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Finding the best ISA rates for over 60s

ISAs are some of the most popular savings vehicles here in the UK, and finding the best ISA rates for over 60s is something that could be of prime importance to many as they contemplate their retirements. But first, let’s recap on what an ISA is, which will help explain its popularity.

🤓 Can I do it myself?Yes, you can, but you must be experienced
🔍 How to find the best ISA provider?Find a provider who offers the best ISA rates for over 60s. The lowest cost option might not be the best one for you
⚖️ Some important aspects to compare?Number of funds available
How much does the platform charge
Transfer out fees
Account closure fee
Fund dealing charges
Ease of use
👴 Can ISAS be passed on via inheritance?Yes, they can

The acronym ISA stands for Individual Savings Account. This type of savings account was first introduced in 1999 by the then Chancellor of the Exchequer, Gordon Brown. It was hailed as offering tax-free interest payments.


The five different types of ISAs

When ISAs were launched, the ISA allowance was £7,000 per annum. Over the years, the allowance has increased, and in the current 2022/2023 tax year, that allowance is £20,000.

There are five different types of ISA.

  • Cash ISA
  • Innovative Finance ISA
  • Junior ISA
  • Lifetime ISA
  • Stocks and Shares ISA, or Investment ISA

The best savings accounts for over 60s tend to be the Lifetime ISA and the Stocks and Shares ISA.

The Cash ISA

Cash ISAs, sometimes referred to as NISAs, allow account holders resident in the UK from age 16 upwards to save up to £20,000 per annum tax-free. Some NISAs permit instant access to your savings and have variable interest rates. However, the interest rates are not great when looking for the best ISA rates for over 60s UK residents.

Now let’s take a quick look at the Lifetime ISA.

What is a Lifetime ISA?

The Lifetime ISA, or LISA for short, is available to anyone between the ages of 18 and 39. It is attractive for potential homeowners as account holders can save up to £4,000 per annum toward their first home. The state adds a 25% annual bonus after one year. It is paid each year you save something into your LISA until you reach the age of 50.

In theory, if you started a LISA when you were 18 and saved a maximum of £4,000 every year, your bonus would amount to £33,000. The only thing to remember is that if you withdraw some savings and don’t use them to buy a property, you will forfeit 25% as a penalty.

Clearly, this type of ISA is aimed at those who want to get a foot on the property ladder, and they are quite attractive from that point of view. For over the 60s, though, unless you are a late starter when it comes to buying a home, they don’t really cut the mustard.

The drawback with both Cash and Lifetime ISAs is that the interest rates they offer are on the low side, which is why many 60-year-olds and over choose Stocks and Shares ISAs instead.

The Stocks and Shares (Investment) ISA

Stocks and Shares ISAs are renowned for paying significantly higher interest rates on savings than their Cash or Lifetime ISA cousins. However, the downside is that there is a certain element of risk. You could lose some or all your savings. But how worried should you be?

Why put money into an investment ISA for over 60s?

Evidence suggests that investments usually perform better than cash over the long term. According to data from Berkshire Hathaway, the average annual return on the S&P 500 with dividends included from 1965-2021 was 10.5%. In 2021, the S&P 500 recorded returns of 28.7% and an average return of 17.15% over the last 10 years. It’s a good indication of the potential performance of the best savings accounts for over 60s and other age groups, too.

The three occasions where investments underperformed were during periods of a financial crisis. So, the risk is there, and it is real, but it needs to be put into perspective. The important thing is being prepared to invest over the long term so that you can ride out any unexpected falls.

The need to compare investment ISAs for over 60s

Not all Stocks and Investment ISAs are the same, nor are the wealth management specialists who look after them. To find the best ISA rates for over 60s, you will need to check out the best do-it-yourself-platforms as well as the best do-it-for-me platforms. Of course, if you are thinking about going down the DIY route, you’ll need to:

  • Carry out your own research regarding choosing the right shares
  • Construct your own investment portfolio
  • Track how it’s performing and be ready to move your money around

It’s only recommended for those who have the financial nouse.

You can have as many ISAs as you like, including Stocks and Share ISAs. Lots of over 60s do this so they can spread the risk. The more diverse your investments, the more likely you are to minimise any downturns.

