Lifetime ISA
Lifetime ISA for retirement: what the pot can reach by 60
A Lifetime ISA that is never used for a home becomes a retirement account at 60. This guide follows the account through its three phases, payments, waiting and access, and puts it next to a pension without ranking either.
A Lifetime ISA kept until age 60 can be emptied in full with no withdrawal charge and no income tax on what comes out. Payments are possible from opening, between 18 and 39, until the day before the 50th birthday; each one attracts a 25 % government bonus, capped at £1,000 a year on £4,000 paid in. After 50 nothing new can go in, but the pot stays invested or on deposit and keeps its tax-free status. A saver who opens the account at 30 and pays the maximum every year puts in £80,000, receives £20,000 of bonus and, if the pot grows by 4 % a year, has about £229,210 at 60. Before 60, money taken out for anything other than a qualifying first home or terminal illness loses 25 % of the withdrawal. Unlike most pensions, the account carries no employer contributions and no tax relief beyond the bonus.
A Lifetime ISA kept for retirement
Pot at 60, tax free
£229,210
| Your payments | £80,000 |
| Bonus | £20,000 |
| Years of payments | 20 |
Growth is your assumption, not a forecast. Taking money out before 60 for anything but a first home costs 25 %.
Sums checked by Radif Partners · Editorial policy · How the sums are done
Three phases of the account
Seen as a retirement product, a Lifetime ISA has a shape of its own. It starts with a paying phase that can last at most 32 years for someone who opens it at 18, and only 11 for someone who opens it at 39. A waiting phase follows from 50 to 60, ten years in which the pot can grow but receives nothing new. The access phase begins at 60 and has no end date (GOV.UK, Lifetime ISA).
The bonus only arrives during the first phase. The amounts below assume the full £4,000 every year and 4 % growth, a round figure chosen for illustration and not a forecast of any fund or account.
| Opened at | Years of payments | Own payments | Bonus | Pot at 60 |
|---|---|---|---|---|
| 18 | 32 | £128,000 | £32,000 | £482,630 |
| 25 | 25 | £100,000 | £25,000 | £320,560 |
| 30 | 20 | £80,000 | £20,000 | £229,210 |
| 35 | 15 | £60,000 | £15,000 | £154,127 |
| 39 | 11 | £44,000 | £11,000 | £103,808 |
Starting early matters twice: there are more years of bonus, and every payment has longer to grow. Someone opening at 18 pays in for 32 years against 11 for someone opening at 39, but the gap in the final pot is much wider than three to one.
The ten quiet years
For an account opened at 30, the pot at 50 under the same assumptions is about £154,846. By 60, with no further payments, it reaches about £229,210. The growth of those last ten years comes only from what is already inside, which is why the choice between cash and investments inside the account weighs more in a Lifetime ISA kept for retirement than in one emptied after three or four years for a home. A cash Lifetime ISA pays the interest its provider offers; a stocks and shares one can rise or fall in value, and nothing protects it from a fall in the years just before 60.
| Growth a year | Payments and bonus | Growth | Pot at 60 |
|---|---|---|---|
| 0 % | £100,000 | £0 | £100,000 |
| 2 % | £100,000 | £51,054 | £151,054 |
| 4 % | £100,000 | £129,210 | £229,210 |
| 6 % | £100,000 | £249,150 | £349,150 |
Smaller regular payments
Many people pay in monthly rather than in one sum. The bonus follows the payments, so a smaller monthly amount gives a proportionally smaller bonus. The table keeps the opening age at 30 and changes only the monthly amount; £333 a month is just under the £4,000 yearly limit.
| Each month | Each year | Bonus to 50 | Pot at 60 |
|---|---|---|---|
| £100 | £1,200 | £6,000 | £68,763 |
| £200 | £2,400 | £12,000 | £137,526 |
| £333 | £4,000 | £20,000 | £229,208 |
Reading the projections
All of the figures on this page are in pounds of the day they are reached, not in today's money. Thirty years of rising prices reduce what a sum at 60 will buy, so a pot that looks large in the tables may cover much less than its face value suggests. The growth rates are assumptions to compare cases with each other; they are not the return of any particular account, and a stocks and shares Lifetime ISA can end below what was paid in.
