Pension or ISA at 50?

How you choose to save and invest should change as you get older.

In the latest of this series we look at the issues facing someone in their 50s.

As ever, Investor Weekly recommends seeking independent and specific advice to plan your finances.

Most young savers are starting from a low or zero base and the advice they need is often very similar.

But most 50 year olds have lived through a number of life’s twists and turns. All of which have lead to a unique set of financial opportunities and challenges.

However if looking to save extra money into an ISA or pension there are some key factors common to all:

• Target retirement age
• Tax band status
• Potential large financial costs in the next 5-10 years
• Existing investments

If you are employed in a well paying job, and confident of being so for many years yet, you may want to take advantage of the tax rebates offered by putting a lot of your income into a pension for a few final years of work.

This can make an enormous difference to your retirement.

If you are only saving this extra amount for a short time though, the extra income from your new or extra pension is going to move your retirement income from one tax band to another, it may be that an ISA is better for you as the income will be tax free.

If there is a possibility that you will need to pay for a child’s wedding or replace a car, or something like that from these extra savings then you certainly need an ISA so that you can with draw without cash at anytime without any penalty.

Finally, if you have existing pension pots and ISAs they should all be reviewed by a professional and consolidated to cut costs, reduce administration hassle, to ensure optimal performance (against your timeline and income goals) and these changes will inform whether you should open a ISA or SIPP.