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Hamptons.com
April 11, 2013

Can You Turn Home Equity Into Retirement Income?

Rocco A. Carrieroby Rocco A. Carriero
in Real Estate
Home Real Estate

The long-struggling housing market is finally showing signs of recovery, giving many homeowners more equity in their properties. This encouraging trend is likely prompting more pre-retirees to consider if, and how home equity can be turned into a source of cash to help fund their retirement.

There was a time when owning a home with little or no outstanding mortgage balance was considered a potential financial bonanza for those in retirement. For years, home values moved higher, sometimes dramatically so. But starting in 2006, the bottom fell out of the housing market. Home equity was decimated and homeowners changed their expectations about the role equity can play in retirement.

Even with a lower value, home equity continues to represent one of the biggest assets for many Americans. It may play an even more important role when retirement savings come up short of expectations. Some already retired or approaching retirement feel like they have little choice but to tap the equity they’ve built in their home to support their cash flow needs throughout the rest of their lives.

The question then becomes how to do it. There are a variety of options available, but the right answer for you may depend on what plans you have for living arrangements in the future and many other factors.

Finding the Most Realistic Solution: There are risks in assuming that the equity you’ve built up in your home will be a guaranteed source of income in retirement. For starters, you will always need a place to live, so you can’t assume the full value of a home is at your disposal. Here are three primary options those in retirement generally consider:

Home Equity Lines of Credit (HELOC): Americans became accustomed to tapping their equity through HELOCS in the last 30 years, and though it is a reasonable option for an employed individual, it may be less practical for someone in retirement. HELOCs need to be repaid, and using the proceeds from a home equity loan to help fund retirement income needs often means taking on interest costs in order to generate that income. It’s important to note that an individual puts a lien on their home by taking a HELOC (second mortgage), and risks losing it should he or she fail to repay under the terms of the loan.

Reverse Mortgage: An alternative that has become popular with many retirees is to use a reverse mortgage. This allows a homeowner to tap into the equity of the home while still occupying it. A reverse mortgage provides payment to homeowners for the bulk of the value of their homes via a lump sum, a line of credit or periodic payments. In essence this is a loan to the homeowner paid back when the house is sold at some future date. However, interest accrues throughout the duration of the loan and upfront fees apply, so it can be expensive.

A standard reverse mortgage, also called a Home Equity Conversion Mortgage, charges a two percent mortgage insurance premium on the full value of the home. The government now offers a lower cost “Saver” loan with a mortgage insurance premium of just 0.01 percent of the home’s value, but applying a higher interest rate. Over time, the combination of fees and interest charges can significantly deplete the value of the home’s equity as it applies to income needs. Individuals who qualify for a reverse mortgage must also be at least 62 years old. The older a retiree is, the more he or she can receive from the home’s equity. Understanding the complicated terms of a reverse mortgage before signing on the dotted line is crucial.

Selling Your Home and Downsizing: The other way to tap a home’s equity is to sell it. Many retirees find they are ready to “downsize” their living quarters to a smaller home, townhome or condo. If the market is right, they can sell their existing home, buy a new place and have equity leftover to add to their retirement nest egg. Alternatively, they can pocket the full proceeds from the home sale and rent their living quarters or explore other living options. This will greatly bolster their retirement savings, but it also adds a new monthly expense they will need to fund throughout the rest of their retirement.

Home equity offers great potential value in retirement but, like any investment, is subject to the fluctuations of the market and may have tax consequences. If you plan to tap your home’s value to support your retirement, proceed with caution. Remember that the primary function of your home is to provide a roof over your head, and using equity to fund retirement requires careful planning.

