The equity you build up in your home is not a [tag]retirement-savings account[/tag], although many Americans are tempted to think that it is. But the smartest way to think about [tag]home equity[/tag], financial planners say, is as a cushion, a spare tire in reserve just in case savings calculations are off or liquid assets run out.Shelter is a necessity, and so many planners classify the home as a “use asset”.

A recent [tag]Securities Industry Association[/tag] [tag]retirement[/tag] study identified a “wealth effect” that surfaced as [tag]homeowners[/tag] amassed equity in their properties and perceived they had less of a need to save. Factors such as rising interest payments and higher energy prices also pushed Americans to slack off when it came to lining their retirement nest egg, the study concluded. For many American homeowners, nearly half of their net worth is based on the value of their home, the study found. At the same time, the number and percentage of households holding a retirement account such a 401(k) or an individual retirement account have fallen since 2001, and nearly half of American households are not saving at all. The study also estimated that half of the next wave of retirees — the baby boomers — will be unable to maintain their standard of living in retirement, even if they postpone it.

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