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With a Stocks and Shares ISA, it’s not hard to generate income for retirement. These accounts typically provide access to a vast range of dividend stocks and income funds.
But how much money do you need to build up in this type of ISA to generate enough income for a comfortable retirement? Let’s crunch the numbers.
What does a comfortable retirement look like?
Everyone has their own version of what a ‘comfortable’ retirement might be. However, according to Retirement Living Standards, it’s one in which someone can have a degree of financial freedom and some luxuries (like a two-week holiday in the Mediterranean every year and several weekends away).
As for how much money is needed to obtain this, the research firm believes that a single person today would need £43,900 per year. That assumes no mortgage payments but includes any money received from the State Pension.
How much money do you need?
So, let’s go with that number. And just for this exercise, let’s also assume that there is no State Pension or other pension money available.
In this scenario, I calculate that someone would need between £630,000 and £730,000 in an ISA to generate the level of income required. I obtained these figures by assuming that it’s possible to generate an annual yield of 6%-7% within an investment ISA by investing in a range of high-yield stocks/funds.
I’ll point out that it’s possible to generate higher yields than this in an ISA with super-high-yield stocks. But this is risky (the higher the yield, the higher the risk), hence why I’ve used 6%-7% in my calculations.
Of course, an investor could also try to obtain £43,900 per year by going with a lower average yield and spending their capital over time. With my calculations, however, the investor doesn’t need to touch their capital.
Targeting a 6%-7% yield
In terms of investment ideas, one example of a high-yield stock that could help to generate the average yield we’re aiming for is Aviva (LSE: AV.). It’s a well-known insurance and investment company.
For the 2026 financial year, analysts expect this stock to pay out 41.2p per share in dividends to investors. At today’s share price of 680p, that translates to a yield of about 6%.
The price-to-earnings (P/E) ratio is about 11.6. So, the valuation looks quite reasonable.
Now, this company has been a bit of an underperformer at times in the past. However, CEO Amanda Blanc – who came on board in 2020 – has been able to boost performance.
She’s offloaded non-core divisions in an effort to make the company more profitable. And this has worked – in the first half of 2025 operating profit was up 22% year on year.
Of course, there’s no guarantee that the company will continue to be profitable and pay big dividends. Insurance is a complex industry with lots of moving parts and Aviva could face challenges in the future, leading to a cut in the dividend payout (and/or share price weakness).
Right now, however, the company has momentum. So, I think it’s worth a look as an income play.
But it’s not the only high-yielder that seems attractive to me right now.
