Keep LISA open after house purchase?

retiringin26

DD is using her LISA funds for a first time buy.

She has the option to keep the LISA open. What would be the advantage on doing so? Or downside?

NoMore

She can still contribute up to the age of 50 and get the bonus and tax free growth. She then can withdraw it all at age 60 tax free.

Maybe look at converting it to a s&s Lisa if it’s likely to be decades until access. Invested wisely, you would expect that to outperform cash over that timescale.

Note depending on her tax situation, switching the amount she would pay into it to a pension maybe better. If she’s higher rate or above then pension would be better.

masonic

Pros and cons of using a LISA for retirement can be found here: https://www.moneysavingexpert.com/savings/lifetime-isas/#retirement

The main situation where it can work is if she cannot get tax relief on the contributions if added to a pension (i.e. contributions above the earnings limit or annual allowance), if her pension is likely to grow to the size where she would hit the limit on the 25% tax free cash (that means a £1m+ valued pension), or she ends up paying higher rate tax in retirement (which is possible at a lower value when state pension is taken into account).

But there is no obligation to pay into it, so keeping it has no downside. If she does keep it, she should transfer it to a S&S LISA, as holding cash for that length of time is certainly unwise.