Here's reason to give thanks: Home equity could provide some savings-poor baby boomers with an unexpected soft landing when they retire.

Studies that chide spend-thrift baby boomers for squandering retirement savings often overlook the generation's hefty stake in home equity -- especially older boomers who are nearest retirement.

Baby boomers aged 36 to 54 years old, were born from 1946 to 1964 and comprise a large generation of American's born during the 18 years following World War II.

In the past decade older baby boomers and older home owners have seen their equity increase 3.4 percent to 6.5 percent, according to A "While Home Ownership Rises, Home Equity Stagnates", a recent Consumer Federation of America report that focused on equity losses among younger home owners.

The figures are likely much higher for older home owners in hot markets like California where home values have more than doubled during the same period.

The study said younger boomers, those aged 54 and younger, suffered equity declines from 7.1 to 13.8 percent, but they retained an average equity stake ranging from from $49,300 to $93,400. Older boomers hold more equity, from $111,500 to $112,100, according to the report. Again, those numbers are likely much higher in hot real estate markets.

The National Association of Retired People's "Do Baby Boomers Save and, If So, What For?" says such equity wealth is often unaccounted for in studies examining boomers' savings and spending habits.

"An accurate assessment (of adequate retirement savings) depends greatly on the treatment of annuitized wealth (Social Security and pensions) and how accurately they are projected, since they constitute more than half of total wealth for boomers at retirement," say the report's authors, John R. Gist, Ke Bin Wu and Charles Ford.

"Counting these sources of wealth as well as home equity, boomers are much closer to reaching reasonable retirement savings targets than many have suggested," they continue.

Earlier this year, a Federal Reserve Board survey, "Recent Changes In U.S. Family Finances" found that home value accounts for 50 percent of the average household's net worth and many home owners rely upon equity income to help see them through retirement.

That makes sense.

Home equity, used wisely, can provide improvements that increase a home's value and, in turn, it's equity. Home equity can help finance a home-business, it can help send kids to school, and in the form of a reverse mortgage it can provide cash flow, as well as otherwise assisting with the costs of retirement.

The often cited Merrill Lynch Baby Boomer Retirement Index, however, says the typical baby boomer is financially short and ought to triple his or her rate of savings or face a wretched retirement.

The index's financial data, however, does not consider home equity.

"These assumptions can produce biased results," says the AARP study.

Ignoring home equity as a major financial component for retirement may have some virtual statistical bearing, however gray.

But excluding home equity from the real-world retirement equation doesn't make cents.

Home equity comprises hundreds of billions of dollars of consumers' real net worth.

"The exclusion of home equity is a critical assumption because including it increases the average savings adequacy measure from 35 percent to more than 50 percent," AARP says.

The highly liquid nature of today's home equity is indeed a bane to the existence of undisciplined consumers who don't save while squandering their home equity.

For the majority of home owners, especially homeowners who've managed to hold onto a home for decades, home equity is a well-deserved blessing.

"It's almost paternalistic for someone to suggest that it is improper to use your equity. If you are investing it wisely, no one is going to fault you," said San Francisco real estate broker Ray Brown, who co-authored "Mortgages for Dummies" (IDG Books, $16.99).

Published: November 24, 2000

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.