Andrew Goldman has been writing for over 20 years and investing for the past 10 years. He currently writes about personal finance and investing for Wealthsimple. Andrew's past work has been published in The New York Times Magazine, Bloomberg Businessweek, New York Magazine and Wired. Television appearances include NBC's Today show as well as Fox News. Andrew holds a Bachelor of Arts (English) from the University of Texas. He and his wife Robin live in Westport, Connecticut with their two boys and a Bedlington terrier. In his spare time, he hosts “The Originals" podcast.
Quick multiple-choice quiz: A Lifetime ISA is:
A. A retirement account that is a branded extension of the Lifetime Channel, in which a long lost identical twin impersonates you, kidnaps your baby, seduces your husband, but responsibly invests for your old age?
B. A government-sponsored program started in 2017 that rewards you for saving by giving you free money for your retirement or buying your first home?
Even if the idea of the government tossing around free money sounds even less plausible than the stalker twin from option A, B is indeed the correct answer. A Lifetime ISA (often referred to using the sexy acronym “LISA”) works the same as any other ISA in that you are free to invest your money however you want, and any gains or interest you make will not be subject to income tax. If that feature isn’t great enough, anyone between the ages of 18 and 50 who deposits money into a Lifetime ISA will receive a 25% matching bonus. Since the annual Lifetime ISA deposit limit is £4,000, you’ll receive a maximum bonus of £1,000 every year. (This £4,000 counts towards your annual £20,000 ISA contribution limit.) With this free money, comes more rules. Though other types of ISAs are remarkably flexible, allowing you to withdraw money from the account anytime without penalty, Lifetime ISA will assess a 25% penalty should you withdraw anytime other than three specific circumstances: after you turn 60, if you’re buying your first home, or if you’re dying of a terminal disease. So three cheers for Lifetime ISAs (and not having to take advantage of that bleak third option)!