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Recent claims state that pensions that have taken our annuity bonds will need to live until they are 90 to make their annuities worth anything and so many are planning to sell their main home to fund their retirement. The Baring Asset Management Group did research and found that 13% of people (which is close to 5 million) are planning to either sell their home or rent it out to fund their retirement plans. Last year [2012] this figure was only 11%. There were large regional differences with people in the south of England much more likely to have to sell their home in retirement than peep in the north and Scotland. With an annuity there is supposed to be an annual income paid out from the pension pot however with markets performing badly in the last few years the rates people can expect are now far lower than they had been told. In general a pensioner will not need to live to 82 to get their money back from an annuity and 90 before they are in profit and it was a good investment. Buying an annuity used to be consider a safe investment with a definite return on retirement. But many policies were mis-sold and buyers were mis-guided. While the amount of income received will be guaranteed for the rest of the investor's life from retirement, the capital invested is at risk. Most people will receive a very poor return on their investment with some not seeing any capital paid back to them at all. As many will no longer get the return they hoped for, they are looking at alternatives like renting out their homes or investing in buy to let properties. With house prices looking up and increasing steadily each month and schemes like the Help to Buy scheme fuelling the mortgage market, more pensioners may look to cash in on the equity in their home and sell up and move to a much smaller property or rent in their retirement. But such a decision needs to be looked at carefully as many factors could affect the amount you would be left with for your retirement. And while a pension pays out until your death, when you sell your house you would be left with a finite sum. What if you had to go into care, would the funds cover this? Looking at some figures and taking the average cost of a family house as around £250,000 and selling that to buy a small flat for say £150,000, would leave £100,000 for retirement. As you would be selling your primary residence there would be no tax to pay. But at a very good rate of 3% a year of you locked this cash away for a long period you would have £3000 to live off. Add to this a full state pennon of around £7,500 a year and you would have an income of £10,500 to live off. It has been estimated that a retired couple needs around £12,500 a year to live comfortably, but a more realistic figure says £21,700 is needed. For more property news and to see hundreds of properties for sale visit WhatHouse online property portal and magazine.
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