The UK State Pension is helpful, but let’s be honest — it’s not enough to live on comfortably. So anyone without a decent workplace pension may want to consider investing via an ISA or SIPP.
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In my case, at least £20,000 a year feels closer to the mark if I want to cover the basics without making serious sacrifices.
The State Pension is currently £12,547 a year. So how much would you need to have in an ISA to make up the difference?
Calculating a comfortable future
To get from £12,547 to £20,000, I’d need another £7,453 a year. Using the recommended 4% retirement drawdown rule, I’d need an ISA worth around £186,325.
That’s a stately sum, but it’s not some fantasy number reserved for the ultra-rich.
So, how long would it take to get there? Consider the following compounding scenarios, using an average annual return of 8%:
- Investing £200 a month, you could hit the target in about 24 years and 7 months.
- £300 a month would take 20 years and 3 months.
- £500 a month could reach it in just 15 years and 5 months.
Although not guaranteed, 8% could be a conservative estimate. A more aggressively growth-focused portfolio could average 10% returns a year (many do). But some will average less, of course.
At that rate, £500 a month could compound to £183,920 in just 14 years. Still a long time, but achievable even for somebody in their 50s with no savings.
What kind of shares could deliver 10%?
A 10% average return isn’t easy, but it’s possible with the right mix of shares. Some FTSE 100 stocks have delivered strong 10-year annualised total returns when dividends are reinvested:
| Stock | 10-year total return | 10-year annualised return |
|---|---|---|
| Rio Tinto | 724% | 23.5% |
| Glencore | 544% | 20.5% |
| BAE Systems | 456% | 18.7% |
| HSBC | 431% | 18.2% |
| AstraZeneca (LSE:AZN) | 377% | 16.9% |
Impressive figures. But remember: past performance is never a guarantee of future results. The lesson is not to chase yesterday’s winners, but to understand why they won in the first place.
Take AstraZeneca, for example.
Long-term earnings visibility
It exhibits several characteristics that support long-term compounding. It combines resilient demand, a deep pipeline, and steady cash generation with a broad portfolio across oncology, CVRM, respiratory and rare disease.
That helps provide both a clear picture of future revenue and reduces risk through diversification.
In 2025, it reported 16 blockbuster medicines and is aiming for more than 25 by 2030. That matters because approved prescription drugs can keep producing revenue for years, sometimes decades.
FY2025 showed total revenue of $58.7bn, up 8%, while earnings per share (EPS) rose 11%. CEO Pascal Soriot said of the results:
“We are firmly on track to deliver our 2030 ambition.”
That sounds like a business built for endurance, doesn’t it?
Still, it’s not a guaranteed bet. The key threat to any pharmaceutical company is the dreaded patent cliff, and AstraZeneca is no stranger. Farxiga is a key growth driver for AstraZeneca, with $7.7bn in 2024 sales but a patent expiry due this year.
The bottom line
Passive income in retirement is not as hard as it might seem, but it does take time, discipline and a sensible plan.
A strong portfolio can make a big difference, so stable growth compounders like AstraZeneca are worth looking into as part of a diversified portfolio.
Should you invest £5,000 in AstraZeneca Plc right now?
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Mark Hartley owns shares in AstraZeneca, HSBC Holdings and BAE Systems.
