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It’ll be at least around two-to-three decades before I’m ready to claim the State Pension. But I’m not leaving my retirement plans to chance, or on the decisions of a future government wrestling with an ageing population and probably enormous public debts.
It’s why I hold a Cash ISA, Stocks and Shares ISA and a couple of Self-Invested Personal Pensions (SIPPs), and invest in them at every opportunity. But am I overreacting?
Should you buy HSBC Holdings shares today?
Before you decide, please take a moment to review this report first. Despite ongoing uncertainties from US tariffs to global conflicts, Mark Rogers and his team believe many UK shares still trade at substantial discounts, offering savvy investors plenty of potential opportunities to learn about.
That’s why this could be an ideal time to secure this valuable research – Mark’s analysts have scoured the markets to reveal 5 of his favourite long-term ‘Buys’. Please, don’t make any big decisions before seeing them.
Latest research from Scottish Widows suggests no. The financial services giant says that…
31% of UK adults are currently at risk of failing to cover their basic needs in retirement – that’s equivalent to a worrying 12.2m people.
What’s going on?
So, 12.2m people add up to 12.2m reasons to think hard about my own retirement. Scottish Widows based its findings “on savings, behaviours and income sources” and by “comparing expected income to potential living and housing costs in retirement.” To me, it made for chilling reading. But on the other hand, I wasn’t that surprised by those findings.
Why? It’s not just that people aren’t investing or saving enough for later years. To me, it also largely reflects the meagre size of the State Pension today, and what benefit levels are likely to be in the coming decades.
UK retirees only get 22% of their income from the state. According to the Mercer CFA Institute Global Pension Index, that’s the worst among all the G7 nations. Will things get better? I’m not so sure.
Official forecasts suggest the UK’s pension-age population will rise by almost a quarter between now and 2049, to 15.3m people. How that bill gets paid is the awkward bit few politicians want to talk about.
What should you do?
The good news is it’s never too late to start saving and investing for retirement. Even those who are struggling as the cost-of-living crisis drags on can use tax-efficient ISAs to harness the power of the stock market and create wealth.
Let’s say you’re a 50-year-old with just £250 a month to invest. If you can achieve the typical 9% average return long-term investors tend to enjoy (which isn’t guaranteed), you’ll have a of £142,689 by the time you reach State Pension age.
This would then throw off a yearly passive income of almost £10,000 if invested in 7%-yielding dividend shares.
Doing the work today
Obviously the earlier you start and the more you invest, the larger your retirement pot can be thanks to the long-term impact of compounding. But if you can’t do either of those things, you can still get ahead by doing careful research to find the very best stocks to buy.
HSBC (LSE:HSBA) is a share I’ve bought to help me fund my own retirement. Why? During the last decade, it’s delivered a stunning average annual return of 10.6%.
To put that into context, a £250 monthly investment here would have become an impressive £53,009 today. I wouldn’t suggest investors take the risky step of just buying this one share. But I think it’s a great addition to consider for a diversified portfolio.
Competition is greater than it’s been at any time for FTSE 100 banks. But I’m optimistic HSBC’s huge scale and focus on fast-growing Asian economies should mean further incredible share price gains and dividends over the long term.
Should you invest £5,000 in HSBC Holdings right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if HSBC Holdings made the list?
Royston Wild owns shares in HSBC.