Outdated? The life annuity certainly does not have the appeal of novelty, but it still constitutes an advantageous solution for preparing for retirement. Whether you are a buyer or seller, everyone has their own strategy.
Sell your house for lifetime income
Sell your main or secondary residence for life annuity allows you to supplement your pension once you retire, in the absence of other solutions. Advantage: the seller does not change anything in his lifestyle since he continues to occupy the premises. But be careful, this is indeed a sale from a legal point of view: the house or apartment therefore leaves his estate and will not return to his heirs upon his death. “Selling a life annuity allows you to make money tied up in stone liquid while remaining at home,” summarizes Sophie Richard, the founder of the Viagimmo network.
The seller receives capital upon signing, called the bouquet, then an annuity for life. This depends on the age of the seller(s) in the context of a “two heads” operation, ending on the second death, but also on the amount of the bouquet: the higher it is, the lower the annuity. “It can make it possible, if necessary, to finance home help or a retirement home in a few years,” notes Hélène Leraitre, manager of France Viager. Some take advantage of the operation to donate all or part of the bouquet to their children.
Buy a property at a discounted price
This time it is about make a real estate investment at a lower cost, with the aim, ultimately, of building up capital. “The acquisition value of the property takes into account a discount since it is sold occupied. The latter is of the order of 43% if the seller is a 75-year-old man, 49% for a woman of the same age because its life expectancy is higher”, indicates Sophie Richard. You will pay part of this amount immediately, the balance being paid via a life annuity.
To make this type of acquisition, you must therefore have sufficient income to finance a monthly payment of a few hundred euros for years, until the death of the seller. Example with a 4-room apartment in Lyon sold by a 79-year-old woman: its market value amounts to 350,000 euros, but it is sold for 197,750 euros, to be paid with a bouquet of 90,000 euros and a monthly annuity of 732 euros.
Once the seller dies, the annuity expires. The investor can then resell the property with a substantial gain, since it is no longer occupied, and place the sum in a life insurance contract which he can draw on as his needs arise. There is also nothing stopping you from offering it for rental in order to supplement your income. However, it is difficult to know when this moment will arrive and to make it perfectly coincide with your retirement date!
Invest in a specialized fund
It is also possible to invest in specialized real estate companies (SCI) offered in the form of units of account in certain life insurance contracts, such as ViaGénérations (managed by Turgot AM) or Silver Avenir (Arkéa REIM). These two supports follow the same model: their managers buy real estate on an annuity basis without annuity (to avoid financial hazard), with a discount of between 30% and 40%.
On the death of the seller, the SCI can then resell the property or rent it to generate income. These supports allow you to diversify your investment across several assets and take advantage of the advantageous tax framework of life insurance. The results have been there in past years: according to Quantalys, the first posted a performance of 15.6% over three years and the second 26.3%.
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