The 19 Sources of Retirement Income: Capital Gain Income
Welcome to the Wealth under Pressure Podcast, in which John Smallwood, a certified financial planner, identifies key areas of pressure on your wealth and strategizes with you to reduce it.
In this episode, John continues his series on the 19 Sources of Retirement Income, focusing on the low-taxation income available from long-term capital gains.
John is the author of 5 Ways Your Wealth is Under Attack. He has lectured extensively on financial planning and has received the Five StarSM Wealth Manager Award 6 years in a row.
John’s strength lies in his ability and commitment to continually improve the level and quality of the financial planning process. His dedication to his clients’ growth involves an evolving strategy that strives to meet the demands, desires, and needs of his clients in a continually changing economic environment.
Don’t miss John’s key points:
- Just like qualified dividends (income stream #5 in our 19 Sources of Retirement Income guide), income from long-term capital gains is taxed at much lower rates than ordinary income.
- Capital gain income derives from the sale of assets such as stocks, real estate, cars, and boats.
- In order for the sale proceeds to be taxed at the capital gains rate, you must have held the asset for longer than 12 months.
- Capital gain tax rates are the lowest they have been in the history of taxation at 20%, 15%, or even 0%. (Listen to my podcast on the History of the US Marginal Tax Brackets to find out just how far they’ve fallen.)
- Let’s say you own stocks and are receiving dividends of about 2% on $1 million. If you need more income, you could sell some of the stocks that you’ve owned for longer than one year and pay that low capital gains tax rather than the ordinary income tax you are paying on your dividends.
- Taking advantage of the current low capital gains tax is an important part of your retirement strategy. But don’t put all your eggs in one basket: You don’t know what future tax rates will be.
For more, including nuances like asset depreciation and appreciation, listen here. Then visit us at smallwoodassociates.com and click the “let’s get started” button, connect with us on social media, or call us at (800) 797-1000. Set up a free, no-obligation 30-minute phone call with an advisor to discuss your plan, where your financial pressure is, and how we can be of benefit to you.