Even before the housing correction, it was irresponsible to rely on your home to finance your life. Now that we've learned home prices don't always go up, not counting on home appreciation to fund your retirement is a more popular viewpoint. However, a home is not a substitute for saving in a retirement plan even in an environment of steadily increasing home prices.
A home is a place to live. As long as you are alive, you will need a residence. Even if you're willing to sell your home upon retirement, most people aren't willing to move into a place dramatically cheaper than the home they've been living in. As such, you might be able to pull some of the money out of your home, but you'll never be able to pull out all of it and you might fail to pull out even a majority of the value, especially if you still have a mortgage. If you're planning on a home downsizing funding part of your retirement, consider checking out the prices of the places you can actually see yourself moving to long before retirement. Then, monitor the changes in the market. Doing so will help you avoid unhappy surprises.
Still other people will find they don't have much of a desire as anticipated to move from their homes. After all, they like their homes and their neighborhoods. They enjoy their local friends and family and don't wish to move away. Could that be you one day? If you are convinced you'll be ready to get out of Dodge when the time comes, make sure you know where you're heading and that it has a lower cost of living.
The challenges above largely go away if you've saved enough for retirement without having to rely on selling your home. If you have a big enough 401(k) or IRA balance, you might find you don't need to move at all. Far better to have options in retirement than being forced to sell your home simply to be able to stop working. Remember, sometimes retirement comes faster and in a different manner than you had planned. Will you be prepared?