A Self Invested Personal Pension (SIPP) is one of the most powerful retirement wealth building tools available. However, shockingly, more than a third of UK adults aged 40-75 have no use or even no retirement savings at all.

Even when looking exclusively at 50-year-olds, the numbers don't get much better. But the good news is that there's still time to build retirement wealth even with just £550 a month. Here's how.

Earn £1000 per month passively

UK state pensions are currently worth £230.25 a week, which is just under £12,000 a year. Alone, that's barely enough to get through. But if you add another £12,000 from your retirement portfolio, things get a little easier.

To earn an extra £12,000, the 4% withdrawal rule shows that the portfolio must be worth at least £300,000. This is clearly not pocket change. But with a time horizon of 17 years, a 50-year-old investor could achieve this when using a SIPP.

Don't forget that SIPPs provide income tax relief. So for someone paying the basic rate of 20%, whenever money is put into a SIPP, they get 20% from the government. As such, a deposit of £550 becomes £687.50 of capital. Investing this money each month at a stock market average of 8% for 17 years translates to £296,860 – almost exactly the target.

Please note that tax treatment depends on each client's individual circumstances and may be subject to change in the future. The content in this article is provided for information 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.

£12,000 is not enough

An extra £12,000 a year, when combined with the state pension, can go a long way. Unfortunately, 17 years from now, due to inflation, this is unlikely to be enough.

As such, rather than relying on index funds, my SIPP portfolio is custom-designed, and contains only the best companies, in my opinion. Why? Because while stock picking involves greater risk, it also opens the door to higher returns. Even if it meant a 4% increase per year, that's all it would take to turn your initial £296,860 into £454,650 – a 53% increase in wealth.

Earning 12% annually is obviously easier said than done. But one stock from my portfolio that could have this potential is Howden carpentry (LSE:HWDN).

Market leader

The fitted kitchen specialist is currently navigating a cyclical downturn within the UK home renovation market, and these headwinds have caused growth to slow to a crawl.

But Howden has proven to be very resilient. In reality, management was profiting from the struggles of its peers and was busy stealing market share. At the same time, operational efficiency improvements across its warehouse network have translated into wider profit margins.

However, none of these accomplishments are reflected in its financial statements…yet. Once the tide turns and economic conditions improve, a recovery in demand could lead to higher revenues and profits for Howden – a tailwind I aim to capitalize on.

When this expected rebound will occur is anyone's best guess. Continued economic weakness may eventually begin to undermine Houdin's strong financial position.

Even if everything recovers as expected, competitors, despite their small size, still pose a real threat, especially if they come out with new designs that outperform Howden's offerings. After all, consumer tastes are constantly changing.

However, I remain cautiously optimistic. That's why I think investors may want to take a closer look at their SIPPs.