With an ISA you don’t need to pay tax on any interest earned, so you should definitely consider one when it comes to saving money for your retirement. Read on to find out more about their pros and cons, how they compare with bonds and how to find the best ISA rates for over 50s.
The Financial Services Compensation Scheme (FSCS) guarantees that it will step in to compensate the first £120,000 you have saved with a UK-authorised bank, building society or credit union in the event that the business goes bust.
We currently don't have that product, but here are others to consider:
How we picked these
If you are over 50 years old and you’re looking for the best ISA rates, you may as well compare the whole market. ISAs are available to anyone aged over 16. There may be some providers only offering their ISAs to over-50s, but there’s no guarantee that these providers will offer superior rates. Even if they do, these deals will still be found within traditional price comparison website results.
Whatever age you are, your best bet for finding the best ISA rates is to use price comparison websites.
Our best ISAs for over-50s are the highest interest rates available. To get the latest rates, we use Defaqto data, which covers nearly the full market of savings products and is checked and updated daily. We don’t include accounts from private banks.
All the cash ISAs in our list have savings protection – for most, this is the Financial Services Compensation Scheme (FSCS). Other schemes include that of NS&I, which is 100% backed by HM Treasury, and the Gibraltar Deposit Guarantee Scheme.
The key benefit of saving for your retirement inside an ISA is that you’ll pay no tax on your savings interest. This could be particularly important as your retirement approaches and you (hopefully) have a lot of money stored away.
Stocks and shares ISAs are generally regarded as a better bet if you’re planning on saving for retirement, as they tend to deliver better long-term returns than cash ISAs.
Still, with either type of account, you have the option to withdraw your funds without too many negative implications, and it can be worth having some money stashed away in both.
Then, there’s the lifetime ISA, where you can earn up to £32,000 in free government money to put towards your retirement on top of any interest earned.
Bonds are a contract, where you lend money to a third party and get it back with interest after a set amount of time. You won’t usually be able to access or add to your funds during this period.
Fixed-rate ISAs are tax-free savings accounts that pay interest, but again, you won’t be permitted to withdraw money during the fixed-rate period, unless you pay a penalty. Additional deposits are not usually allowed either.
This means the result is the same for the customer and the interest rates on offer are similar too.
The only key difference is that you won’t pay tax on savings interest within an ISA.
Having said that, the personal savings allowance states that basic-rate taxpayers and higher-rate taxpayers can earn £1,000 and £500 of tax-free savings interest per year respectively. So, if you don’t exceed this allowance, you won’t pay tax on your savings interest, no matter what account it’s in. Just keep in mind that now interest rates have gone up, it’s easier to go over your personal savings allowance, and higher rate taxpayers don’t have one.
| Rates up to | 4.65% AER |
|---|---|
| Number of accounts | 1,235 |
| Number of brands | 110 |
| Minimum investment | £0 |
| Opening options | Mobile app, website, branch, post, telephone |
ISAs can be a useful savings tool especially if you’re saving for your retirement, but there are no special benefits available for over-50s.
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