Skip to main content
No. of Recommendations: 0
Rayvt posted:
<<How should one modify their retirement asset allocation when they buy a home? How do they interact?>>

Not at all. A home is a place to live, not an investment. If it increases in value over the years, well and good; but consider it frosting on the cake.

Regards,
Ray



That's an interesting and perhaps helpful way to look at it, Ray, and overall it's probably not a bad idea to ignore a large chunk of one's net worth when planning for retirement, and rely on other savings to do the trick. The home, then, would be pure gravy, or as you put it, frosting on the cake, when the time for retirement comes. (Why am I getting hungry all of a sudden?)

The question, though, is more complex, and the answer depends on many, many factors, including the age of the home owner, the assets he or she has already accumulated, and the plans that person has for the future. Many people live in large homes during their working life when they have families to raise and a need for more space, then sell those homes and move into more modest digs when it comes time to retire. In that case, the equity in the home can be an important consideration in a retirement plan. Then there are the reverse mortgages which some people use -- it's another way to take advantage of that equity they have built up in their homes.

I'm not going to pretend I have the answers here, and I'll leave the final word to those with larger brains than mine (Pixy? This is your cue to step in...)

Cheeze :-)
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.