The State Pension age is expected to rise to 67 later this decade. This means most workers will have to work longer to receive their retirement income.
However, by investing in FTSE 100 stocks today, you could improve your chances of being able to retire early and beat the State Pension. The index offers a large number of opportunities that have the potential to grow your wealth and provide a passive income in older age.
I think two companies stand out as being particularly attractive.
Recent updates from easyJet (LSE: EZJ) have confirmed this low-cost airline is still at the top of its game. Passenger numbers for the year ending 30 September 2019 increased by 8.6% to 96.1m, despite increasing competition in the European budget airline market.
The company is now investing large sums of capital into increasing its route network and providing a better offering for customers. It looks as if this is the right decision for the business in the long run. EasyJet has an impressive track record of growth, and it needs to improve its customer service to stay ahead of competitors.
Even though the shares have outperformed the market over the past six months, they continue to trade on a low valuation. The stock has a price-to-earnings (P/E) ratio of just 12.5, while its dividend yield of 3.5% suggests its total return prospects could be high.
With the demand for low-cost air travel continuing to grow, now could be the time to buy easyJet. The company’s strong brand should help it stand out in a crowded field, and deliver a sustainable, growing, passive income for investors.
Another FTSE 100 company that appears to have fantastic income credentials is Prudential (LSE: PRU).
Global geopolitical worries have hit Prudential’s shares over the past 12 months but, despite investor concerns, the company’s prospects have continued to improve.
To help cement its position as one of Asia’s most prominent financial companies, Prudential recently agreed on a 20-year exclusive bancassurance partnership with Southeast Asia Commercial Joint Stock Bank in Vietnam. The firm has also signed an agreement to become the preferred life insurance provider to BRG Group Joint Stock Company in Vietnam, which has around 10m customers.
These efforts show Prudential is focusing on long term growth. As such, now could be an excellent time to snap a piece of this business at a discounted price.
The stock has a P/E ratio of 9.9, with a dividend yield of 2.8% at the time of writing. These metrics indicate the company’s shares could offer a wide margin of safety vs other FTSE 100 stocks at current levels.
With a long track record of dividend growth, this looks to be an excellent passive income investment that could give you a steady, growing income for many years in retirement.
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Rupert Hargreaves owns shares in Prudential. The Motley Fool UK has recommended Prudential. 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.