Anyone relying purely on the State Pension to fund their retirement needs their head examining. It’s just not enough to live on. Even if you get the maximum new State Pension, you’ll be getting just £12,547 this year.
That’s below the level required for a basic ‘minimum’ lifestyle, according to the Retirement Living Standards survey. You’ll need a fair bit more to enjoy a ‘moderate’ retirement, let alone a comfortable one.
This table will make dismal reading but will hopefully inspire some to invest under their own steam.
| Lifestyle target | Single person | Couple |
| Minimum | £ 13,900 | £ 22,500 |
| Moderate | £ 32,700 | £ 45,400 |
| Comfortable | £ 45,400 | £ 62,700 |
Source: UK Finance
A brilliant way to build retirement wealth is to invest via a Stocks and Shares ISA. This helps you harness the compounding power of the stock market. And all the share price growth and dividend income is entirely free of tax.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Just look at how stocks and shares build wealth
So how much would you need in your ISA to generate a second income of £20,153 a year? I’ve chosen that figure because once added to the state pension, it would lift a single person’s income to £32,700, producing a ‘moderate’ retirement.
The answer depends on the yield you generate from your portfolio:
- With a 4% yield, you’d need £503,825 invested.
- At 5%, the required total falls to £403,060.
- And at 6%, the figure drops to £335,883.
Those sums look scarily big but this is where the stock market comes into it. Over the last decade, the average Stocks and Shares ISA has delivered a total return of 9.64% a year, with dividends reinvested.
At that rate, if you invest £250 a month and increase that by 3% a year to keep up with inflation, you’d end up with £663,180 after 30 years, blasting through those sums.
Here’s why I like HSBC shares
One UK dividend stock I rate right now is HSBC Holdings (LSE: HSBA). Most of us know it as a UK high street bank, but it generates two-thirds of its profits from Asia, notably Hong Kong and China. That gives it a massive opportunity, as the Asia Pacific region grows in wealth and power.
HSBC already makes huge profits as a result – a staggering $32.3bn in 2024. That dipped to $29.9bn in 2025, but mostly due to one-off impairment losses and corporate structuring costs. Underlying growth remain strong. The HSBC share price is up 60% in the last 12 months, and a stunning 284% over five years.
In practice, investors have done even better, as they’re received dividends on top. The shares have yielded around 5% a year lately. The total return with dividends reinvested would be around 315%.
HSBC shares look a tad expensive after that strong run, and may be more volatile from here. And while its exposure to China is exciting, Beijing interference adds an extra layer of geopolitical risk. Also, if the global economy slows, so could profits. But every stock brings risks as well as rewards and I think HSBC shares are worth considering today. That’s why I bought them in both May and June.
Should you invest £5,000 in HSBC Holdings right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if HSBC Holdings made the list?
Harvey Jones owns shares in HSBC.
