Suze Orman’s Warning for Retirees Banking on Home Equity

A retired Ohio couple paid off their mortgage and built their retirement plan around their home, only to find it was worth nothing when they needed it most. Suze Orman says millions of retirees are making the same quiet mistake.

Financial expert Suze Orman shares her insights. She advises on when individuals with significant savings might consider adjusting their life insurance strategies.

The Ohio couple followed the usual retirement checklist: they eliminated their mortgage and expected to sell the home and buy the next one outright. Instead, they wrote to Orman saying, “Our house isn’t worth anything.” They could not sell it, could not borrow against it, and their attorneys said any legal recovery was probably decades away.

Orman, the longtime personal finance author and podcast host, revisited the story with a blunt reminder: “I am asking all of you, if you are calculating your net worth, to look at what your net worth is without the equity in your home, so that you get a realistic view as to what you really could afford if all of a sudden your home went away.”

If a retirement plan quietly depends on being able to access home value, a disaster or frozen housing market can erase the biggest asset on the balance sheet.

Rising Home Values Can Make the Trap Look Bigger

Producer Robert Hasegawa told listeners that the lesson came from a story “from about three years ago.” Since then, the S&P Cotality Case-Shiller national home price index climbed from 293 in January 2023 to a record 337 in July 2026.

That represents a gain of roughly 15%, and the index is reported with about a two-month lag.

Orman’s point grows even stronger when paper equity is near its high. That is often when people are most tempted to count it. As she put it, “When you feel like you have a whole lot of money, you then also feel that you can spend more than probably you should be.”

Think about a retired couple with a paid-off home worth $450,000 and investments worth $350,000. Their total net worth would be $800,000.

Using the standard 4% withdrawal rule on that full amount would suggest spending $32,000 a year.

But only the $350,000 in investments produces income, and 4% of that is just $14,000. The other $18,000 is based on an asset that does not pay them while they live in it.

Even if the house is sold, the full value does not remain in hand. Orman has noted that sellers typically pay around 6% in commission. On a $450,000 home, that would be $27,000, leaving $423,000 before considering the next place to live. Buyers are also limited right now, with existing home sales running at about 4 million annualized in September, near the low end of the past year.

Whether You Plan to Sell Changes the Math

If you intend to stay in the house for life, its equity adds nothing to annual retirement income. As Orman said, “You do not live in the stock market, but you live in your home.” She has also warned that a home equity line of credit or a sale may not be available when disaster or market stress hits, which is exactly what happened in Ohio.

If downsizing is part of the plan, then the equity can become usable money, but only after selling costs and the price of the next home are considered. Orman advises keeping the proceeds liquid while shopping for the next place. The FDIC national average 12-month CD paid 1.7% in September, so $423,000 would earn about $7,300 a year. A sponsor ad in the same episode promoted an Alliant Credit Union certificate at 4.5% APY, showing how much rates can vary.

Orman also stressed that the segment “was not about stop paying down your mortgage.” If you plan to remain in the home, she still wants the mortgage gone by retirement because it is “your absolute biggest expense.”

Orman’s Two-Number Checkup

1. Work out your net worth twice: once including the home and once without it. Build your spending plan from the second number, and apply any withdrawal rate only to investable assets.
2. Ask your insurer what is excluded. Orman says many policies do not cover floods, earthquakes, volcanoes, war, nuclear hazards, or hurricanes. Water and mold damage after a hurricane may also be excluded.
3. Verify replacement-cost protection. Find out whether your policy pays the full cost to replace belongings and the structure, or only depreciated value, and whether your limits still match current rebuild costs. “Wood today is far more expensive than when maybe you insured it three years ago,” she says.
4. Check whether you could rebuild somewhere else. If your neighborhood becomes unlivable, a payout that only works on the same lot could leave you stuck in the same bind as the Ohio couple.
5. Document everything now. Photograph and inventory every item in the house. Orman warns that after a tornado, “you will not remember.”

A home can be your largest asset and still produce no retirement income, so the safest plan is to rely on money you can actually spend.