Relying on the State Pension to protect you from poverty in retirement is a recipe for disaster. And data this week from the Department of Work and Pensions (DWP) showed just why.
The maximum benefit of £168.60 per week currently given to pensioners is frankly pathetic. I certainly couldn’t see myself surviving on such a paltry sum and countless people already struggle to do just that.
But things threaten to get even worse for me and many, many millions of others as lawmakers contemplate scrapping the Triple Lock, the device that sets the minimum amount the State Pension should rise by each year.
Recent government initiatives to balance the books amidst a rapidly-growing population is proving devastating for British citizens. Which brings me neatly onto that shocking data from the DWP.
Because of a recent rise in the State Pension age, some 120,000 fewer people were eligible to claim the benefit in February, the DWP said, taking the number down to a shade below 13m. Rule changes introduced late last year mean the pension age has started to rise for men and women aged over 65, with the intention of raising the age to 66 by October 2020, and then pushing it to 67 by 2028.
Jam today Reduced government support makes it more and more important to take charge of your finances. But there’s no reason to panic, at least not yet. There’s a galaxy of stocks out there that can save you from pensioner poverty whatever your age or investment style.
Indeed, there’s plenty of brilliant shares to pick from just on the FTSE 100. Take housebuilders Taylor Wimpey (LON:TW), Persimmon (LON:PSN) and Barratt Developments (LON:BDEV), for example.
Risk-averse investors might want to give London-focused The Berkeley Group a miss right now because of the struggling property market in the capital. But those other construction giants look in great shape to keep thriving for years to come, such is the size of the supply/demand gap across the rest of the country.
What’s more, investors don’t need to buy today in the hope of ‘jam tomorrow,’ making them ideal bets for individuals who are a bit closer to their planned retirement. Persimmon and Taylor Wimpey both offer forward dividend yields of 12.5% and above, while Barratt offers a corresponding yield of 7.4%.
Defensive greats For those individuals who are worried about the threat of Brexit on builder’s bottom lines, or indeed other macroeconomic troubles like Trans-Pacific trade wars and a looming eurozone recession, there’s a treasure trove of other great income shares to pick from on the FTSE 100.
Take BAE Systems (LON:BAES), for example, a share which stands to keep benefitting from mankind’s insatiable need to wage war. This particular blue-chip yields an inflation-bashing 4.2%. Or what about utilities giant National Grid (LON:NG), whose role as Britain’s sole electricity network operator provides dependable long-term profits growth? This particular stock also yields an impressive 5.7%.
The risks for stock investors have clearly risen in recent months. But the dangers created by more and more changes to the State Pension mean that you can’t really afford to sit on your hands and hope for the best. So take advantage of the wealth of research that’s out there and take control of your financial destiny today.
Royston Wild owns shares of Barratt Developments and Taylor Wimpey. 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.
Motley Fool UK 2019