“People fall prey to stories of individuals realizing substantial profits by buying a house and selling it years later at a much higher price.”
He noted that he believes nearly 29% of household wealth was tied to home equity in 2021 US Census Bureau facts. But he warned that housing assets are illiquid and often inaccessible for medical bills or long-term care.
Problems with early admission
Experts cited in the report say taking money out of retirement accounts during the best years can be particularly harmful.
“Simply put, this is an absolutely terrible idea. People need to save more for retirement, not less,” Johnson said.
Only about 40% of Americans are on track to meet their retirement needs, and the average saver faces an annual retirement shortfall of $5,000, according to a December 2025 report Forefront report.
“If you take money out of your 401(k) and the stock market to buy a house, you’re essentially cutting your growth in half,” says Jay Zigmont, a certified financial planner and founder of Child-free trust.
A hypothetical 35-year-old who withdraws $100,000 could receive about $66,000 after taxes and penalties, while missing out on about $474,000 in potential growth over 30 years, assuming a 6% annual return.
Home returns versus market returns
While housing markets have seen spikes — including price growth of nearly 19% in early 2021 — such spikes are exceptions.
Historically, home prices have grown about 3% to 5% annually, with forecasts pointing to growth of about 2.2% through 2026. By comparison, the S&P 500 has averaged nearly 7% in inflation-adjusted returns since 1957, the report said.
“No one knows for sure how home values will rise or what the market will do over the next decade, but historical averages give you an idea of what would have happened in the past,” Zigmont said.
Withdrawing from a 401(k) also effectively delays retirement timelines.
“There are no good options if you don’t have enough saved for retirement,” Johnson said. “Once someone reaches retirement age and has not built up enough retirement savings, they are left with only two options: continue working or accept a lower standard of living in retirement – and neither of these options is good.”
Experts also warned that owning a home does not guarantee financial security later in life, citing factors such as long-term care, health care and home modifications.
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