For many long-time Bakersfield homeowners, the house they have lived in for years is more than a place to call home; it’s often one of the biggest pieces of retirement wealth on the balance sheet. Nationally, homeowners held more than $34 trillion in real estate equity, and the average mortgaged borrower had about $295,000 in home equity at the end of 2025, which shows just how much value can build up gradually over time.
In Bakersfield, that matters. Local home values have remained strong enough that many longtime owners now have substantial equity sitting in their homes, even if they never set out to build a retirement asset. The real question is not whether that equity exists — it’s how, when, and whether to use it.
If you’ve owned your home for 15, 20, or even 30 years, there’s a good chance a significant portion of your net worth is tied up in home equity. Between rising property values and years of mortgage payments, your house may be one of your largest financial assets.
But here’s the important question: How should that equity actually fit into your retirement plan?
Why home equity belongs in the retirement conversation
Retirement planning is usually framed around 401(k)s, IRAs, Social Security, and pensions. But for many homeowners, home equity is just as important, especially if monthly income is fixed and expenses keep rising. A home can either be a source of comfort and stability or a tool that helps create more financial flexibility later in life.
Used thoughtfully, equity can help fund a move, create more monthly breathing room, or support a stronger legacy plan. Used carelessly, it can become an expensive way to cover short-term needs.
However, it’s important to understand that home equity is not the same as retirement income. Yes, your home may be worth $700,000. No, that doesn’t automatically mean you have $700,000 available to spend.
Home equity is an asset, but it’s not liquid cash. Accessing it often requires:
- Selling the home
- Borrowing against it
- Creating a structured strategy for using it
And each option comes with tradeoffs.
The goal isn’t simply to “use the equity.” The goal is to decide whether using it improves your long-term financial security or creates unnecessary risk.
Option 1: Downsizing
For some Bakersfield homeowners, downsizing is the cleanest way to put equity to work. Selling a larger home and moving into something smaller can unlock cash while also reducing property taxes, maintenance, insurance, and utility costs. That can make retirement income stretch further without requiring you to take on more debt.
California homeowners age 55 and older also have a major planning advantage through Proposition 19, which can make it easier to transfer a property tax base to a new primary residence in the state. That matters because many retirees delay moving simply to avoid a large property tax jump. When the numbers work, downsizing can turn a house into both cash and cash flow.
Option 2: Reverse Mortgages
A reverse mortgage can help homeowners age 62 and older stay in their homes while tapping some of the equity they have built. In many cases, it provides funds as a lump sum, a monthly payment, or a line of credit, while the borrower continues living in the home. For retirees who are house-rich but cash-flow constrained, that can be a meaningful source of flexibility.
The tradeoff is important: you still have to pay property taxes, homeowners' insurance, and maintenance, and the loan balance grows over time. That means a reverse mortgage is not a free source of money — it’s a tool, and like any tool, it works best in the right situation. It tends to fit homeowners who want to age in place and have a clear plan for ongoing housing costs.
Option 3: Gifting Property
Some families want the home to stay in the family. That can be a meaningful legacy decision, especially for homeowners who hope to pass the property to children rather than sell it on the open market. In fact, Freddie Mac has estimated that three-quarters of homeowners born before 1964 are likely to leave much of their home equity to their children, which shows how common this kind of planning has become.
Still, gifting a house is not something to do casually. Transferring property during your lifetime can create major unintended consequences, including:
- Capital gains tax issues
- Loss of step-up in basis benefits
- Creditor exposure for your children
- Divorce complications
- Loss of control over the property
- Potential Medicaid planning complications later
Families often focus on the emotional side of the decision first, but the financial and legal details matter just as much.
When not to tap equity
Home equity is valuable, but it should not be treated like an ATM. Sometimes the smartest decision is simply to keep the house, continue living there, and let the equity remain part of your long-term safety net. Especially if:
- Your mortgage is low or paid off
- Your cash flow is strong
- The home supports your lifestyle
- Moving would create more disruption than benefit
- You don’t need the equity to fund retirement
If using it would leave you unable to cover taxes, insurance, repairs, or future healthcare costs, it may create more risk than relief. That’s especially true if your retirement timeline is uncertain or if you may need to move again soon.
It is also wise to be cautious if the money would mainly fund lifestyle spending rather than a lasting financial need. Home equity is often best used for strategic goals such as downsizing, aging in place, or protecting a spouse or heirs. If the decision doesn’t improve long-term stability, it may be better to leave the equity where it is.
A practical Bakersfield lens
For Bakersfield homeowners, equity decisions often come down to a few simple questions. Do you want more monthly income, lower housing costs, or a way to stay in the home you already love? Or is your bigger priority preserving the property for your children or heirs?
That’s why home equity should be viewed as part of the retirement plan, not separate from it. The best use of equity is the one that fits your goals, risk tolerance, and family priorities. In many cases, the right answer is not to spend the equity — it’s to give it a job.
Do you have questions about what option might be right for you? At Charpentier Wealth Strategies, we help Bakersfield families look beyond account balances and build retirement strategies that reflect real life - home equity included. CLICK HERE to make an appointment.