New over 50s ISA allowance

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- Best savings for your children

We all know Britain’s finances are in a mess right now. But if you’ve been keeping an eye on the news lately, you’ll know that much of the blame is being put on the problem of our living longer.

Now a new report from the Institute of Directors is calling for the state pension age to be raised to 70 in an attempt to deal with this 'problem'.

No-one yet knows what the government will do. But pretending this problem will just go away without affecting each and every one of us is naïve and frankly dangerous if you’re hoping for a comfortable requirement.

What seems inevitable is that we’ll all have to pay a lot more attention to our personal finances.

Keeping your fingers crossed that the state will provide isn’t an option anymore. And in any case, with the state pension now so small and with private pensions complicated beyond belief (as well as failing to provide any idea how much income they’ll actually produce) it’s time to look at what else you can do. 

As the IoD report’s author, Malcolm Small, makes clear: "Both state and private pension systems have now become so complex that people are becoming disengaged from pension saving and are looking for alternatives.

So What Can You do About it

If you need more proof that you’ll be expected to look after yourself in retirement, then this month’s announcement that ISA limits are being increased from this month for the over 50s, should be it.

The new over 50s ISA allowance stands at £10,200, that up a whopping £3,000 from the previous limit of £7,200.

This means that anybody aged 50 or over this tax year (before April 5 2010) will be eligible.

It’s not often that the government gives us the opportunity to make ourselves wealthier and so this is an opportunity to grab straight away. If you have any money to save then this really is a 'use it or lose it' opportunity.

The basic rule is that you can invest the whole of your £10,200 into a stocks and shares ISA, or up to £5,100 invested into a cash ISA and the rest into a stocks and shares ISA.

Sounds simple, but with such a huge array of ISAs available, choosing the one that suits you best can be a minefield.

There is, however, an easier way.

Need to Know What You’re Getting? Or Ready to Take a Gamble

Basically, it’s a good idea to decide what you’re after out of these two options: 

• Investing for Income or

• Investing for Growth

 
Basically, the difference is that the “income” investments either guarantee, or should give you a very clear idea of what returns you will get while the “growth” products are less certain but offer the chance of much higher returns.