3177: Mortgages, Home Equity, and Retirement Spending by Jeremy Jacobson on Financial Independence

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Investing, Business, Education, Self-improvement

4.4 • 1.3K Ratings

🗓️ 14 June 2025

⏱️ 13 minutes

🔗️ Recording | iTunes | RSS

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Summary

Discover all of the podcasts in our network, search for specific episodes, get the Optimal Living Daily workbook, and learn more at: OLDPodcast.com. Episode 3177: Jeremy Jacobson challenges the conventional wisdom of including home equity in retirement budgeting, emphasizing that doing so can create dangerous blind spots, especially during market downturns. By treating home equity separately and recognizing the benefits of imputed rent, retirees can protect their portfolios and maintain spending power without being forced into selling their homes or taking on unnecessary debt. Read along with the original article(s) here: https://www.gocurrycracker.com/mortgages-home-equity-and-retirement-spending/ Quotes to ponder: "Home equity is not included in our net worth for budgeting purposes. I plan to spend less than 4% of the remainder." "Exclude home equity from the portfolio." "Debt is leverage, which multiplies returns and losses." Episode references: Cfiresim: https://www.cfiresim.com/ Risk Parity Radio: https://www.riskparityradio.com/ Learn more about your ad choices. Visit megaphone.fm/adchoices

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1:10.3	This is Optimal Finance Daily, mortgages, home equity, and retirement spending by
1:16.1	Jeremy Jacobson of go currycracker.com. Is home equity part of net worth? When I googled
1:24.4	how to calculate net worth, one of the first results was very succinct.
1:28.3	Net worth is assets minus liabilities. And it is simple. Hence, home equity, home value minus mortgage, is part of net worth,
1:38.3	which is great for accounting purposes. But does it work for retirement budgeting? Retirement budgeting.
1:46.9	The 4% rule is often used or at least discussed when planning a retirement budget.
1:53.1	Summarized. Plan to spend 4% of your starting portfolio value each year adjusted for inflation.
2:00.2	Following this guideline, your retirement money
2:02.3	should last at least 30 years, even in the worst cases in the historical record, which is why
2:08.0	it's the 4% rule and not the 5% rule. It's in these hard times that the trouble of including
2:14.0	home equity in net worth becomes clear. What if you based your retirement budget on
	...

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