Britons wanting to improve their savings have been told how they could use an ISA to earn the same amount as the state pension. Data suggests more and more Britons are opening up stocks and shares ISAs as they look to make their hard-earned cash grow.
The current full rate of the state pension is £12,548 a year, or £241.30 a week. While the triple lock ensures it rises each year in line with either inflation, wage increases or 2.5%, many find the state pension only covers the basic standard of living. Now, it has been revealed how much Britons would need to invest into a stocks and shares ISA to produce the same amount as the current state pension.
A portfolio of the top 10 FTSE 100 stocks worth £190,121 would produce dividend income of £12,548 a year, the same amount as the state pension, financial website The Twelfth Magpie reports.
This was based on stocks yielding 6.6% on Sunday (June 15).
While many could struggle to invest almost £200,000, the analysis offers an insight into how stocks and shares ISAs could be used to help boost a pensioner’s income.
It comes amid concerns that an increasing number of pensioners may find that they have to pay some tax on their state pension due to Chancellor Rachel Reeves’ freeze of the personal tax allowance at £12,570 per annum.
The state pension age is gradually increasing over the next couple of years, rising from 66 to 67 by April 2028, in a move that reflects longer life expectancy.
The state pension age determines the earliest date people can claim state support, although they can still retire earlier and use their private or workplace pension.
The Office for Budget Responsibility estimates that increasing the age from 66 to 67 will save the Government £10.5 billion by 2029-30.