How much do you need in your ISA to earn £20 a day in passive income in retirement?

Regardless of your retirement plan, it’s worth considering a passive source of income. The full up-to-date state pension is currently £12,547 a year. This may be enough to cover basic bills, but not much more.

However, if you pay off your mortgage and manage your health needs, you may not need a fortune to enjoy life.

Is it worth buying Tp Icap Group Plc shares today?

Before you make a decision, please take a moment to read this report. Despite ongoing uncertainty from US tariffs to global conflicts, Mark Rogers and his team believe that many UK shares are still trading at significant discounts, offering many potential learning opportunities for experienced investors.

That’s why this could be the perfect time to conduct this valuable research – Mark’s analysts have combed the markets to discover his 5 favorite long-term “buys”. Please do not make any critical decisions before watching them.

Even 20 pounds a day can change the picture. This works out to £7,300 a year, or around £600 a month. Enough for a few meals out, brief breaks or just peace of mind.

So how gigantic would an ISA have to be to generate that kind of income?

Please note that tax treatment depends on each client’s individual situation and may change in the future. The content of this article is for informational purposes only. It is not intended to be and does not constitute any form of tax advice. Readers are responsible for conducting their own due diligence and obtaining professional advice before making any investment decisions.

How much do you really need?

Let’s start with a plain rule: Experts recommend withdrawing no more than 4% in retirement to avoid depleting your savings too quickly. This £20 a day equates to £7,300 a year, which is 4% of £182,500.

However, this number is not written in stone. Your required pool depends on performance, fees, inflationand how careful you want to be. After all, markets don’t move in straight lines.

That’s why many investors aim higher. The round target of £200,000 provides a margin of safety. But how realistic is this for the average saver? If you simply save £200 a month, it will take you 1,000 months, or over 83 years, to achieve this. Not entirely practical.

Investing changes the equation. Let’s assume the following dividend portfolio averages:

Dividend rate 6%.
3% annual capital growth.
2% annual dividend growth.

With these contributions, £200 invested per month could grow to £195,063 in around 24 years.

Interestingly, if the 6% yield continues, it would take £121,667 to generate £7,300 a year in dividends alone. This raises a key question: Is income investing the smarter route?

As Warren Buffett once said:

“If you don’t find a way to make money while you sleep, you will work until you die.”

So where do these sleeper assets come from?

Which stocks could deliver?

To build reliable income, I focus on a few key features:

Constant demand and predictable earnings.
Reasonable debt level.
Diversified activities across regions or services.
Good performance in terms of dividends and shareholder returns.

One example that meets many of these criteria is TP ICAP (LSE: TCAP). It operates as an interdealer broker, providing critical infrastructure to global financial markets. This niche gives it resilience and recurring demand.

Here are some notable numbers:

26 consecutive years of dividend payments.
The dividend yield is typically between 5.5% and 6.5%.
Average dividend growth of 1.2% per year.
The share price has increased by 46.3% in five years (7.8% annualized).

This is not a story of rapid technological development. It is a stable, profit-oriented business. Still, there is always a risk. Advances in artificial intelligence and automation could ultimately disrupt parts of a company’s business model, negatively impacting profits (and share price).

While the yield looks attractive, investors need to ask themselves: How sustainable will this yield be over the next decade?

The most critical thing

Passive income in retirement is easier to achieve than many people think. With time, consistency and the right portfolio, even modest contributions can turn into something significant.

TP ICAP, although not risk-free, meets many criteria, so it is worth taking a closer look at it. But don’t stop there – using this example, try to identify similar stocks that will complement a diversified income portfolio.

Is it worth investing £5,000 in Tp Icap Group Plc now?

If investing expert Mark Rogers and his team have stock advice, it can pay to listen. After all, Twelfth Magpie’s flagship Share Advisor newsletter, which it has run for almost a decade, provides thousands of paying members with the best share recommendations from across the UK and US markets.

Mark believes there are 6 standout stocks that investors should consider buying right now. Want to check if Tp Icap Group Plc is on the list?

Mark Hartley owns shares in TP ICAP.