How to get the best savings interest rates for over 60s

Don’t limit yourself to one market. Many Brits go for the FTSE 100 because it is familiar, but there are other markets out there, like the USA’s S&P 500 and Japan’s Nikkei 225.

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Capital at risk. Tax treatment depends on your individual circumstances and may be subject to change in the future.

Similarly, an investment doesn’t restrict you to stocks and shares. You can also invest in:

  • Corporate and government bonds
  • ETFs (exchange-traded funds)
  • Investment trusts
  • Open-ended investment companies (OIECs)
  • Unit trusts

To get the best ISA rates for over 60s, you need to put together the best portfolio you can, which isn’t easy unless you have professional, personal wealth knowledge.

What are the best fixed ISA rates for over 60s?

In the interest of clarity, let’s make it clear that Investment ISAs don’t come with fixed interest rates; the best fixed-rate ISAs are associated with cash ISAs.The interests on investment ISAs vary according to the market’s volatility in which your assets are listed. They come with a variety of fixed terms, although strictly speaking, you can always access your money, but you may have to pay a fee.

The general opinion concerning the rate of time, or the term of a Stocks and Shares ISA, is that you should be prepared to leave it untouched for at least 5-years to offset any drops in the markets – or longer if you can.

The pros and cons of Investment ISAs for the over 60s

Choosing the best vehicle for your savings can be quite confusing. Stocks and Shares ISAs bring the spectre of risk into the equation. But it would be best if you didn’t write them off without going over the pros and cons.

The Pros

  • The return with a Stocks and Shares ISA can be significantly higher than you would earn if you put your money into a cash or any other sort of ISA.
  • By using up your ISA allowance, which is currently set at £20,000 per annum, any interest earned by your stocks and shares is tax-free.
  • You can invest in various assets and in several stock markets.

The Cons

  • There is a risk of losing some of your investment if the products you invest in don’t perform well.
  • If an outside agency manages your fund, you will have to pay a fee, and depending on whom you work with; these fees can be significant.
  • If you choose to manage your investments yourself, you will have to pay trading fees.

The best regular savings accounts over 60s have access to?

Some people are interested in the best regular savings accounts for over 60s as they expect them to offer better interest rates. They do, but you have to tread carefully.

First of all, some regular saving accounts are flexible, and some are not. If you open one that isn’t flexible, they will expect you to pay in a certain amount every year. Typically, the sum is between £25 to £300 pa. If you don’t comply, you might lose interest, and your account could be closed. You may also find that there are restrictions on taking money out.

The other disadvantage with regular savings accounts is that you will have to pay tax on any interest according to your tax bracket.

Choosing the best ISA provider

It would be best to choose an ISA provider based on what funds you want to invest in and what you want to achieve with your investments. Find a provider who offers the best ISA rates for over 60s and the most suitable features for you. The lowest cost option might not be the best one for you.

Consider the number of funds available. How much does the platform charge? Transfer out fees? Account closure fee? Fund dealing charges? Which platform is easiest to use? A comparison site makes it easy to compare ISA rates and other options. Similarly, an investment consultant can help you choose the right platform for you with the best interest rates. They can help you pick the best investment for your needs.

Putting risk into proportion

When reviewing all of the different savings vehicles, there can be little doubt that the best ISA rates for over 60s are those you can earn by taking out a Stocks and Shares ISA. It all boils down to how risk-averse you are. But don’t forget Barclay’s findings when they did their research. The risk may not be quite as great as you think it is if you are prepared to invest long term.

The other thing worth bearing in mind – especially for the over 60s – is that ISAs can be passed on via inheritance.


Is there an ISA for over 60s?

Yes, there is an ISA for over 60s. The best ISAs for over 60 include cash ISAs, stocks and shares ISAs, and lifetime ISAs.

Where can I get 5% interest on my savings?

The best way to get 5% interest on your savings is to invest your savings in stocks and shares, mutual funds, ETFs, bonds, bond mutual funds, or real estate. Another way is to own a Cambridge Building Society account.

Where can I put my money to earn the most interest?

To earn the most interest, you can put your money in high-yield savings accounts, bonds, certificates of deposit (CDs), index funds, treasury bills, corporate and government bonds, ETFs (exchange-traded funds), investment trusts, open-ended investment companies (OIECs), and unit trusts.

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Capital at risk. Tax treatment depends on your individual circumstances and may be subject to change in the future.