LISA for retirement

VNX

Hello all,

apologies if this has been covered already but any help much appreciated.

What are peoples general opinion if LISAs for purely retirement?

I am nearly 40 so need to open one in the next tax year if I do, I am on the property ladder so it would be to take advantage if the 25% govt top up to then access at retirement. 

I know financial advice can’t be given but any views on whether this would be wise or am I probably better off just putting monies into a pension? 

Thank you 

billy2shots

It depends on your all round retirement plans. 

I'm happy with my ISA and SIPP contributions and don't need to access the LISA pot until 60+ so have taken advantage of a s&s LISA. That £4k a year adds 25% from the government like you say. So outperforms my ISA which holds mirrored investments. 

Two things to consider. It reduces your ISA available limit (£16k) and there's a penalty to withdraw so if you think you might need these funds then the ISA would be better. 

Albermarle

If you scroll through this link, there is a list of pros and cons for pension vs LISA for retirement.
Lifetime ISA (LISA): how they work & best buys - Money Saving Expert

anxiousnow

There's no harm in opening one now, while you can, even if you never or rarely use it. I opened a S&S LISA at 39. As @billy2shots has said, it's a way of investing in stocks and shares whilst receiving a 25% top up. 

I think the consensus is that for most a pension is better, but there is also no harm in having both, and certainly no harm in opening one with £1 just in case some time between now and the age of 50 you want to add some funds to it.

Alexland

Yes, if you are still considering this, look at pensions first particularly if you could get employer contributions, NI savings from salary sacrifice, are a higher rate taxpayer and/or coud reduce your adjusted net income for child benefit.

If you do decide to use a LISA for age 60+ then the Stocks & Shares version is more suitable than the Cash version as over 20+ years a good S&S investment would be expected to outperform both cash interest rates and inflation to give a real return (growth in your spending power).

For a beginner something like the Nutmeg LISA invested in a Fixed Allocation portfolio might be of interest but over time you may prefer the wider options and opportunity for lower ongoing costs as the account valuation grows with AJ Bell's LISA.

I have been putting the £4k per tax year into a S&S LISA since the product launched as a modest side investment to my main pensions. The 25% bonus means the government are covering the first 20% of any investment drops you may see in the early years before the account has started accumulating gains.

billy2shots said:

IIt reduces your ISA available limit (£16k)

Or with the glass half-full you could see it as an opportunity to invest £21k via ISAs each tax year :-)