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Can retirement savers turn to dividend stocks for income?

Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.

Can retirement savers turn to dividend stocks for income?
Shifting to dividend stocks for retirement income can be a great strategy, as dividends offers numerous advantages, according to this article in Barron's. For example, qualified dividends are subject to capital gains tax rates, which are lower than the rate that applies to ordinary income. “If done correctly, dividend-yielding stocks are the gifts that keep on giving,” says an expert.

Senior clients may consider contributing to a Roth account instead of a traditional retirement account before leaving the workforce for good.

Here’s when an annuity might make sense for clients
Annuities can be a great option for clients who are afraid of how political uncertainty can affect their retirement security, a Forbes contributor writes. An annuity can also be a great source of guaranteed income in retirement and also offer tax deferral on savings with no contribution limits, the expert writes. “With a variable annuity, any dividends, interest, or annual capital gains are not taxed and continue to grow within the account,” according to the expert. “Why pay taxes on your investment income when you don’t have to, especially if you’re in a high tax bracket?”

Married couples are in the retirement danger zone
Nearly half of working households are unlikely to continue their pre-retirement lifestyle after leaving the workforce for good, according to an expert in this article in Morningstar. Retirement preparedness is “a serious concern,” says Alicia Munnell, director at the Boston College Center for Retirement Research. “On the one hand, the need for retirement, wealth and retirement income has gone up because we’re living longer... On the income side, we have less coming from Social Security in terms of replacement rates.”

Those that shorted the market suffered “steep losses,” while market-neutral products posted “modest gains.”
November 13

3 retirement mistakes even smart savers make
Cashing out 401(k) assets when switching jobs can be a big financial mistake that many clients make, according to this article in Motley Fool. That’s because clients in the workforce will not only face hefty fees and taxes, but they will also miss out on the opportunity to grow their savings through compounding. They are advised to prepare for a long retirement horizon and not assume that they can continue working as long as they want.

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