Are you under 40 and thinking about your financial future? It's time to reimagine the potential of a Lifetime ISA (LISA). While commonly associated with purchasing property, the benefits of a LISA extend far beyond that.
Why You Should Set Up a Lifetime ISA Today
Maximise Your Savings Potential
A Lifetime ISA offers a unique opportunity to supercharge your savings with the government's help. Contribute up to £4,000.00 annually, and receive a 25% bonus from the government, adding £1,000.00 to your savings each year. That’s a total of £5,000.00 annually, growing tax-efficiently and providing tax-free income upon withdrawal.
Perfect for Retirement Planning
Not just for homebuyers, a LISA is a powerful tool for retirement savings. Unlike pensions, where you can withdraw funds starting at age 55 (rising to 57 in 2028) with 25% tax-free and the rest taxed at your marginal rate, a LISA allows full tax-free withdrawals after age 60.
Age Matters – Act Now!
You can only open a LISA if you are aged 18 up to the age 40, but once it's set up, you can keep contributing until you’re age 50.
Compare with Pension Contributions
While you can contribute up to £60,000 annually into a pension (or up to 100% of your earnings) whichever is lower, you receive 20% tax relief and additional relief for higher rate taxpayers, the LISA's benefits, including the government bonus and tax-free growth, make it a worthy consideration in your financial planning toolkit.
Wish to retire before state pension
Whilst state pension age is rising to 68 with the minimum age rising to 57 a LISA could help fill that retirement gap between age 60 until state pension age. With tax free income from the LISA you will be able to supplement any pension income running until state pension age or allow those big retirement dreams.
Great for long-term saving for children:
Whilst your children or grandchildren may not be able to afford to maximise their allowances so early in their careers and life, you may be in the fortunate position to help them.
You can contribute to help your children/grandchildren to help them plan to get on the housing ladder or for their retirement to benefit from long term investment growth.
Utilise your investment strategy
With a LISA you can utilise either cash or investments, this allows you to utilise the same investment strategy as your other investments. Allowing a consistent investment strategy aligned to your attitude to risk for long term growth.
Ready to Explore Your Options?
Reach out to discuss how a Lifetime ISA can fit into your financial strategy. Let's work together to create a plan that aligns with your goals and ambitions.
Contact Me Today
If you're interested in learning more or want to explore your options, please don't hesitate to get in touch. Your ideal financial future is just a conversation away.
Feel free to reach out if you have any questions or need personalised advice. I'm here to help you every step of the way!
Chris Hopkins DipPFS
Financial Advisor
Mob. 073 6888 2092
chris.hopkins@cardiffifa.co.uk
Please note: Tax rules can change and lifetime ISA benefits depend on your circumstances. You can withdraw money from a Lifetime ISA to buy your first home, or at age 60. Other withdrawals will usually mean a 25% government charge, so you could get back less than you put in. Investments carry risk