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Image source: Getty Images<\/p>\n
It\u2019s no secret that the UK State Pension is far from sufficient to maintain a decent lifestyle. Even after it gets a boost in April, thanks to the triple lock, Britons will only receive up to \u00a312,547.60 each year \u2013 firmly behind the estimated \u00a343,900 needed to live comfortably.<\/p>\n
To make matters worse, there are growing fears that the State Pension could be a ticking time bomb.<\/p>\n
A combination of lacklustre economic growth, an ageing population, and concerningly high levels of youth unemployment is creating a potential nightmare where tax receipts can\u2019t cover pension payouts.<\/p>\n
Consequently, the Office for Budget Responsibility has highlighted that the current trajectory is unsustainable in the long run. And that puts the State Pension at risk for even 40-year-olds today.<\/p>\n
But by taking the right steps today, investors can protect themselves and aim to secure a better future. Here\u2019s how.<\/p>\n
Building retirement wealth<\/p>\n
With the sustainability of the State Pension in doubt, investors who build an additional private pension pot<\/a> with a Self-Employed Personal Pension (SIPP) could be far better protected in the long run.<\/p>\n Even following a simple index tracker strategy yielding an average of 8% a year could make an enormous difference.<\/p>\n Let\u2019s say a 40-year-old investor in the Basic rate income tax bracket puts \u00a3600 each month into their SIPP and intends to retire at age 68. Each deposit gets automatically topped up by 20% through tax relief to \u00a3750. And investing this money at an 8% rate for 28 years translates into a \u00a3936,423 pension pot.<\/p>\n Following the 4% withdrawal rule, that\u2019s enough to generate a \u00a337,450 retirement income. That\u2019s a significant improvement versus the current State Pension. But investors can potentially do even better.<\/p>\n Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.<\/p>\n Aiming higher<\/p>\n By investing exclusively in the best businesses, a portfolio can go on to earn significantly higher returns than 8% a year. And looking back at the last 28 years, a perfect example of this is Chemring Group (LSE:CHG<\/a>).<\/p>\n