Economist warns that homeowners may be underestimating their retirement readiness.

• A recent survey by CNBC found that some workers believe they are either ahead or on track with their retirement plans.
• Home equity or ownership contributes to the feeling of readiness.
• Angie Chen, a senior research economist and the assistant director of savings research at the Center for Retirement Research at Boston College, believes that confidence in retirement savings might be overestimated.

Some experts believe that owning a home may not necessarily increase confidence about retirement prospects.

According to a survey by SurveyMonkey and bizfocushub.com, 37% of polled workers, including those with part- or full-time jobs, or who are self-employed or business owners, say they are either "ahead of schedule" (7%) or "on schedule" (30%) in their retirement savings.

According to the report, 42% of those who claimed to be ahead or on schedule in retirement savings attributed their success to an early start in retirement savings. Other factors that contributed to their readiness included having little-to-no debt (38%) and home equity or ownership (37%).

In August, a survey was conducted among 6,657 adults, comprising 2,603 retired adults and 4,054 working adults.

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Angie Chen, a senior research economist and the assistant director of savings research at the Center for Retirement Research at Boston College, suggests that homeowners' confidence in the wealth in their home value may be overestimated.

""Retirement readiness is often overestimated by homeowners, as there is a common misconception about assessing one's progress," Chen stated."

Winnie Sun, co-founder and managing director of Sun Group Wealth Partners in Irvine, California, stated that owning a home can bring other benefits in retirement years.

Here's what to know.

'Overconfident or not worried enough'

In 2023, a CRR analysis revealed that 28% of working-age households who assessed their retirement readiness individually believed they were not at risk, despite the National Retirement Risk Index predicting otherwise.

According to Chen, those who have a mortgage on their homes are more likely to be overconfident or not concerned enough.

To accurately assess retirement readiness, it is crucial to take into account not only the value of your home but also the amount you borrowed and the remaining balance you owe, as advised by Chen.

Experts advise against tapping into home equity as it can be costly and risky, even if you still owe $400,000 on a $500,000 house.

"Chen stated that housing is not a liquid asset that can be consumed in retirement. It cannot be spent in the same way as other types of savings."

Experts suggest that owning a home has its advantages.

'You have a controlled cost of housing'

Owning a home can provide financial benefits in retirement, regardless of whether you factor in home equity for retirement readiness.

According to Sun, a member of CNBC's Financial Advisor Council, homeownership involves two aspects.

As you accumulate equity in your property, you can access it as a lump sum when you decide to sell it, whether you downsize during retirement or for any other reason, Sun explained.

As long as you own the property, you have a controlled cost of housing, which may include a fixed mortgage payment, according to Sun.

You may be eligible for senior pricing on utilities when you retire, even though homeownership costs like home insurance and property taxes have risen in recent years, according to Sun.

"As clients age, they may become eligible for senior pricing on their utilities, which could lower some of their costs, stated Sun."

Experts suggest that although a house is not liquid, you may still be able to access your home equity if necessary.

Sun stated that for most retirees, equity serves as their emergency fund.