According to the Office for National Statistics (ONS), in April 2025 the average annual earnings of full-time workers in the UK are £766.60 per week. That’s a good enough salary to live on, but what if you could earn it as passive income?

Let’s calculate how much it takes to say goodbye to office work for good.

Work for £766.60 a week

Based on this figure, the investor would need to earn a return of around £39,863.20 per year. Over the last decade, the British stock market has returned an average of 8.2% per year (based on Curvo.eu data).

FTSE 100 average annual returns:

• Last five years: 12.3% (total 78.3%).
• Last 10 years: 8.2% (total 118.9%).
• Last 20 years: 5.2% (total 176.5%).

Experts recommend that retirees withdraw only 4% a year from their farms to avoid them depleting too quickly. This means the pot would have to be worth around £996,580 (4% of £996,580 = £39,863).

Let’s say an investor starts with a lump sum of £20,000 and puts £500 a month into an ISA. Assuming an average of 8.2%, it would take almost 30 years to achieve this goal.

For investors already in their 40s, that’s probably a bit too long. So how can investors aim to reduce this time?

Targeting high-yield stocks

Apart from increasing your monthly deposits, the only way to grow your pot faster would be to earn a higher return. One way to achieve this is to have a high-yielding portfolio of dividend stocks.

Take it City of London Investment Group (LSE: CLIG), for example. It currently boasts an exceptionally high yield of 7.67% and a decent, unbroken payment record for 12 years.

But it’s not just a powerful dividend payer. Unlike many high-performing companies, it is also backed by excellent growth credentials. Over the last 20 years, the share price has increased by 123%, which, after taking into account dividends, gives it a 20-year total return of 12.11% per year.

This is a market-leading return that can significantly raise your average overall portfolio return. But does the company have what it takes to maintain these results for the next 20 years?

Let’s take a closer look

City of London Investment Group is a well-established asset management company operating since 1991. With an enterprise value of just £187.4m, this represents a relatively diminutive but reliable company in the fund management sector.

But like any business, it comes with risks. With a powerful tilt towards emerging markets (EM) and global closed-end funds (CEF), it is sensitive to volatility in sentiment in EM and CEF. Not to mention shrinkage or stagnation in the closed-end fund space, which could limit returns and threaten dividend cuts.

Encouragingly, the number of funds under management (FuM) continues to grow. They increased from around £7 billion in June 2023 to £7.55 billion in 2024 and £8 billion in 2025.

Net fee income (revenue) is approximately £57.2m and underlying pre-tax profit is just over £20m. Additionally, with a quick ratio of 4.97, his balance is more than vigorous enough and may be worth a look.

The most significant thing

Building a lucrative enough passive income stream to retire on won’t happen overnight. However, if you start early and focus on high-yield stocks, this can be a realistic goal – even for people already in their 40s. And this is just one of many high-yield stocks I’ve been covering lately.