When most people imagine retirement, they picture a well-stocked investment portfolio, a steady Social Security check, and maybe some part-time income from passion projects. What’s often missing from the conversation? Home equity: the single largest asset for many retirees.

Chris Kawashima, CFP®, a seasoned financial planner and equity compensation specialist at Charles Schwab, challenges the traditional “set it and forget it” approach to housing in retirement in his recent article, Leveraging Your Home Equity in Retirement (Kawashima). With decades of experience in comprehensive financial planning, Kawashima isn’t simply talking about mortgages, he’s talking about reimagining how we think about our largest asset in the context of our entire retirement strategy.

And he makes one thing clear: the decision about your home in retirement is far from binary.

The Traditional Retirement Blind Spot

For decades, the advice has been consistent:

• Own your home outright before retirement.
• Live off your savings and never tap the house unless you absolutely have to.

This sounds sensible, but it often leaves retirees with a lopsided financial picture, cash-poor and house-rich. In other words, you might have $800,000 in equity sitting in your home while you’re rationing groceries or delaying medical care to preserve your investment accounts.

Kawashima argues that this narrow approach leaves flexibility and opportunity on the table.

Beyond “Stay or Sell”

Most retirees think the housing decision boils down to two options:

1. Stay put (and hope your savings are enough).
2. Sell and downsize (and hope the move works out).

Kawashima challenges this either/or thinking by outlining three distinct ways to unlock the value in your home:

• Selling — freeing up cash but possibly incurring taxes and lifestyle disruption.
• Renting — generating income but taking on landlord responsibilities.
• Tapping equity — converting part of your home’s value into accessible funds while staying put.

The brilliance here isn’t in the list, it’s in the invitation to think of your home not just as a roof over your head, but as an adaptable financial tool that can change with your needs.

Problem First, Product Second

Too often, conversations about home equity jump straight to the mechanics of products, loans, rates, and fees, without first asking the bigger question: What problem am I trying to solve?

Here are a few examples Kawashima’s framework can address:

• Reducing portfolio risk — Avoid selling investments in a down market by drawing temporarily from your home’s value.
• Covering unexpected expenses — Fund in-home care or home modifications without liquidating retirement accounts.
• Increasing lifestyle flexibility — Create a cash cushion that allows for travel, family support, or health investments without straining monthly budgets.

The point isn’t whether you should rent, sell, or borrow, it’s that each choice solves a different problem, and you can’t choose well if you haven’t defined the problem first.

A Thought Experiment

Imagine two retirees, both with $500,000 in investments and $750,000 in home equity.

• Retiree A ignores the home equity entirely. A market downturn forces them to sell $50,000 in investments at a loss to pay for unexpected medical bills.
• Retiree B plans ahead, using a portion of their home equity as a flexible reserve. They avoid selling investments at a loss, protecting their portfolio for future growth.

Same starting point, very different outcomes, not because one saved more, but because one planned differently.

The Takeaway

Your home is both an emotional anchor and a financial powerhouse. Pretending it’s off-limits may feel safe, but it can limit your ability to adapt to the unexpected. As Kawashima reminds us, the smartest approach is to understand all your options before you need them.

Whether that means selling, renting, or tapping equity, the key is to integrate your home into your overall retirement plan, not as an afterthought, but as a strategic asset.

Because in retirement, flexibility isn’t a luxury, it’s security.

Works Cited
Kawashima, Chris. “Leveraging Your Home Equity in Retirement.” Schwab.com, Charles Schwab & Co., Inc., 2024, www.schwab.com/learn/story/leveraging-your-home-equity-in-retirement.