This financial move can ensure you keep your home in retirement

Saving for retirement is a critical financial move at any age, but if you’re over 50 and a homeowner, ensuring that your accounts are well funded is particularly important. 

In 2026, investors can defer up to $24,500 in their 401(k) plan, up from $23,500 in 2025. The full plan limit, which includes employer matches and other contributions, is $72,000.

If you’re over 50, you can add $8,000 in 2026 for catch-up contributions, while investors aged 60 to 63 can add $11,250. 

Maxing out your 401(k) every year is ideal, as it has a plethora of benefits in the short and long term. This is especially true for homeowners, and if you’re heading into retirement in the next decade, you may want to prioritize your 401(k) if you hope to stay in your home after you’re done working.  

How maxing out your 401(k) benefits homeowners 

As of June 2025, the average 401(k) balance for people in their 60s was $568,040, according to data from Empower. This figure is slightly less than the average balance for those in their 50s ($607,055), which may be due to some individuals in the older age group having already retired and started withdrawing funds from their 401(k).

Regardless, financial experts encourage homeowners to fund this retirement account specifically due to the unique benefits. 

“Having a 401(k) improves your financial picture, making it possible for one to become and successfully stay a homeowner,” says Katrina Martin, founder and Certified Tax Advisor of Wow Tax & Advisory Service.

“When you don’t invest the maximum amount, it’s not like those dollars end up in your pocket. They’re taxed at every level of your paycheck—federal, state, Social Security, Medicare, and more. So it makes sense to keep the money you worked hard to earn and give it a chance to grow.”

“Because 401(k)s are pretax, maxing them out every year can shave a few hundred dollars off your federal and state income tax bills. This means that savings is available to help pay for maintenance, repairs, insurance, homeowners association dues, and so on,” adds Armine Alajian, founder and CPA at Alajian Group Inc., an accounting firm with locations in Los Angeles and New York.

How the math plays out at tax season

To better understand just how powerful maxing out your retirement fund can be, we’ll show you the math. 

Say you’re a single 50-year-old homeowner in New Jersey earning $125,000 a year. You own a home purchased in 2005 with 20% down at a 6% mortgage rate and pay $10,500 annually in property taxes. 

New Jersey has the highest property tax rate in the nation, and the SALT deduction is capped at $10,000.

Losing out on the SALT deduction, combined with other itemized deductions not exceeding the standard deduction, those housing costs don’t meaningfully reduce their federal taxable income. 

But by maxing out your 401(k) in 2026—contributing $24,500 plus an $8,000 catch-up for a total of $32,500—you can reduce your taxable income from $110,400 to $77,900 after the standard deduction. At a 22% marginal federal tax rate, that 401(k) contribution cuts your tax bill by roughly $7,100, savings that can help offset high New Jersey property taxes without touching home equity or cash reserves.

The long-term benefits of maxing out your 401(k), by the numbers

As homeowners reach retirement age, the dread of not having a steady income starts to set in. If they’re not working, how will property taxes be paid, the roof get fixed, or even the last lingering mortgage payments be taken care of?

This is where the real benefits of maxing out your 401(k) really shine.

If you were to continue to max out your 401(k) at $32,500 a year for the next 15 years, assuming a 6% annual return, you could rack up roughly $756,000 by the time you’re 65, two years shy of the standard retirement age. 

That total includes $487,500 in contributions and about $269,000 in investment growth, all growing tax-deferred. 

There’s no doubt that this is a substantial nest egg, which has been built alongside your home equity, providing two parallel sources of wealth to support retirement. Remember, unless you have refinanced, by 2035, the mortgage is paid off free and clear, so that’s one less bill you’re on the hook for. 

And this doesn’t even take into consideration any employer match or potential future increases in contribution limits.

And in a scenario where your mortgage is still live and you fall on hard times, your 401(k) can be the lifeline you desperately need to save your home.

“If you hit a roadblock and need to save your home from foreclosure, you can tap into your 401(k),” adds Martin. “We all know that it’s best to leave your 401(k) untouched until retirement, but it’s nice to know it’s there in times of real need.”