In your 50s and 60’s, you are either planning for retirement or coming to terms with the fact that you no longer have a monthly salary. By this time you should be done experimenting with different savings and investment options. If you saved in a lifetime ISA dedicated to retirement savings it should be maturing and you now have to think of better ISAs that suit your new lifestyle.
At this time your financial priorities have changed. You are probably more inclined to the idea of a savings/investment plan that guarantees the safety and integrity of your finances without exposing it to unnecessary risk and market volatilities.
Like all important things in life, a comfortable retirement calls for well-calculated financial plans. And this involves vetting different cash ISAs, shares and stocks ISAs and identifying the one that has the highest potential of providing you with enough income to sustain you without risking everything you have. In such a case, we advise that you pay attention to both the highly secure ISAs with reasonable returns as well as other high-yield ventures that reduce investment risk through diversification. To help you get started, we have tested and tried different ISA providers and products and compiled a list of what we consider the friendliest ISAs for individuals in their 50s and 60s.
Why consider ISAs when planning for your retirement?
- Take over the place of your salary: If you fall within this age bracket, you are staring at the possibility of having to live without a salary or are already living off pensions and savings. This, however, doesn’t have to be the case as there exist numerous savings and investment plans whose returns are enough to guarantee you decent regular incomes that take the place of the now-gone salary.
- Safekeeping for your pensions: Many are the times when individuals blow their pensions and lifetime savings within the first few years of retirement due to poor planning. Savings with the tax-free ISA plan, however, provides a safekeeping for this cash as you identify more profitable ventures and earn you tangible returns while at it.
- Expand your tax allowance: United Kingdom pensioners don’t pay taxes for incomes below £12,500 while a basic rate of 20% applies to incomes between £12,500 and £50,000. The tax-free ISA savings and investment plans help you expand on this tax allowance or avoid it altogether. For instance, your savings and all interests accrued in a Lifetime ISA are tax exempt.
- Most don’t require expert level proficiency in money markets: Even the most rewarding savings and investment opportunities availed by the different ISA providers don’t require proficiency in the money markets. Most are either wholly passive or expertly run by fund managers on your behalf for a small management fee. You, therefore, don’t have to worry about learning the money markets and only need to understand how to identify reputable service providers.
- FSCS protected: Each ISA service provider must be vetted and monitored by the Financial Conduct Authority (FCA). Your cash deposits with these providers are then protected by the Financial Services Compensation Scheme (FSCS) that insures your contributions with every company to a maximum of £85,000.
Pros and cons of the ISAs for individuals in their 50s and 60s?
Criteria used to vet these ISAs and come up with this list
- Possible returns and annual interest rates
- Risk exposure
- Interest payment schedules
- ISA product and provider reputation
- Policies on inbound and outbound ISA transfers
- Minimum initial deposit
- Maximum operating balances
- FCA regulation and FSCS protection
Best ISAs for individuals above 50 or 60 years
How do you determine the best ISA to invest in as you face retirement?
- One that offers a balance between capital growth and regular income: While the regular salary may be gone, bills still have to be paid. But your lifetime ISA savings plus the pension probably won’t be enough to cover all this for the rest of your days, especially when you factor in the loss of insurance and the increased risk of age-related health complications. In such a case, we advise that you consider an investment plan that offers a balance between capital growth and monthly income.
- Low risk but high yield ventures: The last thing you want is to gamble with what might easily pass as your last coin. In this case, the phrase ‘never invest more than you can afford to lose’ has never been more applicable. If you don’t have an additional source of income apart from lifetime savings and pension, only go for low-risk investment options.
- Maximal diversification to reduce risk exposure: When looking for an investment ISA that grows your already limited capital, you might be tempted to go for the high-risk/high-reward options. We, however, advise that you first consider the ISA providers that guarantee the highest form of investment diversification.
- FCA regulated and FSCS protected deposits: If your preferred ISA provider went down with your last coin, it would help to know that the government will step in and compensate you. This explains why it is important that you prioritize FCA regulated providers where your deposits are protected and insured to a tune of £85,000 by the FSCS should they be forced to liquidate.
There is no room to experiment and try out different ISA savings and investment options when you are in your 50s and 60s. At this time, you should be more focused on investment opportunities that help protect your savings, earn you decent incomes, and grow your capital. And we have taken our time to come up with a list of reputable ISA providers with all these qualities or a mix of two of either. While your options may be relatively limited it is not too late. You only have to figure out your priorities, between capital growth and regular income stream, and evaluate your risk tolerance before looking to this list and settling with the best UK ISA for you.
What is ISA?
An Individual Savings Account (ISA) is a specially designed savings plan where United Kingdom residents have a chance to save and invest up to £20,000 tax-free. There is no age limit to the use of ISA and it can be opened by virtually everyone above 16 years. Even parents and legal guardians can open one for their children.
Can you open a new ISA when you are in your 50s or 60s?
What do I do with a lifetime ISA after it matures when I reach 60 years?
You can only open a lifetime ISA if you are above 18 but below 40 years. Similarly, you can only contribute to this ISA if you are below 50 years but it only matures when you hit 60 years. If you are still working and don’t need this cash at the moment, you can consider saving it in a cash ISA or investing it in shares and stocks ISA where it continues accumulating interests.
What are my ISA options when I hit 50 years and illegible for Lifetime ISA contributions?
If you have been contributing your annual ISA allowance to a lifetime ISA but hit 50 years that bars you from further contributions, you can consider investing or saving this annual allowance in such other ISAs as cash, shares and stocks or Peer to peer lending ISAs.
Should I invest in the shares and stock markets in my 50s or 60s?
The answer to this question depends on how much you have in savings, your risk tolerance level, and whether you have a secondary income. If you only have meager savings and pension and no secondary income, don’t invest in the highly volatile shares and stock markets. Instead, concentrate on the less volatile niches like cash ISA.
Should I invest in cash ISA or shares and stocks when am in my 50s or 60s?
You are more likely to lose money deposited with shares and stocks ISA than those saved in a cash ISA. It is therefore advisable you stay away from the shares and stocks market if you don’t have more than you can afford to lose.
What should I prioritize between capital growth and protecting what I already have during my 60s?
Are you retired? Don’t have a secondary source of income? Have no more than just your lifetime ISA savings and little pension funds? If your answer to these questions is yes, give priority to protecting the little you already have and stop investing in the often volatile ISA investments that expose it to unnecessary risks.
Must I use an ISA provider when planning for retirement?
No, you don’t have to invest or save via an ISA provider when planning for retirement. We, however, advise that you consider investing and saving through accredited ISA platforms as they help shield your investments and interests earned from taxation.