855.304.3748 or email [email protected].

About Jeremy Stanley

Jeremy Stanley is the founder of CRNA Financial Planning® as well as CRNA Tax Associates®. He has been providing advice and guidance for Certified Registered Nurse Anesthetists (CRNA) for over two decades. As a CERTIFIED FINANCIAL PLANNER™, Jeremy has met rigorous certification and professional standards set by the CFP® Board. He is committed to adhering to the principles of integrity, objectivity, competence, fairness, confidentiality, professionalism and diligence when dealing with clients.

Jeremy is also the author of The Wealthy CRNA and A CRNA’s Life After Anesthesia. The Wealthy CRNA features insights into becoming a financially successful CRNA and how to start planning for your financial future, and has been prior approved for up to 4 Class A CE credits by the AANA. A CRNA’s Life After Anesthesia serves as your financial roadmap for a smooth emergence into retirement. It reviews recent changes in the CRNA industry along with the new rules of retirement and the final steps of legacy planning. This book has been prior approved by the AANA for up to 2 Class A CE credits.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

________

(1) https://www.investopedia.com/retirement/5-best-practices-using-housing-wealth-retirement/

(2) https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html

Share |