You'll often hear how important it is to build retirement savings -- and a nice amount at that. While you can count on some income from Social Security, those benefits will only replace about 40% of your pre-retirement wages if you're an average earner. And many seniors need a lot more money than that to live comfortably.

Plus, we can't ignore that Social Security cuts are possible in a little over a decade. So all told, many future retirees may become even more reliant on their nest eggs.

The problem, though, is that a lot of older Americans lack savings. Transamerica reports that as of the end of 2021, workers had saved a median of $67,000 for retirement. And that's before the market took a dip in 2022, potentially bringing that number down even further.

A house with a large front lawn.

Image source: Getty Images.

If you're approaching retirement with a savings shortfall on your hands, you may be understandably stressed about it. But if you're a homeowner, all is not lost.

Your home could bail you out

Around 80% of Americans aged 60 and over are homeowners, reports Vanguard. And many seniors enter retirement with their homes paid off.

If that's your situation, you have a prime opportunity to use your home to compensate for a smaller nest egg. In fact, even if your home isn't fully paid off, you can still use it to your financial advantage.

For one thing, you could always sell your home, downsize to a small place, and then use the proceeds from that sale as a second nest egg of sorts. Let's say you're sitting on a home you own outright worth $400,000, and it has more space than you need. If you were to replace it with a $150,000 townhouse or condo, you'd be sitting on over $200,000 in cash, even after transfer taxes and agent fees. That's a sum you can invest and withdraw from as needed.

Of course, downsizing in retirement isn't always feasible or desirable. In that case, you can monetize a larger home by renting out a portion of it, such as a finished basement. And if that doesn't work for you -- say you don't want a full-time tenant living under your roof -- you could always rent out specific portions of your home, like a parking space in your driveway or storage space in your garage.

Use your home to your advantage

It's hard to carve out money for retirement savings when life's many expenses tend to get in the way. But if you're a homeowner, you should know that you may have more options for generating retirement income than you'd think.

One option you may want to avoid, however, is a reverse mortgage. These mortgages are often marketed to older homeowners to increase their cash flow. But a reverse mortgage is still a loan you'll have to pay back, and you could encounter several drawbacks if you decide to take one out. So before you go that route, you may want to consider downsizing your living space or monetizing your home by renting it out in some capacity instead.