By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Make Financial CenterMake Financial CenterMake Financial Center
  • Home
  • Investing
  • Banking
  • Credit Cards
  • Mortgages
  • Money Management
  • Marketing
  • Retirement
Reading: How much should investors put in a SIPP to earn the average UK wage in retirement?
Notification Show More
Make Financial CenterMake Financial Center
Search
  • Home
  • Investing
  • Banking
  • Credit Cards
  • Mortgages
  • Money Management
  • Marketing
  • Retirement
© 2024 All Rights Reserved | Powered By Make Financial Center
Retirement

How much should investors put in a SIPP to earn the average UK wage in retirement?

Make Financial Center April 22, 2025
Share
5 Min Read
How much should investors put in a SIPP to earn the average UK wage in retirement?
SHARE

Picture supply: Getty Pictures

Contents
Incomes £37k in annual dividendsCrunching the numbersAn revenue inventory to contemplate

Many individuals use a office pension scheme to take a position for retirement, however I feel a Self-Invested Private Pension (SIPP) could be a extra engaging choice. One key benefit of a SIPP is that buyers have better flexibility relating to their funding decisions. This permits them to construct a portfolio tailor-made to their threat urge for food and particular aims.

In accordance with the ONS, the common UK wage is presently £36,972 a yr. Right here’s how an investor can attempt to safe a passive revenue move that matches that determine from dividend shares held inside a SIPP.

Please word that tax remedy is determined by the person circumstances of every shopper and could also be topic to alter in future. The content material on this article is supplied for data functions solely. It’s not supposed to be, neither does it represent, any type of tax recommendation. Readers are accountable for finishing up their very own due diligence and for acquiring skilled recommendation earlier than making any funding selections.

Incomes £37k in annual dividends

Investments inside a SIPP don’t entice capital features tax or taxes on dividends. Consequently, buyers can purchase and promote shares with out worrying about what they could owe in taxes.

Furthermore, buyers get a serving to hand from the federal government by way of tax reduction. For a primary price taxpayer, that’s 20%. Primarily, this implies somebody investing £100 in a SIPP will obtain a £25 reclaim mechanically from HMRC, leading to a £125 contribution!

Aiming for almost £37,000 in annual dividends is not any imply feat, however it’s achievable. If the common dividend yield throughout an investor’s portfolio was 5%, they’d want £739,440 in shares to show this dream into actuality.

Crunching the numbers

The quantity people want to take a position to hit this goal varies significantly relying on their timeframe and portfolio development price. As an instance this, the desk under exhibits the month-to-month contributions required with 6% annualised development, accounting for 20% tax reduction.

Time interval Required month-to-month contribution
20 years £1,275
30 years £587
40 years £296

At 8% development, the numbers are as follows:

Time interval Required month-to-month contribution
20 years £999
30 years £395
40 years £169

At 10% development, right here’s how a lot buyers have to contribute:

Time interval Required month-to-month contribution
20 years £773
30 years £260
40 years £93

Choosing the proper shares and getting began as early as doable is essential to constructing a wholesome SIPP for the bottom doable contributions. That’s as a result of compound returns can do the heavy lifting over longer durations.

Granted, investing in shares isn’t a assured option to construct wealth. A poorly constructed portfolio could end in slower development and even the destruction of capital. As well as, dividends aren’t assured since corporations can minimize or droop shareholder distributions.

An revenue inventory to contemplate

Nonetheless, shopping for the correct mix of dividend shares could be a golden ticket to a snug retirement. One price contemplating is FTSE 100 tobacco inventory Imperial Manufacturers (LSE:IMB), which affords a 5.6% dividend yield.

Arguably, cigarette manufacturing is a sundown business. With a dwindling client base and authorities well being initiatives designed to eradicate smoking fully, Imperial Manufacturers faces its fair proportion of challenges.

Nonetheless, buying and selling at a ahead price-to-earnings (P/E) ratio of simply 8.8, the share’s dangers are mirrored in its low valuation. The enterprise has an extended historical past of dependable income and robust money move era, which shouldn’t be dismissed frivolously.

