The 19 Sources of Retirement Income: Qualified Dividends
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 the 19 Sources of Retirement Income with a deeper look at last week’s episode. He explains qualified dividends, and how they differ from ordinary dividends. A mix of both can bring you an income stream that is resilient and tax-efficient.
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 takeaways:
- Dividends come from owning stock in a company and are paid to shareholders in regular intervals.
- Owning stocks as an individual—in addition to whatever you own in your investment accounts—provides another income stream to give you redundancy and protection in your retirement plan.
- Your dividend yield should derive from both qualified dividends and ordinary dividends.
- All dividends are ordinary unless they are specifically designated “qualified,” in which case they have to meet certain standards set by the IRS. A company can pay out qualified dividends if:
- It is a US company, publicly traded on a US market, or
- It is a foreign company that either has been incorporated in the US or is part of a comprehensive income tax treaty, and
- The investors hold their shares for a specified set period of time.
- Qualified dividends are taxed at the capital gains rate, which is much lower than your tax bracket for ordinary income and is the primary benefit of this type of dividend. You could pay 20% tax, 15% tax, or 0%, depending upon your income tax bracket
- Having both qualified and ordinary dividends from many different types of companies in different industries and in different countries gives you a resilient, tax-efficient income stream.
At Smallwood Wealth, we want you to accumulate as many of the 19 Sources of Retirement Income as you can. Investing in stocks as an individual gives you a separate stream of income from your retirement accounts and protects your plan from unforeseen events.
For more, 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 phone call. Let’s diversify your income streams for retirement.