1What Happened
As the Federal Reserve's rate path has become clearer, financial planners are revisiting the strategic use of home equity lines of credit as a retirement reserve tool. A growing body of research — including work by Wade Pfau and the Retirement Researcher framework — supports opening a HELOC early in retirement, before it's needed, as a buffer against sequence-of-returns risk. Rates for HELOCs are variable and tied to the prime rate, which has shifted meaningfully over the past 24 months.
2The Detroit Angle
Metro Detroit homeowners have seen significant equity appreciation over the past several years. For long-time Detroit, Grosse Pointe, or Livonia homeowners, that equity represents decades of payments and appreciation — a real asset that most retirement plans barely acknowledge. A strategically structured HELOC isn't a spending tool; it's a reserve that can allow a retiree to avoid selling investments at a loss during a market downturn.
3Janine's Take
Home equity is often the most overlooked pillar in a retirement plan. Clients come to me focused on their 401(k) and Social Security, and their home — often their single largest asset — sits on the sideline. That's not always wrong, but it's worth at least understanding your options. Our home equity guide walks through the strategic use of equity in retirement, from downsizing to reverse mortgages to the HELOC-as-reserve approach.
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