The account can hold cash, stocks and shares, or a mix of both (GOV.UK). That choice can differ between the years of payments and the years of waiting, and the tool above lets you test the effect of a lower or higher rate on the pot at 60.
A late start at 39
Someone who opens a Lifetime ISA just before turning 40 has 11 tax years of payments. At the full £4,000 a year, that is £44,000 of their own money and £11,000 of bonus. With 4 % growth a year the pot at 60 is about £103,808. The bonus is the same 25 % at every age; what a late start gives up is the number of years in which it is paid and the time for it to grow.
Beside a pension, in general terms
A comparison with a pension depends on facts this site cannot see: your employer's scheme, your tax band now and later, and how you will draw the money. What can be stated are the rules each one follows.
Money going in. In a personal pension using relief at source, the provider claims basic rate tax relief of 20 % on your payment, so £80 from you becomes £100. In a Lifetime ISA, the 25 % bonus on £80 is £20, which also makes £100. For a basic rate taxpayer the two are level at this stage. A higher or additional rate taxpayer can claim further pension relief through Self Assessment, while the Lifetime ISA bonus stays at 25 % for everyone. Pension relief is available on payments up to 100 % of your earnings, subject to the pension allowances, whereas the Lifetime ISA stops at £4,000 a year.
GOV.UK also limits relief at source to £2,880 a year for someone with no earnings in that year, while the Lifetime ISA bonus depends only on what is paid in, within £4,000, whatever the saver earns.
Employer money. In a workplace pension under automatic enrolment, the employer must pay in at least 3 % of your earnings, with a minimum total of 8 %. Employers have no such duty towards a Lifetime ISA, and the bonus is the only money added to your own.
Money coming out. GOV.UK states that you will usually pay tax on income from your pensions. Lifetime ISA withdrawals from 60 are tax free in full, and they are not counted as income for tax.
Timing. The Lifetime ISA has one fixed access age of 60. Leaving earlier for any reason other than a first home or terminal illness costs 25 % of the amount withdrawn, which removes the bonus and part of your own money; the withdrawal penalty page works through that loss (GOV.UK, withdrawing money from your Lifetime ISA).
These points describe the rules; they do not say which product suits a particular person, and the two are not exclusive. A person can hold both at the same time; the Lifetime ISA's £4,000 is counted inside the £20,000 ISA allowance, not against any pension limit.
Payments that stop early
Nothing obliges a saver to pay in every year. A Lifetime ISA can receive the full £4,000 one year, less the next and nothing for several years after that, and the bonus simply follows what is paid. For an account opened at 30, ten years of full payments followed by ten years without any give £40,000 of own money and £10,000 of bonus; at 4 % growth, that money would be worth about £136,796 at 60. Compared with the full twenty years of payments shown earlier, the bonus is halved, but the early payments still carry most of the growth because they stay invested longest.
Its place in the ISA allowance
Each pound paid into a Lifetime ISA uses a pound of the yearly ISA allowance (GOV.UK, how ISAs work). A saver who pays the full £4,000 has £16,000 left for cash, stocks and shares or innovative finance ISAs in the same tax year. The allowance and the Lifetime ISA limit are both the same in 2026/27 and 2027/28, and are frozen until April 2031. The ISA allowance page sets out how the total is split.
A home after all
Plans change in both directions. Someone who opened the account for retirement can still use it for a first home if the conditions are met on the day: a price of £450,000 or less, a mortgage, a conveyancer, and at least 12 months since the first payment. Those conditions are on the house price limit page, and the Lifetime ISA page projects the pot for a shorter horizon.