Do these 3 things now or live on a State Pension of just £8,546 a year

Retirement is supposed to herald your golden years, those happy days when you kick back, relax, and live out your allotted span in comfort and ease. The problem is that it's not easy to relax when you're living on an income of just £8,546 a year.

That's what you will get from the basic State Pension, which is currently £164.35 a week. And you will only get that if you have made 35 years of qualified National Insurance contributions. This is less than a third of the average full-time wage of £27,271, not exactly what you would call golden. If you want to add sunshine to retirement, you'd better take action now.

Start saving

Yes, I know money is tight. Wages are scarcely rising. The gig economy is not as cool as it sounds. House prices are off the scale, so are rents. Too many are genuinely be unable to save. However, others can save, yet don't bother. They fritter their cash away, when they could put it to work. If this is you, why not try an app such as Moneybox. It helps you save every time you spend, by rounding up your purchases to the nearest pound and investing the change.

Ideally, you need cash on instant access worth three to six months of your salary, for emergencies. Then you need to get serious.

Learn to invest

For most people, the best way of building up a retirement pot is to invest in stocks and shares. You can do this either through a flexible self-invested personal pension, known as a SIPP, or by using this year's £20,000 tax-free Isa allowance. With a pension, you get tax relief on your contributions when you pay money in. With an Isa, all growth and income is tax free when you take the money out. These two tax benefits complement each other nicely.

One more thing. If you are offered a company pension with employer contribution, DO NOT OPT OUT. That way you're turning down free money. You will regret it one day.

Finally, stick with it

Investing in the stock market can make you much better off. It could even make you a millionaire. However, it will do neither of these things overnight. You have to give it time. This means building a balanced portfolio of stocks and shares, or low-cost passive exchange traded funds (ETFs), and leaving them to grow for year after year. You can invest cheaply and easily through online platforms such as AJ Bell, FundCalibre, Hargreaves Lansdown, Interactive Investor, and more.

If you don't know what to buy, a simple tracker such as the SPDR FTSE UK All Share ETF might be a good place to start. Alternatively, or a global tracker such as the Vanguard FTSE All-World UCITS ETF could be the only investment you'll ever need. Once you get the hang of it, you need to keep going, regularly topping up your portfolio pot for 10, 20, 30 or 40 years. Do that and you should be able to look forward to a golden retirement. Do nothing and, well, how does £8,546 a year a sound?

Buy-And-Hold Investing

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harveyj has no position in any of the shares mentioned. 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.