Seniors are more and more likely to resort to this form of property sale that is the life annuity and there is no doubt that they will be even more tomorrow. And for good reason: the population is aging, life expectancy is increasing, retirement pensions are decreasing, leading to a drop in their purchasing power.
In September 2018, the Prime Minister asked Dominique Libault, President of the High Council for the Financing of Social Protection (HCFPS), to conduct a study leading to guidelines and courses of action for an ambitious reform of the care of people weakened by advancing age.
The Libault Report “Old age, time to act” published in March 2019 marked the old age sector by the relevance of its inventory and its recommendations. It highlights the many challenges France faces in coping with the growing number of elderly people.
The increase in life expectancy and the arrival at an advanced age of the first generations of the baby boom raise the question of care for the elderly. France is aging but the challenge of advancing age is still ahead of us: the share of people aged 75 or over rose from 6.6% in 1990 to 9.1% in 2015, i.e. an increase of 2.5 points in 25 years.
In 2040, 14.6% of French people will be 75 or over, an increase of 5.5 points in 25 years. The Libault Report poses with great acuity the need to change our perspective on old age. According to INSEE figures, in 2040 more than 10 million people will be over 75, an increase of nearly 70% compared to 2018.
In addition to this, you will need to know more about it.
In other words, over the next 20 years, millions of people in France will be faced with the challenge of old age and the care of dependency.
In addition to this, you will need to know more about it.
The lengthening of the lifespan and the advancing age of the baby-boomer generation (now papy-boomers) are leading to the aging of the French population.
13.8 million French people were over 65 in 2020, or 20.8% of the French population. In 2050, a third of the population will be over 65 years old, whereas they represented only one person in five in 2005. This increase is even more marked for the oldest people. In 2050, the number of seniors over 85 will cross the 5 million mark, 3.2 times more than today.
Life expectancy is increasing by an average of four months per year:
• In 2019, it is at birth 88 years for women and 83 years for men;
• In 2050, forecasts predict a life expectancy of 90 years for women and 86 years for men.
This increase in life expectancy is leading to an explosion in the number of very old but able-bodied people. Thus in 2050, of the 5 million over 85 years old, 3 million will be autonomous and 2 million in a situation of loss of autonomy.
The fall in pensions for retirees
The gross average pension is currently estimated at € 1,578 (all plans combined, derived rights included), by the Retirement Orientation Council (COR).
The graph showing the data from the report of the retirement guidance council (June 2019) illustrates the increase in the share of pensions in French society.
At the turn of the century, there were 2.1 people contributing for every 1 retired person. This ratio drops steadily to reach 1.7 in 2017 and is expected to reach 1.4 in 2050. Therefore, everyone knows that the level of pension benefits is also set to decline over the years.
According to a study carried out by the European Commission and made public in 2009, France is, because of the reforms acted previously, one of the countries in Europe which has planned to reduce the most what is called the "replacement rate" of pensions, that is, the ratio between the net pension a retiree receives and his net salary when he retires.
Based on the reforms enacted in 2006, the Commission estimated this rate in 2006 and 2046 in the 27 countries of the Union for a man who had worked full time and paid contributions for 40 years at the time of his retirement.
In France, this rate should drop from 79% in 2006 to 63% in 2046, a drop of 16.5 points. Suddenly, in 2046, the French replacement rate would be among the lowest in Europe. The change in the replacement rate is even more accentuated when a distinction is made between non-managerial staff and managerial staff.
A simulation of the possible evolution of replacement rates carried out by Alternatives économique shows the replacement rate for executives would fall to 42.7%, representing a significant drop in terms of purchasing power and standard of living.
At the time of the transition to retirement, a growing contradiction appears between the lengthening of the life span and the reduction of the resources to continue to live in good conditions.
Seniors are more and more owners of their main residence
The share of owner households up 15 points
Between 1968 and 2014, in mainland France excluding Corsica, the number of households increased from 15.7 to 27.9 million following the increase in the population and the decrease in the size of households.
In 2014, 16.1 million households owned their homes, or 58% of the total. They were only 43% in 1968. Conversely, households housed free of charge have considerably decreased: they represent only 2% of households in 2014 against 12% in 1968. The share of households tenants fell by more than 4 points and stood at 40% in 2014.
In general, the share of owners increases with age: households whose referent is over 60 are more often owners, both in 2014 and 1968. The gap with the other age groups has widened. . Among households over 60 years of age, the share of homeowners has increased by 19 points in about fifty years, the largest increase.
The oldest households in 2014 were those who reached intermediate ages during the years 1968 to 1990, a period more favorable to home ownership. This more marked increase in the share of owners among seniors is present in all regions, but it is particularly pronounced in Île-de-France.
In conclusion, nearly 75% of seniors (60 years or over) own their main residence. Consequently, the conjunction of these different factors - the increase in the number of seniors, the fall in pensions and the possibility of staying at home - explains the favorable outlook for the market for life annuity sales.
This trend can be summed up in a few words: Live better in retirement. Selling on an occupied life annuity basis is a way for seniors to improve their retirement, with additional income while retaining the lifetime use of their property.