Did you know that your home is probably your largest retirement asset?

If you have spent your working life as a homeowner in Southern California, you probably have built up significant equity in your home. As you approach your early 60s and you’re getting ready to retire, what should you do with your home?

Is it smart to stay put and leave your home to your kids? Does it make sense to downsize or move out of state? Finally, what if you don’t have significant retirement assetsis it wise to do a reserve mortgage?

In this article, we attempt to answer those questions while laying out the pros and cons of each strategy.

Strategy 1: Stay in Your Current Home  

Most of our clients take this route. They stay in their homes until they pass away or need to move because of declining health.

The reason most people stay in their homes during retirement is that the house is sentimental to them. Most likely, you purchased your dream home in your late 30s or early 40s and raised your family in that home. By the time you are going to retire, it should be nearly paid off and decorated to your liking.

The most significant advantage of having a home paid for is you have no home payment in retirement! This will cause less of a strain on your portfolio assets. With no home payment, your costs to run the home are property taxes (tax deductible!) and maintenance costs.

One reason you might want to consider selling your home in retirement is to use your equity in your home to live a better retirement.

For example, most of our clients living in San Bernardino and Los Angeles counties purchased their homes for around $200,000 to $500,000. Today, home prices in these areas have gone up significantly, selling anywhere from $400,000 all the way up to the low millions. That’s a lot of equity that could be used to accomplish your ideal retirement scenarios!

One question we always ask our clients is, does this home still suit your lifestyle in retirement?

Strategy 2: Sell Your Home and Downsize, Move Out of State, Rent, or All the Above

If your answer to the above question is something like “This home no longer makes sense for me,” then you should consider downsizing, moving out of state, renting, or doing it all.

If you have a two-story home with your master bedroom on the top floor, moving to a single story makes a ton of sense in retirement. What is going to happen when you cannot get up the stairs anymore?

This is the No. 1 reason our clients decide to downsize to a single-story home.

Sometimes, if you get fewer bedrooms, you may be able to purchase a smaller house and pocket some of the equity! This will give you a more substantial amount of portfolio assets for retirement. These assets can be used to accomplish dream vacations!

Another option that is in play for a lot of our clients is moving out of California. If you are no longer working, living in California does not make sense unless you like paying high taxes. We have lots of clients who relocate to low-tax or no-tax states like Nevada, Florida, Arizona, and Texas.

 Strategy 3: Do a Reverse Mortgage

Whenever we say the words “reverse mortgage,” most clients get a disgusted look on their face.

The reason for this is twofold in their minds:

  1. They believe their heirs would not inherit the house.
  2. Before 2013, reverse mortgages had extremely high fees and lots of negative press.

Fortunately, both of those are false (sort of).

For those who don’t know, a reverse mortgage is when a homeowner “taps” into their home equity and takes a loan from it. We like to think of it as a home pension.

The strategy is great for people who are short on portfolio assets in retirement. Using a reverse mortgage is a great way to get extra income in retirement.

The downside is a reverse mortgage can have higher costs than a traditional mortgage and be incredibly complex, and the homeowner still owes taxes and maintenance costs on the property.


Deciding what to do with your home in retirement is a tough decision. Knowing your options and putting a plan in place before you grow too old is a wise decision. We would advise that you meet with financial planners who specialize in retirement planning to help you decide.