Seven out of 10 One Family Lifetime Isa customers are saving for the long-term and many of them are planning on using it to fund their retirement.
The provider's survey of customers found 53 per cent of the Lifetime Isas opened were specifically being used towards retirement and 14 per cent were opened for both retirement and to save for a first home.
Additional ways to save towards later life are likely to increase in popularity with 40 per cent of those aged less than 40 saying they do not believe a pension alone will be enough.
The research found the average monthly payment into a Lifetime Isa, which is being used for retirement, is £75.
If a saver takes a Lifetime Isa at age 30 and continues to invest every month, by the time they reach 60, with the government bonus and 5 per cent annual interest, they will have nearly £50,000 saved, having originally invested £18,000.
Nici Audhlam-Gardiner, managing director of Lifetime Isas at One Family, said: "It is positive to see so many younger people are already thinking what they will need to fund their retirement.
"It is important to start saving little and often as early as possible. The increase in people thinking about, and saving towards their retirement can in part can be put down to the government’s auto-enrolment scheme that sees all employees automatically being put into a company pension.
"But this is only applicable to certain workers and excludes the self-employed and those in the gig economy. The number of private pensions is still very limited with just 11 per cent of under 40s having one.
"Savvy savers thinking about retirement should consider the Lifetime Isa as another way to save and access the unique 25 per cent government bonus, and potential investment returns. The bonus is paid monthly so savers should make the most of the new tax year to maximise returns.”
One Family research also revealed that 18 to 40-year-olds hope to retire at age 64.
This is three years prior to the current retirement age, meaning they would be without a state pension when they first stop working.
Savings from a Lifetime Isa can be withdrawn from the age of 60 and can therefore help bridge the gap.
Gemma Siddle, chartered financial planner at Eldon Financial Planning, said: "Lifetime Isas are one of the only 'standard' products that offer both tax relief and also accessibility should it be required.
"Many people in their 20s and 30s feel home ownership is a dream and are not confident it is realisable; the Lifetime Isa gives them a good chance to save for this dream with the knowledge that capital can be used for retirement should the home-ownership dream not be realised.
"In addition, they have the very important flexibility of access , albeit with penalty, should life take an unexpected turn."