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Many retirees ‘risk running out of money’! I’m buying shares to try to retire in comfort

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Sheet of paper with retirement savings plan on it
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The number of pensioners living in poverty in the UK has rocketed in recent years. A combination of desultory State Pension increases and the booming cost of social care, means that retirees are finding it harder and harder to make ends meet. The dreams that many of us have to retire in comfort are looking pretty fragile at best.

The pressure facing British pensioners threatens to grow in the wake of Covid-19 too. The huge bill to cover the cost of the pandemic has to come from somewhere. It’s why talk about scrapping the ‘triple lock’ pension mechanism continues to do the rounds in government circles. The lock guarantees that the State Pension will rise by 2.5%, by the rate of inflation, or by average earnings growth, whichever is highest.

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I couldn’t imagine having to live on the £179.60 per week that the current full State Pension provides. And, as I say, retirees could struggle even more to make ends meet in the years ahead. A report by Standard Life Aberdeen shows how a large majority of British pensioners might struggle to retire in comfort.

Two-thirds risk running out of cash

The study shows that someone planning to retire in 2021 plans to spend on average £21,000 a year going forward. This is around £9,000 lower than the average UK household income of £29,900.

However, Standard Life Aberdeen notes that exactly two-thirds (66%) of retirees “are at risk of running out of money” if they stick to their spending plans. This is based on an analysis of pension pots as well as the amount of money they’ll receive from the State Pension.

The research also showed that 37% of people planning to retire this year are worried about not having enough money to last throughout their retirement. And, staggeringly, 27% plan to work part-time to keep their heads above water.

Retirement saving and pension planning

What I’m doing to help me retire in comfort

It seems then that saving or investing for retirement is essential if you want some breathing space in retirement. I ‘ve chosen to buy UK shares in a tax-efficient Stocks and Shares ISA to try and retire in comfort. It allows investors up to £20,000 a year without having to give anything to the taxman.

History shows that UK share investors make an average annual return of between 8% and 10%. This is why I prefer to use a Stocks and Shares ISA instead of a Cash ISA. Moneysupermarket.com shows that the best-paying, easy-access ISA (provided by Paragon Bank) offers a paltry 0.41% interest rate.

Of course, investing in UK shares carries higher risk than putting your money in a standard savings account. There’s nothing stopping the value of your investments going all the way to zero. That said, I still think the returns British stock investors can enjoy still makes share investing a better way to try and retire in comfort.

And there are stacks and stacks of top-quality UK companies — not to mention help form experts like The Motley Fool — to help investors meet their retirement goals.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

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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.

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