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The economic downturn is causing real hardship to many people right across the world. Some of the hardest hit are those on fixed incomes or living off savings. Pensioners tend to fall into both camps.

First of all, their pensions are relatively fixed and do not keep up with inflation. The prices of everyday essentials and household bills like Council Tax continue to rise - whatever the official overall rate of inflation says. And when it comes to fuel bills it makes you gasp at what has happened.

Then there is the effect the recession. The government are trying to reduce the burden o business and stimulate the economy generally by reducing interest rates. That is great news for many people who have commercial loans or home mortgages, but it is not so good for people on the other side of the coin, the savers. They are seeing the rate of interest paid on their bank and building society accounts drop dramatically.

This is less than joyful for people who have saved but for those who generate a monthly income from these savings it is having a dramatic effect. Imagine retiring just over ten years ago. You would have got 7.5% on your savings account. Today, it is just 1.5%. So, someone with 10 000 in the bank will have seen their monthly income drop from 62.50 to just 12.50. Frightening or what? Then there is the effect of inflation, too.

One of the alternatives that retired people may be able to take advantage of is a scheme called Equity-Release. This suits people who have a home of their home which has little or no mortgage upon it.

There are a number of different ways of going about it, but, basically, some type of loan is taken out upon the property which is specially designed for the purpose of giving either a monthly income or a cash lump sum. A combination of the two is possible. The loan itself has either little or no monthly repayments and the pensioners are free to stay in their property and enjoy the additional income from the scheme.

Obviously, there are downsides to this approach. The pensioners will be giving up some or even all of the value of their home. Their beneficiaries will suffer a reduced inheritance or might even receive nothing at all. There are quite a few pros and cons to this scheme and it requires careful research

It goes against the grain to consider this as a course of action. Some people will be almost horrified at the thought of taking out equity release in retirement but we are into new territory, now. The recession is very bad and will continue for a long time. Children may need to accept that their parents will have reduce the inheritance that they will leave so that retirement can at least be tolerated rather than living on a reduced income and worrying about money the when time.

John Higgins worked in Financial Services for 20 years and now writes about all sorts of finance. He is author of http://www.equity-release-expert.co.uk which is a consumer information site about Equity-Release. It includes help and resources from reliable sources.