I can’t imagine having to live on just £185.15 per week. But that’s the reality if I fail to prepare for retirement — by participating in a workplace pension, or by investing in UK shares, for example — and rely solely on the State Pension for support.
An abrdn study of 2,000 recent and upcoming retirees shows how worryingly dependent many are on the State Pension to survive. It says around 20% of Britons who are looking to retire in 2022 will rely solely on the state benefit to fund their retirement.
The pensioner poverty gap
This is particularly dangerous in this tough economic landscape. As Paul Titterton, a digital retirement advice expert at abrdn, says: “It’s worrying enough that one in five people are intending to rely solely on the State Pension to fund their retirement. But this is happening at a time of high inflation and the cost-of-living crisis, meaning we are likely to see a growing retirement poverty gap.”
Around 66% of those people abrdn surveyed said they plan to continue working beyond their retirement age. And a quarter of those said that believe they have saved enough for retirement.
Why I buy UK shares
The problem of pensioner poverty isn’t a new phenomenon. The rising cost of living, weak State Pension rises, and increasing social care costs, have supersized the number of retirees living on the breadline over the past decade.
This is why I’ve created an investment strategy involving UK share investing I think could help me retire comfortably.
I believe the pressure on the State Pension is only likely to grow as the country’s population rapidly ages and public finances come under greater strain. And I don’t want to leave myself vulnerable to not having enough money in old age.
£5 a day could change my future
Putting enough aside each month for retirement is tougher today as the cost of living crisis worsens. Fortunately though, proven stock investing returns mean I don’t have to spend a fortune to build a retirement nest egg.
For just £5 a day, I could take big steps to reduce my dependence on the State Pension. That fiver would give me an average monthly amount of £152 to spend on UK shares. And this — based on the 8% average annual return that long-term stock investors tend to enjoy — could possibly make me a healthy £327,766 over 35 years.
Making a plan
Investing in UK shares isn’t a golden ticket to having a financially happy retirement. Stock markets can go up and down and the sort of return I describe above is by no means guaranteed.
Drawing up an investment strategy that works for me can also take time and involve some trial and error. It also requires the discipline to keep on regularly investing instead of spending my spare cash.
However, buying UK shares is the right choice for me today. That 8% rate of return means stock investing is historically one of the best ways to make money work. And there’s a wealth of information out there from experts like The Motley Fool to help me draw up a winning investment strategy.
The post Why I’m buying UK shares to try and retire in comfort! appeared first on The Motley Fool UK.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.