[al_borland]

My fear with tapping the 401k to fund purchases during one’s working years would be a bit hit to the money they actually have for retirement. Taking out $80k today, at a 7% rate of return, would be over $600k in 30 years.

If someone is in a great housing market, and is willing to downsize in retirement, maybe it works out, but there is luck mixed in there… along with personality and emotion. Your idea of rolling some equity into the 401k is an interesting one that may help quell some fears. Of course the devil is in the details, and if it requires some complicated work on the part of the buyer once the home value has grown, I can see a lot of people missing out on such a program.

[tim-tday]

Most people who need to do this live in a high cost of living area and the investment in a house increases at a higher rate than the stock market in those cities.

[yomby]

Depending on where you buy, those $80k can be rising at a little over 7% in appreciation over the 30 years too.

[al_borland]

That’s true, that’s why my mentioned the possibility of luck. But also the willingness to downsize as a means to pull money out of the home, as that real estate appreciation won’t put food on the table. HELOCs and reverse mortgages, as means to get money out, both seem predatory. Those are non-starters for me.

My dad talked about potentially downsizing to a condo about 5 years ago, but hasn’t done it and I don’t think he ever will. There is too much identity and emotion tied to owning a nice home for him.