The newest full-year outcomes present the corporate’s shifting alongside properly. A 4.6% growth in underlying revenue to £3.9bn and a 4.5% dividend increase to 153.42p per share are encouraging indicators.

With a rising vary of different nicotine merchandise, similar to vapes, I feel Imperial Manufacturers shares might nonetheless have a vivid future.

You Might Also Like

Want to become an ISA millionaire? Here’s one way to target stock market riches with £500 a month

This SIPP strategy turned £5,000 into a small fortune! Could it work again?

No savings at 40? Here are 3 steps to target a comfortable retirement with UK shares

What sort of shares can make sense to buy for a SIPP?

134,000 reasons why I prefer FTSE 100 stocks over cash savings!

TAGGED: Retirement
Make Financial Center April 22, 2025 April 22, 2025
Share This Article
Facebook Twitter Copy Link
Previous Article Netflix Crushes Earnings — Is It The New Safe Haven in Tech? Netflix Crushes Earnings — Is It The New Safe Haven in Tech?
Next Article To Navigate AI Turbulence, CMOs Can Apply The Flywheel Model To Navigate AI Turbulence, CMOs Can Apply The Flywheel Model
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Latest News

Inspiring Content Personalization Examples For B2B
Inspiring Content Personalization Examples For B2B
Marketing August 3, 2025
Fireworks display in the shape of willow at Newcastle, Co. Down , Northern Ireland at Halloween.
Want to become an ISA millionaire? Here’s one way to target stock market riches with £500 a month
Retirement August 2, 2025
What Are Some Popular Alternative Investments For Making Money?
What Are Some Popular Alternative Investments For Making Money?
Investing August 2, 2025
Response to ChatGPT $20 Plan: Take My Money!
Response to ChatGPT $20 Plan: Take My Money!
Marketing August 1, 2025
Group of friends talking by pool side
This SIPP strategy turned £5,000 into a small fortune! Could it work again?
Retirement July 31, 2025
What Are Stablecoins? | Bankrate
What Are Stablecoins? | Bankrate
Investing July 31, 2025

You Might also Like

Fireworks display in the shape of willow at Newcastle, Co. Down , Northern Ireland at Halloween.
Retirement

Want to become an ISA millionaire? Here’s one way to target stock market riches with £500 a month

August 2, 2025
Group of friends talking by pool side
Retirement

This SIPP strategy turned £5,000 into a small fortune! Could it work again?

July 31, 2025
ISA inflows are booming! But are savers making a fatal mistake?
Retirement

No savings at 40? Here are 3 steps to target a comfortable retirement with UK shares

July 29, 2025
A senior man and his wife holding hands walking up a hill on a footpath looking away from the camera at the view. The fishing village of Polperro is behind them.
Retirement

What sort of shares can make sense to buy for a SIPP?

July 27, 2025

About Us

Welcome to MakeFinancialCenter, your go-to resource for all things finance. We are dedicated to providing insightful and practical information to help you make informed financial decisions.

Quick Links

  • Investing
  • Banking
  • Credit Cards
  • Mortgages
  • Money Management
  • Marketing
  • Retirement
  • Investing
  • Banking
  • Credit Cards
  • Mortgages
  • Money Management
  • Marketing
  • Retirement

Trending News

Inspiring Content Personalization Examples For B2B

Inspiring Content Personalization Examples For B2B

Average Money Market Account Rates for April 2024

Average Money Market Account Rates for April 2024

7 Of The Weirdest, Wildest, Oddball ETFs

7 Of The Weirdest, Wildest, Oddball ETFs

Inspiring Content Personalization Examples For B2B
Inspiring Content Personalization Examples For B2B
August 3, 2025
Average Money Market Account Rates for April 2024
Average Money Market Account Rates for April 2024
April 10, 2024
7 Of The Weirdest, Wildest, Oddball ETFs
7 Of The Weirdest, Wildest, Oddball ETFs
April 10, 2024
Teaching My Two Young Daughters About Money
Teaching My Two Young Daughters About Money
April 10, 2024
  • About Us
  • Contact Us
  • Disclaimer
  • Privacy Policy
  • Terms of Service
© 2024 All Rights Reserved | Powered By Make Financial Center
Welcome Back!

Sign in to your account

Lost your password?