LONDON -- As a nation, fewer of us are putting money aside for our retirement. Not only are many people turning away from personal pension plans, but last week came news that the number of people actively paying into a workplace pension scheme dropped for a third consecutive year in 2011.
Granted, the fall wasn't enormous. 8.2 million people were active members of pension schemes at work, down from 8.3 million the previous year, according to the Office for National Statistics. But it's the continual downward trend that's worrying, as is the steady loss of so-called "defined benefit" pension savers.
In short, as I've written before, a decent-sized chunk of the population looks to be heading toward a penurious old age.
That said, I have anecdotal evidence that the message is getting through. Several people I know socially, for instance, have recently been taking an unusually active interest in their pension provision -- and, what's more, have been doing something about it.
On our ever-popular discussion boards, too, I've seen an uptick in the number of people looking at stock market investments as a way to provide for their old age.
Gratifyingly, too, they're less and less blinkered by associating "retirement savings" with the word "pension." Stuffed with decent shares, an ISA, in short, can be every bit as good as a SIPP.
- A low-cost SIPP offers tax relief on contributions, currently at your highest marginal rate -- which is especially attractive if you're a higher-rate taxpayer now, but likely to be a basic-rate taxpayer in retirement. An annuity, or drawdown at a government-capped limit, is the usual outcome.
- A low-cost stocks and shares ISA offers tax relief on income, and also handily provides ready access to your money should you need it prior to retirement. There's no obligation, either, to buy an annuity, and the rate of drawdown is entirely up to you.
But how to pick those decent shares? Personally, my own retirement savings include FTSE All-Share and FTSE 100 (UKX) index trackers, some overseas trackers, and a sprinkling of investment funds.
But most new money is going to buy solid blue chips with decent long-run prospects -- preferably throwing off decent dividends, as well.
Here, for instance, are five solid blue-chip shares that I hold within an ISA intended to provide income for retirement.
Five for the future
Let's start with a quick "pen picture":
First up is GlaxoSmithKline
Next comes Reckitt Benckiser
Fourthly, there's Unilever
Lastly, consider 500,000-employee Tesco
Let's see the numbers
That's the five businesses. Each, clearly, is large and diversified, with a solid consumer-centric go-to-market proposition.
But how do the numbers stack up? Let's take a look:
|GlaxoSmithKline||1,441 pence||70.8 billion pounds||11.6||5.5%|
|Reckitt Benckiser||3,585 pence||25.9 billion pounds||14.3||3.7%|
|SSE||1,403 pence||13.2 billion pounds||11.5||6.3%|
|Unilever||2,265 pence||64.2 billion pounds||16.3||3.6%|
|Tesco||338 pence||27.1 billion pounds||9.5||4.6%|
Now, it's fair to say that not all of these shares tick the usual "screamingly cheap" boxes. But in any case, for the most part these aren't shares selected because adversity has temporarily driven down their prices: these are shares chosen to be solid picks over the long term.
In short, buy-and-forget shares, that will deliver a decent total return stretching into the future -- a future in which my retirement date will dawn.
The Buffett factor
And I'm not alone in thinking that. One of the stocks above emerged as a pick in this free special report from The Motley Fool: "Top Sectors Of 2012".
Here, in fact, are Motley Fool analyst Nathan Parmelee's very words: "Global diversification, long‑term growth potential, and a big dividend yield are why I see this share as an opportunity to beat the market without taking on above average risk." Its name? Why not download the report to find out? It's free.
And secondly, while all five of the shares in question have a decent history of dividend growth, one especially stands out, with an unbroken 25-year history of solid growth and rising dividends. It's a share that I've been loading up on in recent times, having almost doubled my holding this year.
Its name? You can find that out, too, in another free special report from the Motley Fool -- "The One U.K. Share Warren Buffett Loves." And from the way that Buffett has seemingly been topping-up himself in recent times, it's clear that he's also very clear about the company's long-term merits. As before, the report is free, so why not download a copy now?
Further investment opportunities:
Malcolm Wheatley owns shares in GlaxoSmithKline, Reckitt Benckiser, SSE, Unilever and Tesco. He does not have an interest in any other shares listed. The Motley Fool owns shares in Tesco. The Motley Fool has a disclosure policy.
We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.