A growing number of Americans are facing a harsh reality: Their retirement savings may not be enough.
A new report from the National Institute on Retirement Security finds the average worker, ages 21 to 64, has less than $1,000 saved for retirement. For those with employer-assisted savings accounts, the median balance is just $40,000. Yet, Americans estimate they’ll need $1.26 million to retire comfortably, according to Northwestern Mutual’s 2025 Planning & Progress Study.
With traditional retirement accounts falling short, home equity is emerging as a critical financial backstop.
Research from the National Association of REALTORS® shows homeowners in their 60s have typically owned their home for more than two decades, which translates to about $200,000—or more—in accumulated housing wealth from price appreciation alone. That is five times more than the median retirement savings.
“Home equity has become a major source of financial security for Americans entering retirement,” says Nadia Evangelou, principal economist and director of real estate research at the National Association of REALTORS®. “While retirement assets are more concentrated among higher-income households, for many middle-class homeowners, their home is their single largest asset as they transition into retirement.”
A Reverse Mortgage Resurgence
Downsizing is one way to tap into home equity. But a growing number of retirees today are tapping into that wealth using a reverse mortgage. After years of stagnation, reverse mortgage volume rose 6.23% in 2025, according to the National Reverse Mortgage Lenders Association. What’s more, market projections from Grand View Research estimate the reverse mortgage market could reach $2.71 billion by 2030.
Housing wealth among homeowners 62 and older climbed to a record $14.66 trillion in the third quarter of 2025, according to NRMLA/RiskSpan Reverse Mortgage Market Index.
Related: Is a Reverse Mortgage Smart?
“At a time when inflation pressures and the fear of outliving one’s retirement savings remain top concerns for retirees, home equity stands out as a powerful—yet often underutilized—financial resource,” Steve Irwin, NRMLA’s president, said in a statement. “When incorporated responsibly into a broader retirement strategy, this wealth can help seniors offset rising costs, reduce income shortfalls and gain greater peace of mind about their long-term financial security.
Trade-Offs and Alternatives to Tapping Home Equity
Using home equity isn’t without complications. Reverse mortgages—typically for homeowners 62 and older—come with risks. Also, about 40% of retirees ages 65 to 79 still carry a mortgage, meaning housing costs don’t disappear in retirement.
Selling, downsizing and relocating also can bring emotional and financial hurdles. Research from Vanguard suggests fully leveraging housing wealth—such as through downsizing, renting or other strategies—could boost retirement readiness by 20 percentage points, potentially moving 60% of baby boomers into a more secure retirement. The gains are most significant for lower-income retirees, who often hold a greater share of their wealth in their homes.
Related: Reverse Mortgages: HECM Considerations for Real Estate Agents
Home equity aside, saving for retirement remains difficult. One-third of working-age Americans lack access to an employer retirement plan. Social Security accounts for about 52% of retirement income for older households, according NIRS research.
As Generation X, now in their 40s and 50s, approaches retirement, warning signs are emerging. A 2024 survey from Prudential Financial found that two-thirds of Americans aged 55—just a decade from retirement—fear outliving their savings, and nearly one-quarter expect to rely on family for financial help, including housing support. These trends have sparked discussion over a potential rise of “silver squatters”—older adults who may move in with family to help offset financial gaps in retirement.
Related: The ‘Silver Tsunami’ in Real Estate Is Here: Are You Ready?
How to Reach $1.26 Million in Retirement Savings By Age 65
The Northwestern Mutual’s 2025 Planning & Progress Study shows that Americans say they need $1.26 million in retirement. In order to reach that, here’s how much you’d need to save:
- Starting at age 20: $330 per month
- Starting at age 30: Save $695 per month
- Starting at age 40: $1,547 per month
- Starting at age 50: $3,958 per month
*This assumes a 7% rate of return compounded daily. It also assumes individuals never borrow from their retirement savings account before age 65.
