Personal finance guru Martin Lewis has called on everyone born between two dates to open a special account today. Taking to X, Mr Lewis said the government is planning changes to a key type of account – which is set to remove the option of accessing savings funds over the age of 60.
The change is happening to a specific kind of account – a Lifetime ISA or a Help to Buy ISA. A Lifetime ISA (LISA) is a UK government-backed savings account designed for adults aged 18–39 to save up to £4,000 annually for a first home (up to £450,000) or retirement. It provides a 25% bonus on contributions, potentially adding up to £1,000 extra yearly, which can be held as cash or stocks.
Mr Lewis said: “If you’re aged between 18 and 40 and you do not have a Lifetime ISA or a Help to Buy ISA, I would suggest you open one and put a pound in one now. That’s because the government has announced the Lifetime ISA is to be replaced by a new first-time buyer’s savings product. We don’t know exactly what it is; my guess is it will open in April 2028. It will be a relatively simple product where you save in it and you get a bonus.”
“And unlike the Lifetime ISA, you won’t be able to use it to save for your older age savings once you’re aged over 60.”
Why Put a Quid in Now?
Mr Lewis said: “So why, even though the Lifetime ISA is likely to be a defunct product at some point in the future, am I suggesting you put a quid in it? Two reasons: The One-Year Rule: With the Lifetime ISA, in order to use it to get the 25% bonus—you can put up to four grand a year, so the bonus is £1,000 on that—as a first-time buyer on a property under £450,000, you have to have had it open for a year.
“So getting a pound in means it’s open, and then you have the facility available if you need it. If in a year’s time you suddenly were in a position to buy a house, you could dunk £4,000 in a Lifetime ISA and get the £1,000 bonus and use it then, because it’s been open a year.”
On the issue of the end of retirement savings, Mr Lewis said this facility would come to an end, meaning a useful way for people to save for when they are older would be gone. He said: “Retirement Savings: The second reason is because the Lifetime ISA can be used for retirement savings. Now, it’s important to understand for most people your workplace pension is better because they’re contributing too. But the LISA can be a useful facility in some circumstances.
“So for the sake of a quid, putting a quid in to give yourself the facility of having a Lifetime ISA to save for your retirement, if it becomes worthwhile in future, is a good idea. Now, I don’t even know if you will still be able to use it to save for retirement once they introduce the new product, but it’s possible you may be.
“My point is: putting a quid in a savings product is not a particularly big cost to give you the facility in case you need it in the future. And if the worst comes to the worst, you’ll be able to take the pound out for just a 6.25% penalty, so you’d lose 6p.”