My next milestone birthday is fast approaching, as my wife keeps reminding me.
The big 4-0. When life begins, so they say. Or is it impending doom?
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Maybe – if I hadn’t opened a Lifetime ISA by then.
There aren’t many age restrictions on savings products, at least on the upper range. But with a LISA, the account must be opened between 18 and 39 years old.
Like a financial Logan’s Run, there’s a cut-off point at a certain age. In this case 40.
Or is it 50? The Lifetime ISA allows accountholders to contribute – up to £4,000 each year – until their half-century, either as cash or stocks and shares.
Of course, the real benefit to the LISA is the 25% bonus added to your savings courtesy of the government. So if you’re lucky enough to afford to save £4k each year, that’s a free £1,000 annually!
Once the big 5-0 is reached, you’re unable to pay in to or withdraw from your savings for a decade without incurring a hefty fee – with two exceptions – though it will still earn interest or investment returns.
One of those caveats is if the accountholder is buying their first home; I’m in a fortunate position to have done that in recent years, so my Lifetime ISA savings will go towards our retirement.
I estimate that I’ll have saved around £75,000 by the time I’m 50, with £15k of that kindly contributed by the government. With whatever interest is added, that’s a substantial start to retirement.
As I’ll keep reminding my wife!