![\"A](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/06\/e8f6615b2de6c11e56d1b166ea87e0ef.jpeg\")
Image source: Getty Images <\/p>\n Image source: Getty Images <\/p>\n
One popular way to retire early is with passive income. A steady and reliable stream of cash means you can relax without the stress of bills mounting up.<\/p>\n
If you\u2019re thinking about targeting passive income from investing, a key concern is which type of savings account to use.<\/p>\n
A Cash ISA is one of the most popular options to reduce tax, but I think a Stocks and Shares ISA could be better in the long-term. The ability to select your own stocks can drastically increase potential returns \u2014 but only if you make good picks.<\/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
So how can a British investor aim to escape the nine-to-five without taking on too much risk?<\/p>\n
Crunching the numbers <\/p>\n
According to the global cost comparison site Numbeo, the average monthly cost for a London family of four is \u00a33,909.90 (excluding rent).<\/p>\n
Let\u2019s use the example of a 40-year-old aiming to retire by 60 and continue supporting their family. How could they bring in that much money?<\/p>\n
To draw down \u00a33,909.90 a month, you\u2019d need to aim for roughly \u00a346,918.80 a year. With that goal in sight, we can use typical market averages to formulate a strategy.<\/p>\n
Let\u2019s say you can afford to invest \u00a3500 a month for the next 20 years. Even if you achieved a higher-than-average return of 10% a year, you\u2019d only end up with \u00a3379,684.<\/p>\n
Using the recommended 4% retirement drawdown rule, that would pay out \u00a315,187.37 a year. Barely enough for one person. However, if a dual-income couple were able to invest \u00a31,000 a month, things would change drastically. At that level, the pot grows to \u00a3759,368 in 20 years, delivering \u00a330,374.72 (at 4%).<\/p>\n
That amount, combined with a basic State Pension, should be more than enough to get by. But which ever way you look at it, it\u2019s a long time and a lot of money.<\/p>\n
That\u2019s why picking smart investments is key.<\/p>\n
What to look for in long-term retirement stocks <\/p>\n
Here\u2019s a few things to look for when identifying retirement-friendly stocks:<\/p>\n
Consistent earnings and free cash flow.<\/p>\n
A dividend that\u2019s covered by profits, not borrowed money.<\/p>\n
Low debt relative to cash generation.<\/p>\n
A business with pricing power, so it can pass on inflation.<\/p>\n
A long record of surviving recessions, rate shocks, and sector rotation.<\/p>\n
Reasonable valuation, so you aren\u2019t paying too much for quality.<\/p>\n
One good example that fits these criteria is National Grid (LSE: NG.). It operates regulated monopoly assets in UK electricity and gas transmission, with long-life infrastructure and predictable cash flows.<\/p>\n
Metric<\/p>\n
Value<\/p>\n
Checklist note<\/p>\n
Dividend yield<\/p>\n
4.08% (recent)<\/p>\n
Attractive for income<\/p>\n
Payout ratio<\/p>\n
78.26% (2026)<\/p>\n
Below 80%, reasonable for utility<\/p>\n
Dividend growth<\/p>\n
3.79% in 2026<\/p>\n
Modest but steady growth<\/p>\n
P\/E ratio<\/p>\n
15.18<\/p>\n
Not expensive for regulated utility<\/p>\n
Market cap<\/p>\n
\u00a359.08bn<\/p>\n
Solid FTSE 100 large-cap<\/p>\n
The bottom line <\/p>\n
National Grid offers global-scale regulated assets, long-term contracts, and a dividend that\u2019s covered by earnings and cash flow. That makes it a classic stock to consider for passive income in retirement.<\/p>\n
It still faces clear risks, like interest-rate sensitivity and regulatory pressure. These can suppress price growth and have prompted moderate dividend cuts in the past.<\/p>\n
But overall, it scores well on durability and income stability. But don\u2019t just pick one stock \u2014 portfolio diversification is key, so aim for a mix of 10-20 stocks from various sectors.<\/p>\n
Should you invest \u00a35,000 in National Grid Plc right now? <\/p>\n
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.<\/p>\n
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if National Grid Plc made the list?<\/p>\n
See The Six Stocks<\/p>\n
Mark Hartley owns shares in National Grid.<\/p>\n
The post Here\u2019s how much is needed in an ISA to earn \u00a346,918 of passive income a year<\/a> appeared first on The Twelfth Magpie<\/a>.<\/p>\n More reading<\/p>\n Motley Fool UK 2026<\/p>\n","protected":false},"excerpt":{"rendered":"Image source: Getty Images One popular way to retire early is with passive income. A steady and reliable…\n","protected":false},"author":2,"featured_media":626531,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[84,59,102497,1088,1087,56,54,55],"class_list":["post-626530","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-gb","tag-national-grid","tag-passive-income","tag-stocks-and-shares-isa","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/626530","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=626530"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/626530\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/626531"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=626530"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=626530"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=626530"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}