Pensioners now worth £1 trillion in property

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Pensioners who have paid off their mortgages have seen their wealth increase by an average of £19,000 since May, thanks to a rising property market.

Add it all up, and it means that retired homeowners have seen their property wealth break through the £1 trillion barrier for the first time, analysis from over-55s financial specialist KeyRetirement.com shows.

Only the over-65s in London and Scotland missed out, with Londoners seeing average falls of more than £62,000 and the Scots losing nearly £16,000 on average.

And over the years, over-65 homeowners have seen strong growth, with Key's research indicating that owning a home has been worth around £9,100 a year for over-65s over the last six years.

"Property wealth is a growing asset for pensioners highlighting the success of investing in a home for the over-65s," says Dean Mirfin, technical director at Key Retirement.com.

"The long-term story as highlighted by our research is that property has performed very well with average over-65s making more than £9,000 a year during a period of record low interest rates and stock market volatility."

The South East of England has now replaced London as the wealthiest region for over-65s, accounting for a fifth of all UK pensioner property wealth. But despite the recent fall, Londoners have still done well from their homes, gaining an average of £137,000 each since 2010 - £22,800.

Research carried out late last year by the Resolution Foundation think tank showed that the recently retired in the UK are for the first time wealthier than those aged under 45.

And much of this is in the form of property, with people in their 60s now owning a quarter of all property wealth in the UK.

Many are using equity release to free up this cash, with Key's research showing that they are releasing around £76,300 on average, rising to more than £184,000 in London.

Equity release has become more and more attractive as interest rates tumble. Some equity release schemes now have rates that are just as good as standard variable mortgages.

However, it's worth remembering that with equity release interest is compounded. This means the amount that interest is charged on increases as time goes by, sending up payments. And while interest rates are likely to stay low for the next couple of years, equity release schemes last a lifetime.

Average change in value of home equity for homeowners aged 65+ between May and August
South East: increase of £42,420
London: decrease of £62,581
South West: increase of £37,902
North West: increase of £32,302
East Anglia: increase of £49,040
East Midlands: increase of £31,243
West Midlands: increase of £34,740
Yorks/Humbs: increase of £27,865
Scotland: decrease of £15,916
Wales: increase of £23,017
North East: increase of £26,889
GREAT BRITAIN: increase of £19,120


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If, like many Britons, you have failed to save the cash you need to maintain a comfortable standard of living in retirement, one option is to sell your home and downsize to a smaller property, using the money leftover to cover your living costs.
If moving out of the family home is too much of a wrench, however, the good news is that equity release schemes allow you to stay in your house or flat while still using the equity built up in it to provide some extra cash. The downside of the schemes, which work a bit like mortgages, is that you may not have much left to pass on to any children or other relatives.
But that's a small price to pay for a reasonable standard of living. For more information, try Age UK on 0800 169 6565.

Choosing the right annuity can have a significant impact on your retirement income. And as with most pensions, you automatically have what's called an 'open-market option' (OMO), you can scour the market for the highest annuity rate.
It is worth checking what your pension provider is offering first, though, as some companies offer guaranteed rates for existing customers that are likely to beat those available elsewhere. The Pensions Advisory Service on 0300 123 1047 is a good place to get some free advice.

On retirement, most people convert their pension fund into a guaranteed income annuity that pays out the same amount every month for the rest of their lives.
However, you can also choose an increasing annuity that pays out smaller amounts in the first few years but offers larger payments further down the line. This may prove a wise move if the rate of inflation remains at over 2%.

It is now easier to work later in life because the "default retirement age" has been scrapped.
People approaching retirement age and worrying about money can therefore choose to work for a few years longer - potentially transforming their financial situation. Other than the extra income from working, these people can look forward to higher state pensions, and higher annuity rates due to their greater age.
They can also benefit from bigger tax allowances and the fact that they no longer have to pay National Insurance contributions. Check out this nidirect website for more details.

You could get a much better rate with an impaired-life annuity if you have a medical condition that is likely to reduce your life expectancy.
Incredibly, even snoring, which is a common symptom of Sleep Apnoea could have an impact.
According to figures from MGM Advantage, a man with this condition could receive an extra £12,000 retirement income over the course of their retirement - or £571.44 extra money each year. Click here to find out more.

To maximise your retirement income, it is vital to ensure that you are receiving all the benefits to which you are entitled. These include the basic State Pension, and in some cases, the additional State Pension.
If you are on a low income, you could also qualify for the guaranteed element of Pension Credit, while those with some savings may get the savings element of this benefit. For more information about these and other benefits such as the Winter Fuel Payment, click here.

Many older couples rely on the pension income of one person - often the man. Should that person die first, the other person can therefore be left in a difficult position financially.
One way to prevent financial hardship for the surviving person is to take out a joint life annuity that will continue to pay out up to 67% of the original payments to the surviving partner should one of them die.
The disadvantage of this approach, however, is that the rate you receive will be lower. Again, the Pensions Advisory Service on 0845 601 2923 is a useful first port of call if you are unsure what to do.

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