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For those with a full record of National Insurance contributions, the State Pension (as of 10 April) is £12,548 a year. But according to Pensions UK, over £31,000 more is needed for a single person to have a comfortable retirement.
One way of boosting your income in old age is to invest in the stock market. But how much would be needed to produce an income stream three times higher than the current State Pension? Letâs find out.
Some numbers
The current yield on the FTSE 100 is 2.8%. To produce the additional £31,352 — which when added to the State Pension of £12,548 gives a retirement income of £43,900 â an investor would need a Stocks and Shares ISA worth £1.12m.
Perhaps surprisingly for an index full of more UK-centric shares, the FTSE 250âs yielding 3.9% at the moment. An ISA valued at £803,897 is needed at this higher rate of return.
But I think itâs possible to do much better. The top 10 FTSE 100 stocks are offering a return of 6.7%. The figure for the five highest yielders is currently 7.4%. With these numbers, an ISA would have to be worth £467,940 and £423,676 respectively to reach our target income for a comfortable retirement.
Great for income
One stock thatâs currently yielding slightly more (7.8%) is Standard Life (LSE:SDLF), formerly Phoenix Group. Someone would need to own £401,949 of the pension and savings groupâs shares to produce dividends of £31,352 a year. Of course, holding just one share in a portfolio is a bad idea.
Sometimes, a high yieldâs caused by a falling share price. Not in this case. Shares in Standard Life are now changing hands for 27% more than they were in April 2023. Since its 2022 financial year, the groupâs raised its dividend by 9%.
But savvy investors know that dividends donât come with any guarantees. And Standard Lifeâs generous payout could come under threat if earnings shrink or fail to grow in line with expectations.
To help fund its obligations it manages a large portfolio of investments. At 31 December 2025, it owned £309bn of financial assets including £111bn of equities. Volatile markets will result in erratic investment returns. If the current ceasefire in the Middle East doesnât hold, the groupâs earnings could be hit.
Another threat could come from increased competition.
My view
However at the moment, the groupâs performing well with 2025 being another strong year for the group. Operating cash generation increased 5% compared to 2024. And adjusted operating profit rose by 15%. In addition, there was a 7% rise in assets under administration and its Solvency II ratio improved by four percentage points to 176%.
Also, it appears to be operating in the right sector at the right time. In my opinion, itâs likely to be one of the biggest beneficiaries from the anticipated 70% increase in the size of the UKâs long-term savings and retirement market.
For these reasons, I think Standard Life’s a stock that pensioners looking to supplement their income from the state (and other younger investors too) could consider.
The post How much would someone need in an ISA to aim to treble the current State Pension? appeared first on The Motley Fool UK.
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More reading
- 3 high-yield income stocks, investment trusts, and ETFs to consider in 2026!
- See the income from investing a £20k ISA in this UK stock before it goes ex-dividend on 9 April
- £5,000 buys 709 shares in this 8.1%-yielding passive income stock!
- £3,000 in savings? Hereâs how that could be used to start investing in an ISA and earn monthly passive income
- Should I put 100% of my cash into this dividend stock for a second income?
James Beard has positions in Standard Life. 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.
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