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Hamptons Restaurant Rumbling For Title Of Tasting Table's Top Lobster Roll

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When it comes to dining out in the Hamptons, there is no shortage of restaurants to choose from. While there are not many vegan-exclusive establishments, there are still plenty of options for plant-based eating in the Hamptons, with more joining the culinary scene all the time.⁠
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WESTHAMPTON⁠
🥑 Local Provisions – Smoothies, specialty toast, and local love⁠
🌮 Funchos – Vegan tacos & burritos with outdoor seating⁠
🍝 Baby Moon – Vegan-friendly pastas (get the eggplant!)⁠
🍷 Salt & Loft – Chic setting with salads, pasta, and a Beyond burger⁠
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EAST QUOGUE⁠
🍱 Tony’s Fusion – Top-tier tofu dishes, veggie curry, and sweet potato rolls⁠
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HAMPTON BAYS⁠
🥢 Matsulin – Asian fusion, mock meats & killer peanut sauce⁠
☕ Hampton Coffee Co. – Beyond breakfast sandwich, smoothies, & a “Happy Wrap”⁠
⁠
SOUTHAMPTON⁠
🥪 Four Oaks – All-day vegan eats & organic juices⁠
🍛 Saaz – Authentic Indian with tons of vegan options + lunch buffet!⁠
⁠
BRIDGEHAMPTON & WATER MILL⁠
🍣 Yama Q – Cozy sushi spot with veg rolls and tofu entrees⁠
🇫🇷 Bistro Ete – Fresh vegan zucchini spaghetti⁠
🇬🇷 Elaia Estiatorio – Greek small plates, spreads, and salads⁠
⁠
SAG HARBOR⁠
🥗 Provisions – Café + health market, tons of vegan dishes⁠
🌾 Page at 63 Main – Upscale, with vegan bowls & salads⁠
🌮 Estia’s Little Kitchen – Casual breakfast/lunch, kitchen garden fresh⁠
🍜 Sen – Modern Japanese with rice/noodle dishes & veg sushi⁠
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EAST HAMPTON & AMAGANSETT⁠
🥟 Hampton Chutney Co. – Indian dosas, thali, and oat chai⁠
🍲 Kumiso – Tokyo-inspired ramen & veg izakaya vibes⁠
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 MONTAUK⁠
🥙 Naturally Good Café – Smoothies, juices & vegan breakfast⁠
🍽 Joni’s Kitchen – Tofu scrambles, stir-fry, smoothies & steps from the beach!⁠
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Cover: @locallocalprovisionswhb⁠
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View the complete guide at Hamptons.com (Link in Bio)⁠
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#hamptons #dining #vegan #weekend #montauk #westhampton
  • Sushi by Boū will offer just eight seats per table, a truly unique and memorable sushi experience inside Sydney’s “Taylor” Made Cuisine in Westhampton Beach. 

@sushibybou_westhampton 

#sushi #omakase #hamptons #dining #westhampton
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🎶 5th Annual Palm Tree Music Festival⁠
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📸: Rob Rich/SocietyAllure.com ©2025⁠
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🛍️ Female Founders Market at The HUB⁠
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#palmtreemusicfestival #hamptons #colinquinn #hub #dolcevita #weekend
  • Hosted in the Hamptons at Calissa, Ja Rule showed off his mixology skills, livin’ it up and serving craft cocktails from Amber & Opal as the premium whiskey brand launched in the Hamptons. 

@jarule 
@calissahamptons 
@amberopalspirits 

#jarule #whiskey #hamptons #calissa #hamptonsweekend #hamptonsevents
  • 24 Saddle Lane, East Hampton, NY 11937⁠
Saunders Exclusive: $2,795,000⁠
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@hamptonsrealestate ⁠
@jenniferwilsonhamptons⁠
@edbruehl⁠
@edmondzenuni_⁠
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This stunning contemporary home redefines modern living with its clean lines, dramatic vaulted ceilings, and walls of glass that flood the interior with natural light. ⁠
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Fully renovated in 2016, the open-concept living area seamlessly blends indoor and outdoor spaces, creating an entertainer’s paradise.⁠
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Imagine hosting gatherings on the expansive deck overlooking the heated pool and spa, or enjoying more intimate moments in the screened porch.⁠
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Read the full article at Hamptons.com (Link in Bio)⁠
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#hamptonsrealestate #easthampton #hamptons #realestate⁠
  • Check out the Top Hamptons Events This Weekend!

🎤 Ja Rule Bar Takeover at Calissa
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Hip-hop icon Ja Rule takes over the bar to celebrate the launch of his new whiskey, Amber & Opal.
📸 Phillip Faraone/Getty Images for AVA Resort
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#tilerpeck #guildhall #easthamptonevents

Check out more events at Hamptons.com (Link in Bio)

#hamptonsweekend
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