The Motley Fool

State Pension worries? I’m buying UK shares in an ISA to try to retire comfortably

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

I can’t imagine having to survive solely on what the State Pension provides. I plan to retire in comfort when I hang up my proverbial work apron for the last time. Living on the basic amount, as many UK pensioners do today, isn’t something I’m prepared to sail blindly into.

I’m buying UK shares in a tax-efficient Stocks and Shares ISA to help me build a nest egg for retirement. The new full State Pension provides an annual income of £9,339.20. This is some way short of the £21,000 which (according to Standard Life Aberdeen research) people intending to retire in 2021 wish to spend each year.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

It’s clear then, people who wish to retire comfortably like me need to take their future into their own hands.

Why I worry about the State Pension

Many retirees who plan to stop working this year and rely solely on government benefits are putting themselves at risk of having less money than they’d like. And things could get harder for future generations should the ‘triple lock’ guarantee — the mechanism that dictates the degree to which the State Pension should rise — ever be stripped down.

I’m also mindful that I might not be eligible to receive the State Pension until I’m approaching my 70s. The age at which Britons can claim state benefits is gradually increasing under current legislation and will hit 67 years by 2028. I think the huge stress that Covid-19 has placed on the public purse could even drive the age threshold higher, although there’s no hint of that at the moment.

Stocks and Shares ISAs vs Cash ISAs

This is why I buy UK shares in my Stocks and Shares ISA at every opportunity. The pitiful sub-1% interest rates, which traditional savings products like Cash ISAs offer, isn’t likely to help me offset the impact of a paltry State Pension when I retire.

According to, the best-paying easy-access Cash ISA is offered up by Paragon Bank. The rate here sits at a paltry 0.55%.

The letters ISA (Individual Savings Account) on dice on stacks of gold coins on a white background.

If I invested £300 a month for 30 years in this product I’d have just £117,421 to show for it. To break this down I’d have earned just £9,420 in interest on a total contribution of £108,000. This sort of return is unlikely to allow me to spend what I plan to throughout my retirement.

Now let’s compare what I could make by spending that £300 a month on my Stocks and Shares ISA. History shows the average long-term UK share investors makes an average annual return of 8%. Based on these past figures I can realistically expect to make £425,284 in my ISA after three decades of investing. I’d have made a return of more than £317,200 on combined contributions of £108,000.

Of course, there’s no guarantee share investing will deliver me those sort of returns. Share prices can go up as well as down, of course. But I believe the sort of rewards I could realistically make with a Stocks and Shares ISA outweigh the risks. And there are plenty of quality UK shares to help me retire in comfort.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.