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Wall Street Journal article article on retirement finances leaves out home equity

Posted by John Reed on

WSJ today has a big article on how much savings seniors have and how much they should have. As we often here, the amount they gave is generally not enough. They should have 15% a year starting at age 25.
Give me a break. Extremely few people did that or could have.
The article makes no mention of home equity. I thought that home equity was seniors main net worth category. But when I was writing my principal residence book, I checked.
For people with 401(k)s, THAT was their biggest net worth component; home equity was second. For others, home equity was first.
The article never mentions home equity. It can be accessed tax-free by cash-out refis including RAMs. $250,000 per spouse can be obtained by sale. Transaction costs can be avoided by selling privately to family members. For example, if you need $25,000 at the moment for a year or so, you could appraise your home and sell the percentage of your home that currently equals $25k to relative or friend and deed them a tenant-in-common interest of that percentage.
In some jurisdictions, like CA, transfer of an interest triggers possible assessment change.
Doing cash-out refis with relatives friends might also work and would not likely trigger any transaction costs or reassessments. The seniors could also sell the home outright if they could arrange satisfactory new housing. And generated a worthwhile amount of cash.

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