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Over a third (37%) of UK adults are using an ISA to save for their retirement, with this figure rising to 62% for those aged 55-64.
This is according to LV= Wealth and Wellbeing Research Programme, which stated the ISA would be in addition to traditional sources of income such as a pension.
LV= added: “There are times when it may be better to opt for an ISA over a SIPP to top up pension income.”
This is because those who have already started accessing their pension savings can be limited to adding £10,000 to a SIPP each year, whereas the annual limit for ISAs is £20,000.
The study also found men are 11% more likely to be saving in an ISA for retirement than women (42% vs 31%).
Additionally, 10% are saving into an ISA towards a mortgage deposit, while another 10% plan to use their ISA savings to gift money to family members.
Younger adults are more likely to be using ISA savings for reasons other than retirement saving.
Nearly a quarter (26%) of 18- to 34-year-olds said they intended to use their ISA savings for a mortgage deposit instead.
Over three quarters (77%) of UK adults aged 25-44 are interested in a stocks and shares ISA with “smoothing elements to alleviate day-to-day stock market volatility and deliver strong returns”.
LV= sales director Gwen Haggo said: “With investors worried about short-term losses, having an ISA with smoothed investments could be a great option for those looking to grow savings in addition to their pension pot.
“When approaching retirement, it can often be worthwhile to consider spending some non-pension assets first, which can also help reduce the estate for inheritance tax purposes.
“It could also help to maximise the amount of wealth available to pass on to loved ones later by not dipping into pension assets until it is necessary.”
To obtain these results, LV= commissioned Opinium to speak to 4,000 UK adults via an online quarterly survey.
If you want a better view of what your future could be, we'll have a chat over a cup of coffee in our Durham office and work out if we can add any value to your financial picture.
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