Being a pensioner may be more fun than you think. Many have a million reasons to look forward to retirement.
This down to what insurer Prudential calls the “rise of the pensioner millionaires”.
The number of millionaire retired households in the UK has just passed the million mark, its analysis of official data for 2010/2012 reveals.
Four years earlier, there were just 636,000.
The pensioner millionaires are on the march.
Many More Millionaires
The stock market and house price boom of the last five years are the main reasons for this surge in wealth.
The over-65s have a lifetime of investing behind them, in pensions, tax-free ISAs and property.
Which is why where are a greater proportion of millionaires in this age group than any other.
Fancy Living on £8,000 a Year?
Who wants to be a millionaire? You probably will, as you get older, because nobody wants to reach their final years with money worries on their mind.
Sadly, more than one million pensioners have total wealth of less than £40,000, Prudential’s figures show.
Despite the forthcoming flat-rate basic state pension, worth £155 a week from April 2016, many will still retire in poverty.
£155 a week translates as £8,060 a year, barely one-third of the average national wage.
That can’t be much fun to live on.
It’s The Stock Market, Stupid
There is a surprise lurking in Prudential’s figures. The biggest increase in pensioner wealth hasn’t come from property prices but from investments, primarily in pensions or ISAs.
Today’s so-called property boom is largely restricted to London and prosperous parts of the South East. In the rest of the UK, prices are still lower than before the financial crisis.
Yet the average retired person has pensions worth £82,300, up from £60,000 four years ago.
And one in five have investments worth more than £100,000.
Here’s Where to Start
If you want to join the pensioner millionaires, you have to start investing now.
Your workplace pension, if you’re lucky to have one, isn’t enough on its own.
You could start by investing in renowned FTSE 100 companies, such as oil giants BP and Royal Dutch Shell.
Or dig up great opportunities in the global mining sector by investing in Rio Tinto or BHP Billiton.
Banking stocks such as Barclays and HSBC Holdings have fallen lately, but could be a great opportunity for bold investors who want to buy them cheaply, then wait patiently for the recovery.
If you’re feeling brave, supermarket giant Tesco is also available at a bargain valuation.
All these stocks pay dividend income of around 4% to 5% a year, far more than any savings account.
This will steadily boost your long-term returns, while you wait for the next spurt of stock market growth.
Become A Millennial Millionaire
The sooner that you start investing, the better your chances of making that million. The so-called ‘millenials’, today’s 18- to 34-year-olds, really need to focus on this.
It won’t be easy, given the burden of student loans and property deposits, but if millennials want to be millionaires, they can’t afford to hang around.
