Are ISA's necessary for older people?

freeasabird

This may be a silly question but if someone is retired and in their seventies/eighties; is it worth doing an ISA?

I'm asking because I assume that someone who retires is a non tax payer and therefore a savings account with a better rate of interest might be more useful to them?

Unless you're not regarded as a non tax payer just because you've retired?

I was just curious. I'm not due to retire for some time.

Thanks in advance for any posts.

[Deleted User]

Depends on the interest rate you can find. If it's better in an ISA go for it, if it's better elsewhere, go for that one. Some pensioners do pay tax - depends on your income as with non-retired people. I believe there are age related allowances however.

dunstonh

ISAs can actually provide even more use for people in retirement.

For example, after age 65, you get an increased personal allowance. However, if you earn over £22k (rounded) then this age related personal allowance begins to be taken away from you. ISAs and income derived from them doesnt go towards that figure.

I'm asking because I assume that someone who retires is a non tax payer and therefore a savings account with a better rate of interest might be more useful to them?

The state pension is paid gross but eats up your personal allowance. So, whilst someone may be a non-taxpayer, if the interest on their savings is greater than their remaining personal allowance, then they will become a taxpayer. So, in that case, an ISA can certainly still be the best option for some/all of the money.

I was just curious. I'm not due to retire for some time.

Dont take this the wrong way but are you planning to be poor in retirement?

If you are planning to be poor in retirement (no pension, virtually no savings) and living on benefits, then the ISA benefit will not be great. However, for most people, that will not be the case.

Sometimes the state pension alone can wipe out the personal allowance totally and that alone can make you a taxpayer.

Funkyfreddy

freeasabird wrote: »

....
I'm asking because I assume that someone who retires is a non tax payer and therefore a savings account with a better rate of interest might be more useful to them?

Assumption is the mother of all f... u..

freeasabird wrote: »

Unless you're not regarded as a non tax payer just because you've retired?

Your not.

If you income on retirement is from the State Pension only then the chances are you will not be liable for income tax as your income will be below the personal allowance - which increases slightly at age 65 (well, at the moment anyway - by the time we get there maybe not !)

The State pension is paid gross but reduces your remaining personal allowance. Any additional income from other Pensions, part time employment, interest on savings (Non ISA) etc may well take you above the personal allowance and income tax will be due on that amount.

You would receive a Coding Notice for your non state pension in the same way you receive a coding notice for your employment now which would be paid "after tax". You may have to complete a Self Assessment Tax Return.

An ISA can therefore be as advantageous to retired person in their 80's as it is to you.

freeasabird wrote: »

I was just curious. I'm not due to retire for some time.

Regardless of the timescale rather like the squirrel many would suggest get as much stashed away as you can for your future [retirement]

FF

atush

An ISA can be good for anyone who pays tax.

freeasabird

dunstonh wrote: »

ISAs can actually provide even more use for people in retirement.

For example, after age 65, you get an increased age allowance. However, if you earn over £22k (rounded) then this age allowance begins to be taken away from you. ISAs and income derived from them doesnt go towards that restriction.



The state pension is paid gross but eats up your personal allowance. So, whilst someone may be a non-taxpayer, if the interest on their savings is greater than their remaining personal allowance, then they will become a taxpayer. So, in that case, an ISA can certainly still be the best option for some/all of the money.



Dont take this the wrong way but are you planning to be poor in retirement?

If you are planning to be poor in retirement (no pension, virtually no savings) and living on benefits, then the ISA benefit will not be great. However, for most people, that will not be the case.

Sometimes the state pension alone can wipe out the personal allowance totally and that alone can make you a taxpayer.

Thank you for your post. I was just curious because I'd suggested to people in the past to go for for ISAs and now they're getting older; I just wondered whether I was right to do so.

The reason I'm as poor as a church mouse is because I worry about my old age and I'd rather be skint now and live a more comfortable life when I get older.

atush

So I presume that means you are saving into a pension?

freeasabird

I'm trying to do whatever it takes to make my old age better.

Mikeyorks

freeasabird wrote: »

I'm trying to do whatever it takes to make my old age better.

18 year old blonde then ...... and stuff the ISA!

atush

Some would consider that quite disgusting rather than a good idea.

Maybe a 22-25 yr old would be slightly less seedy?

Derivative

atush wrote: »

Some would consider that quite disgusting rather than a good idea.

Maybe a 22-25 yr old would be slightly less seedy?

Sod that.
Once they're 25 it's bin bags out the front door.