CHRIS LOKER | Longer lives are reshaping retirement — and the role of the family home

We are living longer than any generation before us. This is without question one of humanity’s quietest successes.

Advances in medicine, nutrition and living standards have added years to life and, increasingly, life to years. But longevity also changes the financial arithmetic of retirement in ways many households did not anticipate.

Across the world — and in South Africa — retirement planning has historically been built on assumptions that no longer hold. People who are now retired or approaching retirement often planned for shorter lifespans and lower late-life costs.

Yet retirement income is typically fixed, while expenses such as healthcare, home maintenance and daily living continue to rise. When there is little realistic scope to “earn more”, the gap between income and expenditure widens over time.

South Africa’s demographic trajectory reflects this shift. Life expectancy has risen markedly over the past two decades, while the share of older citizens continues to grow. What was once a short post-work phase is becoming a multidecade life stage that must be funded with care and foresight.

When the numbers no longer balance, it becomes necessary to revisit the full household balance sheet — including the family home.

For many retirees, the home is by far the largest asset they own, accumulated slowly through decades of bond repayments. Yet it is frequently excluded from retirement planning conversations because it does not feel like “spendable” wealth.

When the numbers no longer balance, it becomes necessary to revisit the full household balance sheet — including the family home.

This psychological divide is understandable but economically misleading. Housing is often the single biggest store of lifetime savings, built through disciplined repayment regardless of market cycles.

International evidence shows that older adults place enormous value on remaining in their homes. Surveys in the US consistently find that about three-quarters or more of adults aged over 50 want to stay in their current homes and communities as they age. Similar research indicates that more than 80% of seniors see ageing in place as a priority, even as rising costs and safety concerns make doing so harder.

This preference is not merely sentimental. Remaining at home is closely linked to independence, wellbeing and social connection — and is often far less expensive than institutional care. In-home support can cost a fraction of assisted living or nursing facilities, underscoring why ageing in place is an emotional and financial priority.

Complications of downsizing

Yet the traditional solution offered to retirees under financial pressure is downsizing. In theory, selling a large home and moving to a smaller one should release capital and reduce costs. In practice, the outcome is frequently more complicated.

International experience shows that many older homeowners are reluctant to sell, citing emotional attachment, community ties and the comfort of mortgage-free living. Even where downsizing occurs, transaction/friction costs, limited suitable housing and the stress of moving can erode much of the expected financial benefit.

These realities are prompting a broader re-examination of how housing wealth can support retirement without requiring people to leave their homes. Home equity release — long established in markets such as the UK — emerged precisely to address the challenge of “asset-rich, cash-poor” retirees.

Such structures allow homeowners to access a portion of their property value through loans secured against the home, typically repaid later from the estate. The approach converts illiquid housing wealth into usable income while preserving the ability to remain at home.

Home equity release — long established in markets such as the UK — emerged precisely to address the challenge of “asset-rich, cash-poor” retirees.

For retirees this can create meaningful financial breathing room: supplementing monthly income, funding healthcare or adapting homes for safer ageing. Crucially, it can also preserve future choices — including the option of later moving into assisted living or frail care if circumstances change.

South Africa presents a particularly relevant context for these ideas. A growing older population, uneven retirement savings and high levels of homeownership among retirees combine to create a structural mismatch between income and assets. Ignoring housing wealth in this environment is no longer a neutral decision; it risks leaving significant resources unused while financial pressure mounts elsewhere.

None of this diminishes the emotional significance of the family home or the importance of intergenerational wealth. Rather, it reframes the question: should housing wealth primarily serve inheritance, or should it first support dignity, security and quality of life in the years it was built to protect?

Flexible assets, thoughtful planning

Encouragingly, international studies suggest many families are comfortable with the latter. Adult children often prefer parents to use housing wealth to live well, rather than preserve an inheritance at the cost of daily comfort. Combined with the strong global desire to age in place, this points towards a gradual shift in how retirement is funded.

In the end, longevity is unequivocally positive. The challenge is not that people are living too long, but that financial thinking has not fully adapted to longer lives. Retirement can no longer be treated as a brief closing chapter; it is an extended phase requiring flexible assets, thoughtful planning and honest conversations.

The family home — long viewed only as shelter or legacy — may increasingly become part of that solution. Living longer is a gift. Our financial models simply need to catch up.

• Loker is the founder of Water Financial.