Home equity can help finance a home-business, it can help send kids to school, and in the form of a reverse mortgage it can provide cash flow, as well as otherwise assisting with the costs of retirement. The often cited Merrill Lynch Baby Boomer Retirement Index, however, says the typical baby boomer is financially short and ought to triple his or her rate of savings or face a wretched retirement. The index's financial data, however, does not consider home equity. Ignoring home equity as a major financial component for retirement may have some virtual statistical bearing, however gray. But excluding home equity from the real-world retirement equation doesn't make cents.
Home equity comprises hundreds of billions of dollars of consumers' real net worth.
The highly liquid nature of today's home equity is indeed a bane to the existence of undisciplined consumers who don't save while squandering their home equity. For the majority of home owners, especially homeowners who've managed to hold onto a home for decades, home equity is a well-deserved blessing. It's almost paternalistic for someone to suggest that it is improper to use your equity. Broderick Perkins has been a consumer journalist for 23 years. Experienced in daily print, electronic, and consulting journalism, he is executive editor of San Jose, CA-based, DeadlineNews.