Suze Orman’s Warning for Retirees Who Count Home Equity as Spendable Wealth

Quick Read

• Suze Orman cautions retirees to figure net worth without including home equity, because a single disaster can leave a home’s value unusable overnight.

• A couple with $450,000 in home equity and $350,000 in investments can only draw 4% from the $350,000, not from the full $800,000 combined total.

• Orman’s five-step checklist includes reviewing insurance exclusions, verifying replacement-cost coverage, and recording all belongings before trouble hits.

• Learning how to build a portfolio is not the same as learning how to live off it, and that second skill is rarely taught. The Definitive Guide to Retirement Income is designed to help, and it is available free today. (Sponsor)

A retired Ohio couple followed the usual retirement advice. They paid off their mortgage and planned to sell their home and buy the next one with cash. Then they wrote to Suze Orman: "Our house isn't worth anything." They could not sell the property, and they could not secure a loan. Their lawyers told them any lawsuit proceeds would probably be "30 years" away.

Orman, the longtime personal finance author and podcast host, revisited that 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 your retirement plan quietly assumes you can tap your house, one disaster or frozen housing market could wipe out your largest asset.

Rising Home Prices Make the Warning Harder to Ignore

Producer Robert Hasegawa told listeners the lesson came "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%. The index is reported with about a two-month lag.

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Orman’s point is especially relevant when asset values are high. When paper gains look biggest, the temptation to count them is strongest, too. She described the danger plainly: "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."

Take a hypothetical retired couple with a mortgage-free home worth $450,000 and $350,000 in investments. Their net worth totals $800,000.

Using the common 4% withdrawal rule on that full amount suggests annual spending of $32,000.

But only the $350,000 in investments can generate income, and 4% of that equals $14,000. The other $18,000 comes from a house that produces no cash while you live in it. (We made the case for replacing the old withdrawal rule, and what to use instead, in a free income-first guide.)

Selling the home still does not leave you with the full headline value. Orman has noted that sellers usually pay about a 6% commission. On this house, that would be $27,000, leaving $423,000. Buyers are also limited right now. Existing home sales were running at an annualized pace of about 4 million in September, near the low end of the past year.

Whether You Plan to Sell Changes the Math

If you intend to remain in the home for life, the equity adds $0 a year to retirement income. As Orman said, "You do not live in the stock market, but you live in your home." She also warns that a home equity line of credit or a sale may not be available when a disaster or market shock hits, which is exactly what happened in Ohio.

If downsizing is part of the plan, the equity can become real money. Even then, it should be counted only after selling expenses and the cost of the next home. Orman advises keeping the proceeds liquid while shopping. The FDIC national average 12-month CD paid 1.7% in September, so $423,000 would generate about $7,300 a year. A sponsor message in the same episode promoted an Alliant Credit Union certificate at 4.5% APY. The gap between those rates shows why comparison shopping matters.

Orman also said the segment "was not about stop paying down your mortgage." If you plan to stay put, she still wants the mortgage eliminated before retirement because it is "your absolute biggest expense."

Use Orman’s Two-Number Check This Week

1. Calculate your net worth twice: once including your home and once without it. Build your spending plan around the second figure only, and apply your withdrawal rate to investable assets alone.

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 left out.

3. Confirm replacement-cost coverage. Find out whether your policy pays the full replacement price or only depreciated value, and whether your limits reflect current rebuild costs. "Wood today is far more expensive than when maybe you insured it three years ago," she says.

4. Ask whether you could rebuild somewhere else. If your neighborhood becomes unlivable, a payout that only covers rebuilding on the same lot could leave you stranded in the same situation 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."

Your house can be your biggest asset and still contribute nothing to retirement income, so base your plan on the money you can actually spend.

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