At 35, how much would you need to invest every month to target a £12,547 passive income at 65?

Building a decent passive income for retirement takes time, so it makes sense to start early. The longer your money has to grow, the more it will be worth when you finally need it.

So how much would someone in their mid-30s need to tuck away each month to generate £12,547 a year from age 65?

That isn’t a figure I’ve plucked from the air. It’s roughly the current full new State Pension. So this investor’s effectively aiming to double their State Pension income.

Start as early as possible

FTSE 100 and FTSE 250 shares are a brilliant way to build this retirement income because they offer two potential sources of return: dividends and capital growth. Better still, dividends and gains can be sheltered from UK income tax and capital gains tax inside a Stocks and Shares ISA.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

The key’s giving the money time to compound. The earlier investors start, the more time they have to build the pot and eventually turn it into a passive income-producing machine.

Let’s say their portfolio of income stocks yields 5% a year. At 65, they would need £250,940 to generate a second income of £12,547.

Let’s assume the portfolio generates an average total return of 7% a year, during the accumulation phase. That’s roughly the long-term return on the FTSE 100, with dividends invested. The investor also increases their contribution by 3% every year to keep pace with inflation.

Based on that, our 35-year-old would hit that target if they started by investing £156 a month.

There are no guarantees, of course. Share prices fall, dividends can be cut and investment returns will vary. But this illustrates what starting early can achieve.

NatWest shares have delivered

One FTSE 100 dividend share I rate is NatWest Group (LSE: NWG). The bank’s shares have done brilliantly lately, rising 220% over five years, with dividends on top. They’ve slowed slightly, but are still up 36% over the last year.

The trailing dividend yield’s now 4.56%. That’s forecast to climb to 5.33% in 2026 then 5.89% in 2027, as the board keeps increasing dividends.

NatWest is generating plenty of money. Latest results showed attributable profit of £3bn for the first half of 2026. The interim dividend was hiked 26% to 12p per share.

Strong capital generation gives NatWest scope to keep returning money to shareholders through dividends and potentially buybacks. But as with every stock, there are risks. The shares may slow after such a strong run. A weaker UK economy could increase bad debts, as could rising interest rates.

There’s also growing speculation the UK government will increase the windfall tax on FTSE banks in the Autumn Budget, or bar the Bank of England from paying interest on their reserves.

Despite that, I think NatWest’s well worth considering for both income and growth. And I can see plenty more exciting dividend stocks on the FTSE 100 right now.

What income stock do we like better than NatWest Group Plc right now?

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Harvey Jones owns shares in NatWest.