Targeting an HSBC ISA passive income of £20,153 a year alongside the State Pension would lift a single retiree to £32,700, the level the Retirement Living Standards research, carried out during 2025 and published in 2026, defines as a moderate retirement for a one-person household.
The State Pension alone falls well short. The full new State Pension pays £12,547 this year, below the £13,900 minimum threshold for a one-person household set by the same survey. A fair amount of supplementary income is needed just to clear the minimum bar, let alone reach moderate.
How much ISA capital does that income target require?
The pot size needed depends entirely on the yield your portfolio generates. At a 4% yield, you would need £503,825 invested. At 5%, that falls to £403,060. At 6%, it drops to £335,883.
Those figures look large in isolation. The stock market’s compounding effect changes the picture considerably. Over the past decade, the average Stocks and Shares ISA delivered a total return of 9.64% a year with dividends reinvested. Invest £250 a month, raise contributions by 3% each year to track inflation, and at that historical rate the pot grows to £663,180 after 30 years, clearing even the most conservative threshold.
All growth and income inside a Stocks and Shares ISA wrapper is free of UK tax. Tax treatment depends on individual circumstances and may change in future.
Why HSBC fits an income ISA
HSBC Holdings (LSE: HSBA) is one stock that income investors return to repeatedly when building an HSBC ISA passive income strategy. The shares have yielded around 5% in recent years, putting the £403,060 capital target within reach for holders generating that level of return.
The financials support the income case. Revenue for full-year 2025 came in at $68.3bn, up $2.4bn or 4% on 2024’s $65.9bn, according to HSBC’s full-year 2025 results. Return on average tangible equity (RoTE) excluding notable items rose to 17.2%, up 1.6 percentage points year-on-year, while constant currency profit before tax excluding notable items increased by $2.4bn to $36.6bn.
The 2024 base was already strong. Profit before tax that year reached $32.3bn, which included a net $1.0bn favourable impact from notable items: principally a $4.8bn gain on the disposal of its Canadian banking business, offset by a $1.0bn loss on its Argentine business and $5.2bn in recycled foreign currency reserves. Strip those out and constant currency profit before tax for 2024 was $34.1bn, according to HSBC’s 2024 annual results. The CET1 capital ratio stood at 14.9% at year-end 2024.
HSBC ISA passive income and the dividend record
HSBC approved total dividends of $0.87 per share in respect of 2024, including a $0.21 special dividend linked to the Canada disposal, alongside a further $2bn share buyback, bringing total shareholder returns for 2024 to $26.9bn across buybacks and dividends, according to HSBC’s 2024 annual results.
For 2025, the total ordinary dividend came to $0.75 per share. Two interim dividends have already been paid: $0.10 per share announced on 29 April 2025 and $0.10 per share announced on 30 July 2025, according to the HSBC dividend timetable. The board then approved a fourth interim dividend of $0.45 per share.
The HSBC share price has risen 60% over the past 12 months and 284% over five years. Adding dividends back in, the total return over five years reaches around 315%.
Geopolitical risk is the primary caveat. HSBC generates roughly two-thirds of its profits from Asia, with significant concentration in Hong Kong and China. Beijing policy risk is real, and a slowdown in global growth would pressure earnings. The income stream is not guaranteed.
For investors prepared to carry that risk inside an ISA, the combination of a 5% yield, sustained buyback activity, and a growing Asian earnings base makes HSBC one of the more direct routes toward the £20,153 target. Pensions UK notes that a two-person household in which both partners receive the full new State Pension (worth £11,973 each in 2025/26) can cover the minimum standard without any additional investment income, but a single person faces a larger shortfall the ISA must fill.
The next signal for income investors will be HSBC’s upcoming interim results, where the board’s next dividend decision will set the yield outlook for the year ahead.
