With Home Income Plans (HIPs), you take out a loan of pounds 15,000 to pounds 30,000 secured against your home. The money is used to buy an annuity, which funds the interest payments on your loan and gives you extra income. When you die (or the surviving partner dies, in the case of a couple) the loan is repaid from the proceeds of selling your home.The table shows the typical levels of income you can expect to get. If you are aged under 70, or in the case of a couple, have a combined age of less than 145, the benefits are not likely to be worthwhile, according to Cecil Hinton, of the independent specialist Hinton & Wild.Home Reversion Schemes involve selling part or all of the property outright in return for a lifetime income or a discounted lump sum.

Importantly, you keep the right to live in the house for the rest of your life.Use tax allowances to the full. At 74, your personal tax allowance rises to pounds 4,800 a year. Similarly, the additional married couple’s allowance goes up to pounds 3,035 if either partner is 74 or older. But you will not get the full benefit of the allowances if your total taxable income exceeds pounds 14,600. If it does, it may pay to switch to savings where the income is tax-free, such as National Savings Certificates.Typical home income plan paymentsNet annual income if:Taxpayer (1) Non-taxpayer (2)Woman aged 75 1213 1469Woman aged 80 1864 2088Man aged 75 1866 2203Man aged 80 2799 3168Couple both aged 75 766 1013Couple both aged 80 1212 1425For a loan of pounds 30,000 on a property worth at least pounds 45,000(1) After basic rate tax at 25% has been deducted.(2) Assuming total income (including from this plan) is covered by personal and married couple’s tax allowance.Source: Using Your Home As Capital 1996-6, Cecil Hinton. Published by Age Concern England (pounds 4.95)Tips for the 70sDOo Review your will regularly.o Get advice on inheritance tax planning if you and your partner’s combined estate is significantly over pounds 154,000.o Shop around for the best rates if you want to buy an annuity – rates can vary by 20 per cent or more.o Consider using your home to raise extra income only if you need that money.o Use tax allowances to the full.DON’To Assume your spouse or partner will automatically get everything when you die – they may not.o Create financial hardship for yourself just to save tax.o Buy an annuity if you don’t need the extra income.o Buy a roll-up scheme. They are very high-risk.o Forget to reclaim the basic rate tax deducted from an annuity you’ve bought yourself if you’re a non-taxpayer..

THE scandal of widespread mis-selling of personal pensions has helped to kill sales. But this trend is worrying, because many people ought to be using personal pension plans. There is no doubt that employers’ pension schemes tend to be better, with better benefits for lower contributions. But many people do not have that choice.
The big advantage of saving for retirement using a pension arrangement, whether an employer’s scheme or a personal plan, is tax efficiency, though benefits from personal plans are unpredictable. They depend on how much you pay in, how well the money is invested and how much is deducted in charges.