With the current State Pension paying £12,548 a year, more people are using a Self-Invested Personal Pension (SIPP) to try and provide a better standard of living in retirement.

Offering attractive tax relief and flexibility in the types of investments that can be held – including gold bullion and commercial property, as well as stocks and shares — a SIPP could be a great way to target the level of income that industry experts reckon is needed to have a comfortable retirement.

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According to Pensions UK, a single person requires £45,400 a year in retirement to have a comfortable lifestyle. Let’s assume that someone wants to give up work early — before they are entitled to receive the State Pension – and wants to target this level of income. How much would be needed in a SIPP?

Well, it depends.

A bit of number-crunching

Assuming our retiree owns a portfolio of dividend shares paying 5% a year, they would need a SIPP worth £908,000. At 6%, the figure drops to £756,667. If 7% could be achieved, the requirement is £648,571. All are chunky numbers but I think it’s amazing what a difference a one percentage point variation in the annual return can make.

One company that provides SIPPs and, by a happy coincidence, is one of the highest-yielding FTSE 100 stocks at the moment (12 July) is Standard Life (LSE:SDLF), formerly known as Phoenix Group. Currently, it’s returning 6.4%.

If this could be maintained, a £709,375 SIPP would be needed to produce our £45,400 income target.

Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.

John D Rockefeller

My view

And in my opinion, there are a number of reasons why Standard Life could be considered by income investors.

By 2034, the UK retirement and savings income market is expected to grow by £2.5trn. Most business owners will argue that it’s easier to sell more to existing customers than to find new ones. Standard Life claims to have 20% of UK adults on its books so, it seems highly likely to me, that it will grow in line with the wider market.

When its £2bn deal to acquire the UK customers of Aegon completes, it will have an even bigger client base.

More specifically, higher interest rates are creating renewed interest in annuities. Changes to inheritance tax rules have led to a doubling of the number of people looking for £1m+ annuities.

However, as they’re a distribution of profit, dividends can fluctuate in line with earnings. Standard Life’s financial performance could be impacted by rivals taking market share. It might also be threatened by global market instability. That’s because it has £309bn of financial securities on its balance sheet to help it meet its obligations.

But with a Solvency II ratio of 176% (at 31 December 2025), it has plenty of headroom for the time being at least.

A final thought

Of course, it’s never a good idea to own just one share. However, the example of Standard Life shows how a portfolio of high-yielding income stocks can help someone target a more comfortable retirement. Personally, I think it’s one to consider.

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James Beard owns shares in Standard Life plc.