If you’re in the over 50s or over 60’s age bracket, you are likely to either be 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 into 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. 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.
Table of Contents
- Transfer out your savings when you need to
- Invest in highly diversified portfolios
- A personal adviser to help you get started with your investment
- Expert portfolio management
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 over 50s and over 60s 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.
Best ISAs for individuals over 50 or 60 years: Reviewer’s choice
Pros and cons of the ISAs for individuals in their 50s and 60s?
Criteria used to vet these ISAs
- 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 over 50 or 60 years
1. Moneyfarm stock and shares ISA – up to 55.2%
When readying for retirement in your 50s and 60s, you are looking to accumulate as much retirement funds as possible.
Moneyfarm and its stocks and shares ISA helps you achieve this by compounding your annual ISA deposits by between 8.1% and 55.2% annually. You will have seven investor portfolios to choose from based on your risk tolerance levels ranging from low- to high risk portfolios.
Moneyfarm only asks for a minimum investment amount of £1,500 but also processes transfers in from different types of ISAs and ISA companies. Its team of professional money managers and traders then actively handles your investment on your behalf implying that you do not need a prior exposure to the stock markets to open an account here.
- Minimal trading fees as low as 0.35% of assets under management
- You don’t need stock market trader experience to invest in Moneyfarm stock and shares ISA
- You are matched with a personal investment advisor that is available online, on phone and in person
- You have no control over how and where your funds are invested and managed
2. Mintos P2P lender – 11.88%
If you want higher monthly returns to push you through retirement with minimal risks, consider investing your annual ISA allowable in Mintos, a peer to peer lending site with an active presence in over 71 countries. The average interest rate of 11% on investment exceeds any cash ISA by far. The platform has also made it possible to break your investment and fund numerous loans thereby reducing any risk of default.
They also have a thorough screening process aimed at smoking out potential cons and will also furnish you with such details as the loanees borrowing history to help you inform a better investment decision. And if you are in your Fifties and still in active employment or have a regular income source you can just deposit your ISA allowance for the year and have their auto-invest tool reinvest any interests accrued until a time when you need the cash.
- High-interest rates with a monthly payment plan
- Diversification and borrower screening minimizes possible risks
- In the case of emergencies, you can dispose of your investment in the platform’s secondary market
- Even with diversification, the risk of default is still high
- FSCS does not cover losses resulting from defaulters and bad investments
3. LendingCrowd P2P lender – 8.10%
LendingCrowd is yet another impactful peer to peer lending platform that gives you a chance to invest in U.K businesses with the promise of an attractive average return of 8.10% on your investments. The primary difference between Mintos and LendingCrowd is that the latter invests in established businesses within the United Kingdom with attractive cash flows.
Its founders believe that these small business enterprises have a higher chance of repaying their loans than individual borrowers scattered all around the world. If you are in the early 50s and still saving towards retirement, you can approach LendingCrowd from an investment point of view where you deposit your ISA allowance and reinvest all interests earned.
If you just retired and are looking for a steady monthly income stream, consider directing your lifetime ISA savings here and get to withdraw tax-free interest every month.
- Lower default risk compared to most other peer-to-peer lending sites
- Attractive interest rates with the possibility of tax-free monthly withdrawals
- You can diversify your investments and reduce risk
- The risk of defaulting on investments is ever present
4. Property Crowd ISA – 11%
When you are in your 50s and early 60s and looking for a great investment platform where you can direct your lifetime ISA savings and the pension, you can’t help but keep thinking of the real estate industry. But you probably don’t have enough resources to put up rental properties. Enter PropertyCrowd, yet another peer to peer lending platform that specializes in crowdfunded real estate investments. Ideally, it creates a platform where you get to help other real estate companies accomplish their goals and earn attractive interest, up to 11% on your investments in the process.
What we find most attractive about the platform is their thoroughness in researching and identifying the different real estate investment opportunities, the fact that most investments here are short term – between 6 and 24 months – and that all investments here are secured.
- Secure investments mean no investment loss even if the loanee defaulted
- 100% passive income with higher than average returns
- The platform is managed by professional and highly experienced real estate industry players
- Not FSCS protected
- Hard to liquidate in the case of emergencies
5. Funding Circle business loans ISA – 6.50%
Funding Circle is yet another popular peer to peer lender and ISA provider that promises above-average annual returns on investments, up to 6.50%. It specializes in lending pooled funds to small and medium enterprises. And with the promise of paying interests on an annual or monthly basis, the low initial deposit and initial investment amounts of £1,000, and tax-free earnings for the ISA backed investments, it could easily come off as a regular p2p lender.
Funding Circle, however, differs significantly from most other peer-to-peer platforms when it comes to selecting investment options and minimizing risk. It not only carefully screens the SMEs applying for funds to only admit the ones with the highest possibility of repayment but further subdivides these groups into two categories.
The Balanced investment option that invests in any screened business and earns an interest rate of 6.50% and the conservative option that only lends to low risk and high creditworthy businesses with an average return of 4.7%.
