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State Pension: I’d buy bargain UK shares in a Stocks and Shares ISA to retire in comfort

Buying bargain UK shares to retire in comfort may not sound appealing to many investors at the present time. Stock market indexes, such as the FTSE 100 and FTSE 250, have experienced a market crash that’s left many of their members trading on low share prices. And, with an uncertain economic outlook ahead, some investors may prefer to focus their capital on lower-risk assets.

However, now could be the right time to start building a Stocks and Shares ISA to beat the inadequate State Pension. Over time, the stock market could recover and allow you to retire in comfort.

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Long-term growth from UK shares

In the short run, the prospects for UK shares may be very challenging. Risks, such as a second wave of coronavirus, Brexit, and a weak economic outlook, could weigh on the valuations of many businesses.

However, in many cases, those risks have been factored in to the valuations of FTSE 100 and FTSE 250 shares. Many of their members trade at prices that are significantly below their historic averages. This suggests they offer good value for money. Buying them today, and holding them over the long run, could produce high returns that lead to a surprisingly large retirement nest egg.

Of course, a recovery for UK shares is never guaranteed. However, the track record of the stock market suggests that it’s very likely to occur. The FTSE 100 and FTSE 250 have always recorded new all-time highs following their previous bear markets despite facing numerous risks along the way.

Through buying stocks while they are priced at low levels, you may be in a strong position to benefit from a likely long-term recovery.

A disappointing State Pension

Buying UK shares now to build a retirement portfolio may become increasingly important. The State Pension age is set to rise over the coming years. But the rate at which payments increase could slow. The cost of coronavirus means the government may need to raise taxes and make cuts elsewhere.

As such, the ‘triple lock’ on the State Pension may not be guaranteed. There’s also the possibility of a slower pace of growth in the coming years.

Furthermore, with the State Pension currently amounting to around a third of the average UK salary, it may be unable to provide financial freedom for most people. A second income in older age may already be necessary. And it could become even more of a requirement in the coming years.

As such, now could be the right time to start buying UK shares in a tax-efficient account, such as a Stocks and Shares ISA. Over time, they could deliver high returns as a recovery takes hold. This may improve your chances of enjoying a comfortable retirement with a generous passive income.

A Top Share with Enormous Growth Potential

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That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

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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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