I'm 50 and My Home Is Worth $5 Million. Can I Retire Now?
It may be oh-so tempting to cash out your upscale home and leave work for good. But should you? We ask the experts.


Question: I'm 50 and my home is worth $5 million. Can I retire now?
Answer: It depends on several factors. For many Americans, home equity is a major source of wealth, a huge contributor to net worth and a key component of their retirement planning strategy. Because home values have risen in recent years, many Americans have seen their net worth increase.
The average U.S. home value is currently about $361,000, according to Zillow. But in your case, if you’re sitting on a home worth $5 million at 50 years old, you may or may not be in strong shape for retirement. The math boils down to what your home is costing you, the amount of equity you have, and how you’re doing on actual long-term savings. Let’s dig in.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Extracting equity from a home
A $5 million home might seem like a valuable asset on paper. But a $5 million home does not necessarily mean you have $5 million worth of equity.
ICE Mortgage Monitor reported late last year that the average homeowner with a mortgage has $319,000 of equity in their home, $207,000 of which is tappable. With a $5 million home, there’s clearly the potential to have a lot more equity than that. But the question is, how easy is it to access, and what are the costs?
Homeowners can tap into their home equity in several ways, including home equity loans, HELOCs and cash-out refinances. Later in life, reverse mortgages can become an option.
But at the end of the day, all of these avenues ultimately mean borrowing money in some form. Extracting home equity without taking on more debt typically requires a home with equity to be sold. And that may or may not be desirable to you.
Michael Micheletti, chief communications officer at home equity agreement provider Unlock Technologies, says that for someone who has accumulated significant equity in their home, using it can be a major asset in retirement planning. And that often involves downsizing.
To downsize or not to downsize?
Not everyone wants to downsize. A recent AARP report found that 75% of Americans ages 50 and older want to age in their current homes rather than relocate or move to a smaller space.
Jeff Adams, real estate investing strategist at Home Investors Zone, says that as homeowners approach retirement age, the decision to stay in a home versus downsizing can be complex.
“A large home requires maintenance, and these costs are now dramatically increasing. However, selling to buy a smaller home in a market with rising home prices and higher interest rates isn’t always to the seller’s advantage,” he explains.
Is your home impeding your retirement savings?
A $5 million home at age 50 may be a valuable asset — or an expense that’s getting in the way of your ability to save for retirement.
The Wall Street Journal recently reported that Americans have accumulated $35 trillion of wealth in their homes. Yet many people feel less well off due to factors such as rising property taxes, insurance rates, and maintenance expenses.
If you’re 50 with a $5 million home and a $300,000 nest egg, you’re not in nearly the same strong position as someone who’s 50 with a $5 million home and $3 million socked away for retirement. And if you’re spending so much of your disposable income on housing costs that your nest egg is being neglected, you’re not necessarily doing your future self any favors.
Of course, if you’re 50 with limited savings and a $5 million home, you probably have more options than someone who’s 50 with, say, a $500,000 home. But having your home itself serve as your retirement nest egg may not be the clean solution you expect, even if you have no problem with the idea of downsizing in a decade or so.
For one thing, home values can fluctuate. Sellers today continue to benefit from a general lack of inventory. But we don’t know what home values will look like 10 years from now.
There are also costs to selling a home that could eat into your profits, from real estate agent commissions to transfer taxes to capital gains taxes. The capital gains tax exclusion is worth up to $250,000 for single homeowners or $500,000 for married folks filing jointly. If you’re looking at a $2 million gain after unloading your $5 million home, you’re not going to walk away with that money free and clear.
The verdict: should you sell your lovely home?
If you’re 50 with a $5 million home, it may be that you’re a high enough earner that you’re able to both afford an expensive property and regularly contribute to a retirement account. But if the latter is being neglected, it may be time to downsize sooner rather than later. That way, you can focus on building the savings you’ll need to cover your costs once your time in the workforce comes to an end.
Finally, carefully consider if you want to retire at 50 or even 55. Will you be lonely if your friends are at work? How will you spend your time? There are many issues to work through when you decide to retire early.
Read More
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Maurie Backman is a freelance contributor to Kiplinger. She has over a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. She has written for USA Today, U.S. News & World Report, and Bankrate. She studied creative writing and finance at Binghamton University and merged the two disciplines to help empower consumers to make smart financial planning decisions.
-
Are Buffett and Berkshire About to Bail on Kraft Heinz Stock?
Warren Buffett and Berkshire Hathaway own a lot of Kraft Heinz stock, so what happens when they decide to sell KHC?
-
Social Security Will Continue Sending Paper Checks Sparingly, Reversing Course
The Social Security Administration has backed off from plans to eliminate paper checks. However, it will only send checks in the mail as a matter of last resort.
-
Social Security Administration Will Continue Sending Paper Checks, Reversing Course
The Social Security Administration has backed off from plans to eliminate paper checks. However, it will only send checks in the mail as a matter of last resort.
-
The Rule of Retirement Inversion
The rule of retirement inversion says that to have a great retirement, you must ask yourself what would ruin a great retirement — and then plan to avoid it.
-
The Five Best Side Hustles for Retirees
More older people are working in retirement to boost income and stave off boredom. These gigs and hustles make the most sense for the golden years crowd.
-
Sibling Bonds May Wax and Wane: Here's How To Safeguard Them
Sibling Bonds May Wax and Wane: Here's How To Safeguard Them
-
How Divorced Retirees Can Maximize Their Social Security Benefits: A Case Study
Susan discovered several years after she filed for Social Security that she is eligible to receive benefits based on her ex-spouse's earnings record. This case study explains how her new benefits are calculated and what her steps are to claim some of the money she missed.
-
I'm an Investment Pro: Here's How Alternatives Could Inject Stability and Growth Into Your Portfolio
Alternative investments can often avoid the impact of volatility, counterbalancing the ups and downs of stocks and bonds during times of market stress.
-
Retirement in the Age of Cyber Scams: How To Protect Your Next Chapter
Retirement is meant to be a time of relaxation and living life on your terms. But for many retirees, this dream is under threat from a growing epidemic — cyber scams.
-
Even Stars Need Health Care: What Venus Williams' Story Tells Us About Retirement Planning
Don't let health insurance costs force you back into the game. Start planning now to ensure your early retirement is forever.