New to saving

• There are cash, stocks and shares, innovative finance and Lifetime ISAs. There’s no tax on any growth in any of these.
• If you want to save for up to five years, a cash ISA could be a good idea. It pays you interest like a deposit account.
• You can put up to £20,000 (for tax year 2022/2023) into any ISA. Or you can spread this amount across all the different types of ISA.

• You pay in a lump sum for a period of time. You can’t take the money out when you like. But you should get better returns than a normal savings account.

• You commit to paying in a certain amount each month. But you get a higher interest rate than a current account or ordinary savings account. It can take longer to take out your money, if you need it.

• When you start paying in, your employer will normally start paying in too.
• The Government will normally give you tax relief that helps increase the value of your plan. If you’re a Scottish or Welsh taxpayer the tax relief you will be entitled to will be at the Scottish or Welsh Rate of income tax, which may be different from the rest of the UK.
• The sooner you start paying in, the longer your pension pot has the opportunity to grow.
• If you change your job, you can enroll into new employer’s pension plan and take your pension pot with you, including your previous employer’s payments.
• There are a number of ways you can take your pension money, currently this can be taken from age 55, but from 6th April 2028, you will need to be 57 to take money from your pension. When you decide to take money, 25% can normally be withdrawn tax-free and the rest will be subject to income tax.

• The Government will normally give you tax relief that helps increase the value of your plan. If you’re a Scottish or Welsh taxpayer the tax relief you will be entitled to will be at the Scottish or Welsh Rate of income tax, which may be different from the rest of the UK.
• The sooner you start paying in, the longer your pension pot has the opportunity to grow.
• There are a number of ways you can take your pension money, currently this can be taken from age 55, but from 6th April 2028, you will need to be 57 to take money from your pension. When you decide to take money, 25% can normally be withdrawn tax-free and the rest will be subject to income tax.

There are cash, stocks and shares, innovative finance and Lifetime ISAs. There’s no tax on any growth on any of these.

If you want to save for the longer term, stocks and shares ISAs and Lifetime ISAs may be a good idea.

• Stocks and shares ISAs use investments, for example, in the stock market. Any gains you make are not taxed, but your money is at risk if your investments perform badly.
• Lifetime ISAs are for people over 18 and under 40. You can save up to £4,000 each year and you get a government bonus of 25% of what you put in. You can use one of these to save for your first home, and then you can only take money from it after you’re 60. Lifetime ISAs may invest in cash or stocks and shares.

You can spread up to £20,000 (for the tax year 2022/2023) across all the different types of ISAs. But you can’t have more than one of each type of ISA in a tax year.

Many people consider investing in property to fund their retirement.

• Buy to let. This is when you buy a house or a flat so you can rent them out. Your tenants should cover or exceed the cost of the monthly mortgage payments. Once you’ve paid off the mortgage, you could be left with the rental payments as income.
• You can pay off your own mortgage and hope to ‘downsize’. You can sell your house and move somewhere smaller and cheaper. You can then use this extra money to help support you in your retirement.
• Equity release is when you borrow money against what your home is worth now. Normally, you don’t have to make any repayments until your home is sold. Think carefully about this. Growing interest on the loan will reduce the value of any inheritance you may wish to leave. It also means you have less value in your home, if you want to move again.

There are a lot of risks involved in property. Finding tenants, problem tenants, maintenance bills and falling property values to mention a few. Tax is also important. Rent is now taxed at your highest rate of Income Tax. That’s before any costs or deductions. You may also have to pay Capital Gains Tax when you sell a home, if you have more than one property.