The real power of a paid-off home as you enter retirement

The Growing Trend of Homeownership in the U.S.

More Americans are experiencing the financial freedom that comes with owning a home outright. According to data from the U.S. Census Bureau, approximately 38.8% of owner-occupied homes in the United States were fully owned in 2024, meaning these homeowners no longer have a mortgage or any liens on their properties. This represents a significant increase, with a 40% rise in the number of homeowners who are mortgage-free between 2012 and 2022.

This trend is especially relevant for those approaching retirement, as over half of the homeowners in this reporting period are 65 years or older. For individuals who have managed to pay off their homes, this can be a substantial financial advantage. When you own your home outright, it becomes a full equity asset—meaning your bank has no claim on it. If property values in your area have increased since you purchased your home, your residence may now represent a considerable store of wealth.

Understanding the Financial Implications

While owning a home outright offers many benefits, it's important to understand how this compares to other investment opportunities. Unlike traditional investments such as stocks or bonds, real estate doesn’t typically provide immediate returns. Over the years, a large portion of your payments goes toward paying off the mortgage, with much of that money going to the lender rather than generating returns for you.

For instance, consider a $500,000 home with a $100,000 down payment and a 15-year mortgage at 2.5%. In this case, you would end up paying around $80,000 in interest alone, not including property taxes, repairs, and insurance. However, even if you don't own your home, there are alternative ways to benefit from the real estate market without the burden of managing property.

New Investment Opportunities in Real Estate

Investing in real estate doesn't always require a large down payment or hands-on management. Innovative platforms are making it easier for a wider range of investors to participate in the housing market. For example, Homeshares provides accredited investors with access to the $36 trillion U.S. home equity market. With a minimum investment of $25,000, investors can gain exposure to hundreds of owner-occupied homes in major cities across the country.

These platforms offer risk-adjusted internal returns ranging from 14% to 17%, providing a hands-off way to invest in residential properties across different regional markets. For non-accredited investors, crowdfunding platforms like Arrived allow entry into the real estate market with as little as $100. Arrived offers shares in SEC-qualified investments in rental homes and vacation rentals, curated for their potential to appreciate and generate income.

The Impact on Retirement Planning

Owning a home outright can significantly affect your retirement budget. By eliminating a monthly mortgage payment, you reduce your annual expenses, which can help bring your retirement income needs closer to the recommended 55%-80% range suggested by Fidelity. Paying off your home before retirement can also free up more funds for investing, potentially increasing your retirement savings.

For example, if you pay off your home by age 60, you could have an additional $150,000 to invest over five years. At a 7% return, this amount could grow to $210,000, offering a solid foundation for your retirement years. Real estate investing has long been considered one of the best long-term investments, with Americans consistently ranking it as the top choice for building lasting wealth.

Exploring Additional Options

Another option for accessing your home equity is through a reverse mortgage. This financial tool allows homeowners to tap into their home’s value to supplement their income, pay off debt, or fund renovations. As of March 2025, the average homeowner has $313,000 in home equity, which can be a valuable resource during retirement.

With a reverse mortgage, you can receive funds as a lump sum or fixed monthly payments, and you can use the money however you see fit. Importantly, you can continue living in your home while accessing its value, and you won’t have to make monthly mortgage payments. The loan becomes due when you move, sell the home, or pass away.

Conclusion

The trend of homeownership in the U.S. is growing, and for many, it represents a significant financial milestone. Whether you're planning for retirement, looking to build wealth, or exploring new investment opportunities, understanding the value of your home and the options available can help you make informed decisions. With innovative platforms and tools, real estate is becoming more accessible than ever, offering new ways to grow your wealth and secure your financial future.