My wife and I love our home.
Probably too much.
I say this as a compulsive homeowner who is married, very happily, to a compulsive home improver. Most of the time, I think it’s a good thing. But in recent years I’ve begun to wonder if too many people own too much house and not enough in other assets – such as stocks and bonds.
Collectively, we have literal trillions in home equity. Collectively, we have literal trillions in financial assets. But the devil is in the details — how that wealth is distributed. The very wealthy have multiple houses and more than enough financial assets to support them. The poor don’t own. They rent. And there is a good chance that their most valuable asset is a used car.
So how we’re really doing depends on a closer look at how many households are home equity rich, but financial asset poor.
We can get a useful measure of that by examining pre-retirees, households age 60 to 64. How many of them have enough in financial assets to support their home when they retire? That’s the focus of this column.
To find the answer, I went to one of my favorite websites, www.dqydj.com. (The initials stand for “don’t quit your day job.”) The site uses data from the Federal Reserve Survey of Consumer Finances to present data on the distribution of income and wealth by age. The caveat is that the Fed survey is only done every three years. The last one was done in 2022. Since then, lots of people have gotten wealthier in the stock market. Home values, however, haven’t done much since then. In some areas, home prices are falling.
The message I get from the data is that about 25 percent of pre-retirees have enough in financial assets to support their homes when they retire. This is based on the idea that you need to have a nest egg that is one to two times the value of your house to cover its operating expenses without mortgage debt. About 40 percent of all households have financial assets that are about the same as the value of their home equity.
It’s important to remember that “home equity” is less than “home value” for anyone still making mortgage payments. There are lots of people out there still making payments after retirement – about 40 percent of all retired households.
If the operating expenses of the home require having twice the value of the home in financial assets, then only 25 percent of all households have sufficient financial assets to support their home through their retirement.
If reader letters are any indication, many retire in good shape. How? They have enough in financial assets or have the good fortune to have a pension that provides some of the income to support their home. But there are many others who are “living large” in a home that is too big and costs more they can afford once they retire.
Related columns:
Scott Burns, “Too Much House At the End of Your Money,” 3/27/24: https://scottburns.com/too-much-house-at-the-end-of-your-money/
Sources and References:
The DQYDJ website Net Worth by Age Calculator for the United States: https://dqydj.com/net-worth-by-age-calculator/
Federal Reserve Survey of Consumer Finances: https://www.federalreserve.gov/econres/scfindex.htm
This information is distributed for education purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service.
Photo: Scott Burns, A house on the border in Big Bend, 5/19/17
(c) Scott Burns, 2026