Property retirement: how senior citizens can cleverly boost their pension
The Property retirement offers senior citizens an ideal opportunity to become more financially independent and increase their pension - without having to give up the home they are used to. But how much money can you actually expect to receive? We explain step by step how the value of your property can be converted into a one-off payment and monthly pension.
How does property annuitisation work?
The principle is simply explained:
- You sell your property to an investor.
- In return, you receive a one-off payment, a monthly pension or a combination of both.
- Yours Right of residence remains secure - you can continue to live in your property.
Sample calculation: How the value is calculated
The value of the property forms the basis for the annuity. Let's assume that your property has an estimated value of 500,000 euros. This is what the bill looks like:
- Step 1: Determine one-off payment
The higher the one-off payment, the lower the monthly pension. In the example, the owner opts for a one-off payment of 200,000 euros. The security value of 10 % (50,000 euros) is deducted. - Step 2: Calculate usufruct value
The usufruct value corresponds to the rent that the investor would expect if the property were rented out. For a 70-year-old pensioner with a remaining life expectancy of 14 years (statistics from the Federal Office), a rental instalment of EUR 1,000 per month results in a usufruct value of 168,000 euros. - Step 3: Determine monthly pension
The remaining amount (82,000 euros) is divided by the remaining lifetime. In our example, this results in around 490 Euro additional monthly pension.
Optimum balance between single payment and pension
The lower the single payment, the higher the monthly pension. It is therefore worth looking at different options to find the optimum balance.
The advantages of property annuities at a glance:
- Financial security through one-off payments or regular pension payments
- Continue to live in your familiar home thanks to a secure right of residence
- Flexibility in the choice of payment models
- No burden from loans or mortgages
Legal notice: This article does not constitute tax or legal advice. For your individual case, please consult a lawyer or tax advisor.
