Peak Net Worth, Peak Illusion: What the 65-74 Balance Sheet Doesn’t Tell You

By one measure, Americans between 65 and 74 are the wealthiest people in the country. According to the Federal Reserve’s Survey of Consumer Finances, households in this age range hold a median net worth of $410,000 — higher than any other age cohort. For advisors, that number will not come as a surprise. This is the stage of life where decades of income, amortization, and compounding converge, and where the net worth curve reaches its top before decumulation begins.

The surprise is in the composition. Look inside that $410,000 and the picture changes from one of financial strength to one of structural concentration — and it raises a question that deserves more attention in review meetings than it typically gets: how much of a client’s peak net worth can actually be reached when it is needed?

The house outweighs the portfolio

The Survey of Consumer Finances breaks the cohort’s balance sheet into its parts, and two numbers stand out. Among 65- to 74-year-olds, 76% own a home, with a median value of $320,000. Meanwhile, just 51% hold a retirement account at all — and among those who do, the median balance is $200,000.

Read those figures together and the conclusion is difficult to avoid. For the typical household in this age range, the home is not a supporting asset on the balance sheet; it is the largest single line item, worth 60% more than the median retirement account. And for the roughly half of the cohort with no retirement account whatsoever, the home is not merely the largest asset — it is, functionally, the retirement plan.

This is not a fringe condition. It is the statistical center of the very cohort most advisory practices serve. Research from Vanguard reinforces the point: home equity concentration is inversely related to income, with lower-income households holding nearly four times their annual income in home equity, compared with roughly one times income for the highest earners. The clients with the thinnest portfolios tend to have the most of their wealth in the least accessible place.

Wealthy on paper, constrained in practice

The same survey data captures the other half of the paradox. Sixty-five percent of households aged 65–74 carry some form of debt into retirement, with a median balance of $45,000. A third carry credit card balances — revolving debt at card interest rates — while sitting a few feet from six figures of home equity that earns nothing and funds nothing.

That juxtaposition should give advisors pause. It suggests that for a meaningful share of retired households, liquidity is being purchased at high cost on one side of the balance sheet while wealth sits idle on the other. The household is not poor; it is poorly arranged.

And the timing compounds the problem. Peak net worth arrives at precisely the moment traditional access to housing wealth begins to close. The two conventional doors into home equity — the cash-out refinance and the HELOC — are underwritten primarily on income, not on the equity itself. A household living on Social Security and portfolio withdrawals can hold $320,000 of equity and still fail a debt-to-income test. The asset is real. The access is conditional. Advisors who have watched a retired client receive a HELOC denial letter know how jarring that discovery can be — and how often it arrives during a medical event, a widowing, or a tax deadline, when options are already narrowing.

Reading the net worth statement differently

None of this argues that the 65–74 cohort is in trouble. It argues that the headline number overstates flexibility, and that the annual review is the right place to correct for it. A few questions can reframe the conversation. What share of this client’s net worth is liquid or readily accessible? If a six-figure need arrived next year — long-term care, a family emergency, a Roth conversion tax bill — which asset would fund it, and at what cost? And if the answer is “the portfolio,” what does that do to the income plan the household is depending on?

For many clients, the honest answers reveal that the plan quietly assumes home equity is available while including no mechanism for reaching it. That gap is worth closing while the household still has time and standing to consider its options deliberately.

Home equity as a planning asset, not a last resort

Some advisors have begun evaluating housing wealth as part of the plan itself rather than as an emergency reserve of last resort. The toolkit is broader than it was a decade ago. Alongside traditional borrowing, home equity investment agreements — HEIs — allow a homeowner to receive a lump sum in exchange for a share of the home’s future value, settled upon events such as sale, death, or permanent move-out. An HEI is not a loan: there is no interest rate and no new monthly payment, and the homeowner retains title and ownership of the home. CHEIFS®, offered by Cornerstone Financing, is one example of a modern HEI structure designed for planning applications — funding insurance strategies, managing Roth conversion taxes, or creating liquidity without forcing portfolio withdrawals.

The trade-offs are real and should be modeled, not assumed. The homeowner exchanges a portion of future appreciation for liquidity today, remains responsible for property taxes, insurance, maintenance, and any existing mortgage payments, and accepts contractual conditions on the sale, transfer, or refinance of the home. In certain planning scenarios that exchange strengthens the overall plan; in others it does not. The point is that the analysis belongs inside the planning process — modeled alongside portfolio withdrawals, borrowing, and insurance funding alternatives — rather than left for the emergency that finally forces the question.

The Survey of Consumer Finances data ultimately delivers a simple message for the profession. The wealthiest cohort in America holds its wealth in a form that most financial plans still treat as invisible. The advisors who make that wealth visible — who put the largest asset on the planning table before circumstances do — are answering a question their clients did not know to ask.

Data sources: Federal Reserve Board, Survey of Consumer Finances; Vanguard, “Unlocking home equity to close retirement gaps.”

Disclosures

This article is for financial professional use and for informational and marketing purposes only. It does not constitute financial, tax, or legal advice. Advisors should evaluate the suitability of all available options for each client’s individual situation, and homeowners should consult with independent, licensed financial, tax, and legal professionals for advice. CHEIFS may involve risks, fees, costs, contractual obligations, and other material considerations not appropriate for all homeowners. Homeowners and their independent advisors should carefully evaluate all available options against the homeowner’s individual financial situation, goals, and overall financial and tax strategy.

CHEIFS is a home equity investment agreement (or “HEI”), not a loan. This is not an offer or commitment. CHEIFS is subject to underwriting and approval, including property appraisal(s) and verification of credit history, property condition, title, and property insurance, among other things. The subject property may not be in foreclosure or bankruptcy. Performance of the CHEIFS agreement is secured by a mortgage or trust deed, depending on the state, in no lower than second lien priority. Minimum investment payment is $70,000. Owner-occupied, 1-2 unit residential properties only. The equity share return becomes payable upon a settlement event and is calculated as a percentage of the home’s future value, subject to the program’s cost cap. Homeowner pays an origination fee plus appraisal, title, recording fees, and other closing costs. Homeowner must occupy and maintain the property and remain current on property insurance, taxes and assessments, and payments on any other mortgages. Terms may vary and are subject to change. Additional conditions apply. Not available in all states.

Cornerstone acts for itself, as the investor, and not as an agent or broker for the homeowner or any third party. There is no agency relationship between Cornerstone and a homeowner related to the CHEIFS agreement.

Cornerstone does not offer HEI products or solicit business related to properties located in the states of NY, MN, and certain other states. Please visit cheifs.com/licensing for a list of states where CHEIFS is offered. CHEIFS is offered exclusively by Cornerstone Financing LLC, and its subsidiary Domus Funding Corp. (in California only), and does business as “Domus Funding LLC” in OH and as “Domus Funding” in NH. Principal Office: 86 Summit Ave., Ste. 201, Summit, NJ 07901. Toll-free (855) 462-4343. NMLS #2557707, www.nmlsconsumeraccess.org. CA DRE license #02248492. Not licensed in all states. Cornerstone’s HEI product is not offered under state mortgage lending licenses.

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