‘Our House Isn’t Worth Anything’: Suze Orman’s Warning to Anyone Counting Home Equity as Retirement Money
A retired Ohio couple paid off their mortgage and built their entire exit plan around their home, then discovered it was worth nothing when they needed it most. Suze Orman says millions of retirees are making the same quiet mistake…
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
A retired Ohio couple did everything the retirement playbook requires. They paid off their mortgage and planned to sell and buy their next home outright. Then they wrote to Suze Orman: “Our house isn’t worth anything.” They couldn’t sell the house, and they couldn’t get a loan. Their lawyers told them any litigation money was “probably going to be 30 years” away.
Orman, the longtime personal finance author and podcast host, re-aired that story on October 15, 2026 with a frank instruction: “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 the house, one disaster or market freeze can wipe out the biggest asset on your balance sheet.
Record Home Prices Make Orman’s Warning More Urgent
Producer Robert Hasegawa told listeners the lesson is “from about three years ago.” Since then, the S&P Cotality Case-Shiller national home price index rose from 293 in January 2023 to a record 337 in July 2026.
That works out to a gain of about 15%. The index runs on a lag of roughly two months.
Orman is right, and the timing makes her advice more important. When paper equity is at its peak, the urge to count it is at its peak too. She described the trap herself: “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.”
Consider a hypothetical retired couple that owns a paid-off house worth $450,000 and has $350,000 in investments. Their net worth is $800,000.
Apply the common 4% withdrawal guideline to that total and it suggests $32,000 a year in spending.
Only the $350,000 in investments actually makes income, and 4% of it is $14,000. The $18,000 difference is spending supported by an asset that pays nothing while you live in it (we made the full case for retiring the old withdrawal rule, and what to run instead, in a free income-first guide).
Selling still leaves you with less than the headline value. Orman has pointed out that sellers typically pay a commission of about 6%. On this house, that comes to $27,000, which leaves $423,000. Buyers are also scarce right now. Existing home sales ran at a roughly 4 million annualized pace in September, near the low end of the past year.
Whether You’ll Ever Sell Decides Everything
If you plan to stay in the house for life, its equity adds $0 a year to your retirement income. As Orman put it, “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 be unavailable when a disaster or market shock hits, which is exactly what happened in Ohio.
If you plan to downsize, the equity becomes real money. Count it only after selling costs and the price of your next home. Orman tells sellers to keep the proceeds liquid while they shop. The FDIC national average 12-month CD paid 1.7% in September, so $423,000 would earn about $7,300 a year. A paid sponsor ad on the same episode advertised an Alliant Credit Union certificate at 4.5% APY. The difference between those two rates shows how much it pays to compare offers.
Orman also explained that the episode “was not about stop paying down your mortgage.” If you plan to stay, she still wants the mortgage gone by retirement because it is “your absolute biggest expense.”
Run Orman’s Two-Number Test This Week
- Calculate your net worth twice. Do it once with your home and once without it. Base your spending plan on the second number only, and apply your withdrawal rate to investable assets alone.
- Ask your insurance company what is excluded. Orman says most policies leave out floods, earthquakes, volcanoes, war, nuclear hazards and hurricanes. Water and mold damage after a hurricane may also be excluded.
- Confirm replacement cost coverage. Find out whether you’re covered for the full cost to replace or only a depreciated value, and whether your limits match today’s rebuild costs. “Wood today is far more expensive than when maybe you insured it three years ago,” she notes.
- Ask whether you can rebuild elsewhere. If your neighborhood becomes unlivable, a payout that only lets you rebuild on the same lot could leave you stuck in the same position as the Ohio couple.
- Document everything now. Photograph and list 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 your retirement income, so build your plan around the money you can actually spend.
Contact [email protected] for any questions or corrections.
Jake has been been working in financial media for almost 15 years. He focuses on all things personal finance for 24/7 Wall St. with high hopes to educate and entertain. Most recently, Jake spent 12 years working various roles at The Motley Fool. He started copy editing fool.com content, worked on premium and marketing campaigns, and helped launch The Ascent, a personal finance brand.
His work has been featured on platforms like MSN, Yahoo Finance, USA Today, and more. He's written about credit cards, social security, ETFs, savings accounts, and just about anything else you can imagine when thinking about money. Jake love to cook, play golf, and tell people he's never had a cavity. (It's true!)
