A golden retirement on your own terms

There are lots of ways to raise money for your retirement if you don't have a private pension.

Lord Turner's Pension Commission finally delivered its vision for state and private pension reform on Wednesday. But for those who are already nearing retirement, most of the suggested changes will come too late. In any case, the Government is under no obligation to accept Lord Turner's recommendations: it may simply cherry-pick the least expensive and controversial measures.

However, all is not lost for those without private pension savings, even those nearing retirement. If you are a homeowner, or have a small amount of savings, there are ways to increase the income you will have to live on during retirement.

USE YOUR HOME

If you're over the age of 55, there are two ways to release equity from your home. Both lifetime mortgages and home reversion plans enable you to access some of the value of your property without selling it.

Lifetime mortgages typically allow you to release up to 50 per cent of the value of your property (the older you are, the more you will be able to unlock). You make no repayments on the mortgage, but the interest on the loan rolls up and is added to the debt, which is repayable from the sale of the property when you die.

Lifetime mortgages guarantee that the total repayment cannot be greater than the value of the house, but there are no guarantees about the size of the inheritance you will be able to leave to heirs.

Home reversion plans allow you to sell part or all of your property to a scheme provider. The provider then reclaims its stake by selling your property when you die. This option gives greater certainty as to what you will be left with to pass on as inheritance. However, if the housing market soars after you've taken out the plan, you will lose out on any increase in value in the proportion of your property that you've sold.

Brendan Kearns, product development manager for equity release at Norwich Union, says that many elderly people have been turning to equity-release plans in recent years to supplement their retirement income.

"Around 60 per cent of retired people's assets are now in property, so everybody should at least consider equity release, although there are people for whom it won't be appropriate," he says. "Customers tend to come to us when they are already retired and start to see their savings depleted."

However, Kearns emphasises that it's worth considering whether it may be easier, and less costly, to trade down to a smaller property before committing to an equity-release plan. This is an easy way of releasing equity from your home, but not always the most practical.

DEFER YOUR RETIREMENT

Neil Churchill of Age Concern says that if you're in your fifties or early sixties, it may be worth considering deferring your retirement. Even if you haven't yet got a private pension, it may still be worth taking one out, especially if your employer is willing to contribute.

If you're willing to work beyond the state retirement age - currently 60 for women and 65 for men - you can defer taking your state pension for up to five years and receive a lump sum at the end of the period as compensation.

USE TAX BREAKS

Tom McPhail, head of pensions research at Hargreaves Lansdown, says that new regulations coming into force on 6 April 2006 (so-called "A-day", when the Government will be bringing in a new, simplified set of tax rules for pensions) will allow people to transfer as much money as they can muster into a pension in their last year before retirement (up to £1.5m). This means that if you have some savings that are not in a pension, you can transfer them to a private pension, receive tax relief on the way in and then take 25 per cent of your fund back tax-free immediately. If you have less than £15,000 in your pension, you can take the whole pot as cash.

Another option, which will become available after A- day, is to let your children buy your house within their self-invested personal pension (Sipp). You would have to pay rent on your own property, but your children may feel that they can help you out with this. "I certainly think it is an option that some families will consider," says McPhail.

INCREASE YOUR INCOME

Churchill adds that it is also worth taking straightforward steps such as reviewing your finances to check that you're not paying for any insurance or other financial policies that you no longer need.

Finally, make sure that you are receiving the full state benefits that you are entitled to. Benefits such as pension credit ensure that no pensioner in the UK is on any less than £109 a week. If you're not receiving at least this, you should call your local pensions office. Also find out whether you are owed other entitlements such as council tax benefit.

