I’ve made investing in FTSE 100 stocks a cornerstone of my retirement investing strategy. Like many people, I’m becoming increasingly worried about how I’ll be able to financially survive once I hang up my proverbial work apron.
Seven out of 10 Brits believe it’s now harder to retire than ever before. That’s according to a survey of 2,000 people by investment comparison website Investing Reviews.
More than a third (33.2%) of respondents believe they won’t be in a position to retire comfortably. That compares with 28.8% who reckon they are looking forward to finishing work in a financially robust position.
State Pension worries
It’s perhaps no surprise that individuals are becoming more pessimistic about how they’ll make ends meet in retirement. The cost-of-living crisis means that people have less money to make contributions into their pension.
Questions over how large the State Pension will be in future years are spooking Brits, too. The age at which they can claim is also becoming an increasing concern as the government grapples to fund an increasing elderly population.
But I’m not panicking over these issues. By investing in FTSE 100 stocks, I’m confident I can make enough money to eventually retire in comfort.
Okay, putting money aside is more difficult than usual during this cost-of-living crisis. However, even the most cash-strapped can make some changes to give them a decent war chest to invest with.
Someone who spends £5 on coffee a day could have an extra £150 to invest per month if they made it at home. Extra things like cancelling an unused streaming subscription, cutting back on clothes spending, or switching utilities supplier (to name just a few things) can also free up funds for investment.
The exceptional returns being served up by the FTSE 100 make these changes worthwhile, at least in my opinion.
The UK’s blue-chip share index has generated an average annual return of 7.48%* from its inception in 1984 to 2022. There’s no guarantee that this will be replicated going forward, of course. But if returns remain around this level, investors could make an impressive amount of cash.
Let’s say that someone has £300 a month to invest in FTSE 100 shares. If that 7.48% yearly rate of return rolls on they could, after 30 years, have made a shade below £371,000.
That investor could then translate this into an annual passive income of £14,840 once they retire. This figure is based on the 4% withdrawal rule, which allows someone to draw down money for decades before depleting it.
Added to the State Pension, this person could have a healthy amount to retire on.
* According to IG Group.
Buying FTSE shares now
Now could be an especially good time to start buying FTSE 100 shares as well. Concerns over the global economy has smacked market confidence in 2023. And so many quality stocks currently trade at knock-down prices.
Buying them today could allow an investor to make returns above that 7.48% average. I for one plan to continue adding blue-chip bargains to my portfolio in the weeks and months ahead.