Over 50s opt for ISAs to boost savings

A quarter of savers aged over 50 are planning to open an ISA account to boost their income, according to Saga Investment Services.

People are looking to boost their savings income as they move towards retirement with many hoping to take advantage of the tax-free allowance available. 

33% of the 9,128 people surveyed said they will opt for a stocks and shares ISA while almost 50% will opt for a cash ISA. 

20% said they are looking to open both ISA accounts.

When it comes to cash and investing, women favour cash (58%) over shares (27%) ISAs compared to men who are more evenly split between cash (41%) and shares ISAs (38%).

Sally Merritt, head of product for Saga Investment Services, said:

“Savers have had it extremely tough over many years now and yet many still feel uncertain about making the switch to investing. This is largely because people don’t know quite where to start and they are wary of the risk.

“If people have a good cushion of cash savings, say enough to cover 6-12 months' worth of living expenses, then it may make sense to try investing with some of their additional cash savings.”

Savings options

Research shows that just 2% of over 50s are considering opening a stocks and share ISA for the first time. 

However, there are a number of options available to those who are planning to open an ISA account. The following factors should always be considered when choosing which product is the best tool for realising your savings goals.

Personal savings allowance

The personal savings allowance is currently available to individuals paying the basic rate of tax (20%). You can earn up to £1,000 per year tax-free from interest and savings. Higher rate taxpayers are able to earn up to £500. 

ISA allowance

An ISA is a tax-free account with a set amount you can put into per tax year. The current annual allowance for 2016/17 is £15,240 . This will increase to £20,000 per year in 2017/18.

Investing

If you’re investing money to secure a return there are some points to consider depending on the type of investment. For example, fixed rate ISAs will have better interest rates than easy access ISAs.

The innovative finance ISA based on peer-to-peer lending offers up to 6% interest tax-free but can be more complex compared to traditional ISAs.

We can advise you on creating an effective savings strategy.