Independent Partners: 10 top tips for retirement. Get your free guide here

PROMOTED VIDEO
News
Down time: an employee of Google uses the slide to get to the canteen
businessHow bosses are inventing unusual ways of making us work harder
News
Actor, model and now record breaker: Jiff the Pomeranian
news
News
REX/Eye Candy
science
News
i100
Sport
Alexis Sanchez celebrates after scoring his first goal for Arsenal in the Champions League qualifier against Besiktas
sportChilean's first goal for the club secures place in draw for Champions League group stages
Arts and Entertainment
Amis: 'The racial situation in the US is as bad as it’s been since the Civil War'
booksAuthor says he might come back across Atlantic after all
Extras
indybest
Life and Style
Google Doodle celebrates the 200th birthday of Irish writer Sheridan Le Fanu
tech
Arts and Entertainment
Vinyl demand: a factory making the old-style discs
musicManufacturers are struggling to keep up with the resurgence in vinyl
News
i100
News
In Eternal Sunshine of the Spotless Mind Jim Carrey and Kate Winslett medically erase each other from their memories
scienceTechnique successfully used to ‘reverse’ bad memories in rodents could be used on trauma victims
Arts and Entertainment
Singer Pixie Lott will take part in Strictly Come Dancing 2014, the BBC has confirmed
tv
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    C# Developer (C#, ASP.NET Developer, SQL, MVC, WPF, Real-Time F

    £40000 - £48000 per annum + benefits+bonus+package: Harrington Starr: C# Devel...

    C# Swift Payment Developer (C#, ASP.NET, .NET, MVC, Authorize.N

    £45000 - £60000 per annum + benefits+bonus+package: Harrington Starr: C# Swift...

    DevOps Engineer - Linux, Shell, Bash, Solaris, UNIX, Salt-Stack

    Negotiable: Harrington Starr: A fast growing Financial Services organisation b...

    Trade Desk FIX Analyst - (FIX, SQL, Equities, Support)

    £50000 - £60000 per annum + excellent benefits: Harrington Starr: An award-win...

    Day In a Page

    Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

    Robert Fisk: No victory for Israel despite weeks of devastation

    Palestinians have won: they are still in Gaza, and Hamas is still there
    Mary Beard writes character reference for Twitter troll who called her a 'slut'

    Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

    The Cambridge University classicist even wrote the student a character reference
    America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

    America’s new apartheid

    Prosperous white districts are choosing to break away from black cities and go it alone
    Amazon is buying Twitch for £600m - but why do people want to watch others playing Xbox?

    What is the appeal of Twitch?

    Amazon is buying the video-game-themed online streaming site for £600m - but why do people want to watch others playing Xbox?
    Tip-tapping typewriters, ripe pongs and slides in the office: Bosses are inventing surprising ways of making us work harder

    How bosses are making us work harder

    As it is revealed that one newspaper office pumps out the sound of typewriters to increase productivity, Gillian Orr explores the other devices designed to motivate staff
    Manufacturers are struggling to keep up with the resurgence in vinyl records

    Hard pressed: Resurgence in vinyl records

    As the resurgence in vinyl records continues, manufacturers and their outdated machinery are struggling to keep up with the demand
    Tony Jordan: 'I turned down the chance to research Charles Dickens for a TV series nine times ... then I found a kindred spirit'

    A tale of two writers

    Offered the chance to research Charles Dickens for a TV series, Tony Jordan turned it down. Nine times. The man behind EastEnders and Life on Mars didn’t feel right for the job. Finally, he gave in - and found an unexpected kindred spirit
    Could a later start to the school day be the most useful educational reform of all?

    Should pupils get a lie in?

    Doctors want a later start to the school day so that pupils can sleep later. Not because teenagers are lazy, explains Simon Usborne - it's all down to their circadian rhythms
    Prepare for Jewish jokes – as Jewish comedians get their own festival

    Prepare for Jewish jokes...

    ... as Jewish comedians get their own festival
    SJ Watson: 'I still can't quite believe that Before I Go to Sleep started in my head'

    A dream come true for SJ Watson

    Watson was working part time in the NHS when his debut novel, Before I Go to Sleep, became a bestseller. Now it's a Hollywood movie, too. Here he recalls the whirlwind journey from children’s ward to A-list film set
    10 best cycling bags for commuters

    10 best cycling bags for commuters

    Gear up for next week’s National Cycle to Work day with one of these practical backpacks and messenger bags
    Paul Scholes: Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United

    Paul Scholes column

    Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United
    Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

    Kate Bush shows a voice untroubled by time

    A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
    Robot sheepdog technology could be used to save people from burning buildings

    The science of herding is cracked

    Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
    Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

    This tyrant doesn’t rule

    It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?