Anyone planning to retire purely on the State Pension is in for a shock. Even if you have the maximum 35 years of qualifying National Insurance contributions or credits, it simply doesn’t pay enough money.

Today, the full new State Pension pays at most £12,547.60 a year. That’s below the amount you need to enjoy the minimum possible lifestyle, which for a single person, is £13,900 a year, according to the Retirement Living Standards survey.

As this table shows, to get a comfortable retirement, a single person needs £45,400. The State Pension leaves them a staggering £32,853 short of that. Couples can pool their resources, but the same rule applies. If all you have is the State Pension, you will struggle.

With the long-term affordability of the State Pension triple lock under threat, things could get even worse.

Why not need your own savings pot

This makes it vitally important to invest for retirement under your own steam, rather than relying solely on the government.

Investing in the stock market through tax-efficient vehicles like a Stocks and Shares ISA or Self-Invested Personal Pension (SIPP) allows you to build your own retirement pot, on top of whatever the State Pension ultimately pays. 

In a SIPP, contributions attract valuable tax relief, giving the compounding process an extra lift from day one. Plus you can take 25% of your pot tax-free. In an ISA, all capital gains and dividend income are 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.

At The Twelfth Magpie, we suggest people consider building wealth by investing in a portfolio of FTSE 100 and FTSE 250 shares. You can pop them either in a SIPP or ISA and get all those tax benefits. The big question is – which stocks to consider?

Here’s why I like Lloyds shares

I set up my own SIPP three years ago and one of my best performers is Lloyds Banking Group (LSE: LLOY). I bought its shares for 45p and today they trade at just below 115p. They’ve grown by 155% in just three years, but there’s more.

Like many FTSE companies, Lloyds rewards investors by paying regular dividends. Lately, it’s yielded around 5% a year. With dividends reinvested, the total three-year return is closer to 170%. Which would have turned £10k into £27,000.

Lloyds has been boosted by recent high interest rates, which allow banks to widen their interest margins, the difference between what they pay savers and charge borrowers.

That has boosted profits but won’t last forever. So don’t assume Lloyds shares will always do this well. Especially with the economy and housing market struggling. The UK government could also increase the bank windfall tax in its Budget on 28 October, which is another risk to weigh.

But I still think Lloyds shares are worth considering as part of a diversified portfolio of a dozen or so FTSE stocks. And I can see plenty more worth checking out today.

Should you invest £5,000 in Lloyds Banking Group Plc 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 Lloyds Banking Group Plc made the list?

Harvey Jones owns shares in Lloyds.