Should you count your home or business as a retirement asset?

Large, illiquid assets like a home or a business can absolutely play a role in your retirement plan, but they behave very differently from a savings or investment account, and treating them the same way is a common planning mistake. The safest approach is to include them in your plan at a conservative estimate of their value, without depending on them to fund your retirement outright.

Why large assets are different from other retirement savings

Homes, businesses, real estate, and other non-depreciable assets (property whose value isn’t consumed through ordinary use, unlike, say, a car) are genuinely useful to account for in a retirement plan, but they’re also harder to plan around than a typical investment account. They can be a strong financial asset with real returns, and even a relatively inexpensive source of funding for short-term needs. The key is being realistic about what they’re actually worth and how easily you could convert that value into usable income if you needed to.

Other non-depreciable assets (collections, memorabilia, intellectual property, and similar holdings) deserve a more cautious approach. They can be a pleasant bonus if they eventually pay out, but they shouldn’t be counted on as retirement income. It’s not unusual for people to significantly overestimate what a niche or illiquid asset is actually worth on the open market, only to find real buyers offering a fraction of what they expected. Treat these as upside, not as a plan.

Should you count on your home to fund your retirement?

There are a few common ways people think about a home’s role in retirement, and each has some truth to it. One view holds that your living costs will drop once your mortgage is paid off, freeing up room in your budget and leaving your home as an asset you could borrow against or sell later. Another holds that overall costs stay roughly flat in retirement, since lower housing costs get offset by higher medical and lifestyle expenses. A third view is more cautious: that a home may eventually need to be sold to cover the cost of assisted living or long-term care, meaning it shouldn’t be counted as a retirement asset at all.

Each of these has a kernel of truth, and building in some conservatism, assuming your retirement costs might be somewhat higher than expected, is generally a smart planning habit, since it gives you more margin for error. But it’s not accurate to treat your home like a bank account where whatever you put in, you’re guaranteed to get out. Home values generally rise over time, but not universally and not predictably: neighborhood changes, local development, and market cycles can all affect what a specific property is actually worth when you need to sell.

The most useful way to think about your home is as a large, illiquid asset that can rise or fall in value, similar in principle to a stock or bond, just with much higher transaction costs and the added benefit that living in it saves you from paying rent in the meantime. The longer you have until retirement, the less you should count on your home’s current value as a guaranteed retirement asset, simply because there’s more time for that value to move in either direction.

Should you count on a business to fund your retirement?

A business shares some of the same properties as a home. It’s an asset you can sell or borrow against, but it’s considerably harder to plan around. Unlike a home, a business can generate ongoing cash income rather than just housing you. But its value can also swing far more dramatically, driven by competition, market shifts, and how dependent the business is on you personally to run it.

Transaction costs for selling a business are typically even higher than for real estate, in part because finding a qualified buyer is harder than finding a home buyer. If a business requires specialized expertise to run, selling it, or parts of it, to a competitor may be the most realistic path to converting it into retirement income. If it can be run by someone with more standard, replaceable skills, hiring a general manager and stepping into a more passive ownership role is often a better way to keep the income flowing without your day-to-day involvement.

Either way, treat a business as a large asset that will likely retain meaningful value, but avoid assuming you’ll be able to extract every dollar of its current worth as retirement income. Business losses happen, and the risk involved is meaningfully higher than with most other retirement assets.

How to include large assets in your plan without over-relying on them

Go ahead and include your home, business, and other non-depreciable assets in your retirement plan. They’re a real part of your financial picture. But rather than assuming they’ll fund your plan at full current value, apply a conservative discount based on how much market risk and time-to-retirement each asset carries. In other words: hope for the best, but plan as though you’ll only realize a portion of their current value.

From there, keep your plan current. Update your estimate of what these assets are worth as your situation changes year to year, the same way you’d update any other part of your financial plan. Large assets can meaningfully strengthen your retirement outlook, but only if you’re realistic about what they can actually deliver when you need them to.