- The segregation of investments eliminates the risk of defaults
- Promises higher returns compared to such other options as government securities and cash ISAs
- Boasts of the automated reinvestment feature that speeds up capital growth
- Your deposits aren’t covered by FSCS
6. Hargreaves Lansdown
In your 50s and 60s and with retirement and loss of a monthly income staring at your face, you are highly discouraged from investing in the volatile shares and stock markets. This is particularly emphasized on if you only have your pension or lifetime ISA earnings as your only financial backup. But if you are risk-tolerant or have huge savings or a business income, you might consider directing the lifetime ISA accumulation or your annual ISA allowance to the highly profitable but equally risky shares and stock markets.
And who is better equipped to handle your money market investments than the reputable Hargreaves Lansdown. The tricky part about shares and stocks ISA investments is that it is almost impossible to estimate how much you stand to make annually from these investments. However, they will almost always have their returns averaging around 10%, and this implies they will probably pay higher than the cash ISA or corporate/government fixed bond.
- In good months, their returns on investment will be higher than your average cash savings plan
- You don’t need prior exposure to money markets to invest here
- Wholly passive income generating stream where professionals create and manage your investment portfolio
- Recovering from unexpected market volatilities takes time
- Management fees often take a toll on your overall returns
7. Fidelity shares and stocks
You can also invest your £20,000 annual ISA allowance for the year or transfer your accumulated lifetimes ISA savings from another ISA provider to Fidelity’s shares and stocks ISA platform. The minimum initial deposit and investment amount here start from £1,000 with the international financial services provider promising affordable management fees.
Like any other shares and stocks ISA provider, there is no absolute guarantee or an expected average return on investment given the highly volatile markets. You can only invest in these markets basing your decision on the fact that shares and equities are the second most lucrative investments overtime after real estate. To minimize risks that come with the volatile markets, Fidelity diversifies your investments in 4,000+ trust funds, shares, and bonds.
- A highly diversified investment portfolio for reduced risk and higher returns
- Professionally crafted and managed portfolios
- Low management fees and overheads maximize your annual returns
- Not FSCS regulated
- Exposed to huge uncertain markets and huge volatilities
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.
- Transfer out your savings when you need to
- Invest in highly diversified portfolios
- A personal adviser to help you get started with your investment
- Expert portfolio management
Glossary Of ISA Terms
A cash ISA is a form of Personal Savings Allowance that works like ordinary savings account safe for the fact that you don’t pay tax on interests earned. It is tax-free savings account for UK citizens. The maximum you can invest in this ISA for the year 2020 is £20,000
A share and stock ISA is a tax-free investment account provided by a brokerage that lets you invest in a wide range of securities including individual shares and stocks, trusts, and funds. Tax-free means that you don’t get to pay dividend tax or capital gains tax on the shares and stock incomes. The maximum you can invest in this ISA for the year 2020 is £20,000
Innovative Finance ISA is a tax-free investment account that lets you invest in the peer to peer lending platforms. The maximum you can invest in this ISA for the year 2020 is £20,000
A junior ISA is a tax-free and long term Child Trust Fund that a parent or guardian can open for their underage children. A 16-year old can also open a Junior ISA but will only access the funds therein once they turn 18. The maximum you can invest in this ISA for the year 2020 is £4,368
A property ISA is simply a share and stock ISA that will only invest in residential real estate properties. It is a share and stock ISA that buys solely into residential property portfolios.
A lifetime ISA is a savings account available to individuals between 18 and 40 years who are looking to save for a comfortable retirement. A Lifetime ISA account holder can deposit £4,000 into the account for 2020, and with every contribution, the government tops it up with a 25% bonus. You will not be able to contribute to the ISA once you reach 50 years and the funds can be used for retirement or re-channeled towards purchasing your first home.
An easy access ISA is simply a form of cash ISA that makes room for regular withdrawals of earned profits. It is mostly associated with cash ISAs that pay variable terms and allows you to withdraw the tax-free income gained here regularly. The maximum you can invest in this ISA for the year 2020 is £20,000
A fixed-rate ISA is a form of Cash ISA that pays fixed interest rates on savings. The funds in the account have to be locked for a predetermined period of time – usually between 1 and 5 years- with premature withdrawals attracting heavy penalties.
A retirement ISA is a savings account available to individuals between 18 and 40 years who are looking to save for a comfortable retirement. A retirement ISA account holder can deposit £4,000 into the account for 2020, and with every contribution, the government tops it up with a 25% bonus. You will not be able to contribute to the ISA once you reach 50 years and the funds can be used for retirement or rechanneled towards purchasing your first home.
A Help To Buy ISA is a special saving account designed by the U.K. government to help its citizens save for a mortgage deposit for their first home. You can only save up to £200 per month into the help to buy ISA with the government topping you up with an additional 25% bonus. Plus, help to buy ISA is only available to individuals and couples looking to buy their first home.
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.