The dream of a comfortable retirement is slipping away for millions of Americans. According to a 2025 Goldman Sachs retirement survey, the amount needed to retire comfortably by 2043 has surged to $2.57 million, up sharply from $1.75 million projected for 2033. Years of inflation have driven up the costs of housing, healthcare, and daily expenses. Faced with this reality, many older homeowners are eyeing the equity in their homes as a potential income source. But financial advisors warn: home equity is no magic bullet and comes with significant costs and risks.

The Big Picture

The rising cost of living is hitting households headed by someone 65 or older particularly hard. They now spend about $122,000 annually, nearly double the $60,000 they spent in 2000, according to the Goldman Sachs survey. Property taxes, insurance premiums, and maintenance costs have soared, eroding the savings of those no longer earning a paycheck. This phenomenon is not uniform: retirees in high-cost metropolitan areas like San Francisco or New York face even greater pressure, while those in more affordable regions may have more breathing room. But in all cases, inflation has reduced the purchasing power of fixed incomes, such as annuities or Social Security payments.

Many retirees are what experts call "house rich, cash poor." They own homes with significant value but lack liquid savings or dependable income. Pam Krueger, founder and CEO of Wealthramp in San Francisco, describes it as a common predicament: "On paper, they have significant equity in their homes, but not enough liquid savings or dependable income to comfortably support their retirement." This paradox is especially acute for the baby boomer generation, which accumulated housing wealth over decades of appreciation but failed to save enough in retirement accounts. According to Federal Reserve Board data, the median home value for homeowners aged 65 and older exceeds $300,000, but the median retirement account balance is only about $200,000. The gap is stark.