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Is home ownership the best retirement investment?

The home you own (or hope to soon) can be a retirement tool, since, like stocks, it appreciates in value -- on average, 6 percent a year. That’s good, but keep in mind it won’t be a killing. “We’re now seeing the double-digit gains many markets posted in recent years coming unwound -- ask someone who lives in San Diego,� warns Gail Buckner, a retirement planning specialist for Franklin Templeton Investments. So don’t neglect your 401(k) contributions by pouring everything into a mortgage. Still, there are some definite retirement perks to owning a pad: 1) Once the munchkins are grown and leave home, many couples downgrade to a smaller place -- and can claim a $500,000 capital gains exemption, which means they don’t pay taxes on up to that amount of the profits made from the sale. 2) If you decide to stay in your home but find yourselves short on funds come retirement time, consider a reverse mortgage. You take out a loan against your home, which is then paid to you in a lump sum or in monthly installments. Later on, your kids can pay it off to keep your home or sell it and collect the difference.

-- Judy Dutton

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