Do you include the value of your home when calculating your SWR?

[alexgodden]

We're somewhere between 1-4 years away from ER, but I'm trying to figure out how to calculate our ongoing living budget based on totals assets with or without our home value.

Our home is a decent chunk of our assets, let's say $300K of a $900K stash. So is our annual budget post-FIRE 4% of $900K (a luxurious $36K per year or $3K per month), or is it 4% of $600K (a more restrictive $2K per month)? This is the difference between being pretty frugal vs occasionally splashing out a bit on fancy home-brewing equipment, visiting family in Europe and going to the theater more, so definitely impacts the life we'll lead and whether I'll decide to work a bit longer to bulk up the Stash.

The reason I feel that we should include it is that we do expect that as we get older we will do one or several of the below:

• Rent out part of it (it used to be a duplex and is easily convertible back when we don't need the space)
• Sell and downsize
• Take out a reverse mortgage if the two above don't work

On the other hand, we are already constantly benefiting from the $ we have in the house, by not paying rent, so it feels like including the house value might be double-counting.

I'm very curious to hear how other Mustachian's are thinking about this!

[farfromfire]

It doesn't count for 4%/any other SWR because it doesn't appreciate like the common asset allocations used for SWR calculation. The rent does count as income though.

[dreadmoose]

I don't count my house equity in my stash, I'd have to sell it to get the value growing fast enough to support a 4% SWR and then I'd have to add rent in (I may actually do this but it'll be a decision at the time and will only go on my stash once it's properly invested).

Just my 3 cents (2 cents USD)

[Lepetitange3]

I would say you don't count the house. Either sell it and then include it.  But until it's cash in your hand (or your investment account), there's no way of knowing how it's going to go.

[BFGirl]

I count it as part of my net worth and Plan B or C is to get a reverse mortgage or HELOC if I need to tap the equity in the future.  However, I do not use it when calculating my SWR.