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Is it Enough? 5 Steps to Retiring with 2 Million Dollars! 12.08.2021

Having a million very well may not cut it.

''Everybody has a plan until they get punched in the face.''

The stack above represents 100 packets, each containing 100 $100 bills.

This begs the question – Is retiring with 2 million dollars a reasonable goal? A 2020 survey from Schwab Retirement Plan Services found that the average worker expects to need roughly $1.9 million to retire comfortably.

Days versus Decades. Decide which to focus on...

So is $2 million the magic number?

There certainly are a myriad of moving parts involved in answering the question of whether retiring with 2 million dollars is enough, and a number of subjective and objective variables that need unpacking. The recent text thread between our President, Joseph Eschleman, and his wife, Megan, sums this concept up in a simple but perfect way:

Stick to your investment strategy - Do not turn temporary declines into permanent losses.

How pragmatic is it to consider retiring with 2 million dollars tucked away in your nest egg? Is retiring with two million dollars even enough money to truly be comfortable, especially considering today’s rampant inflation? Does retiring with 2 million dollars require that you work until you are 75 or 80 years old? And what do the nebulous and subjective concepts of “comfortable” and “retirement” even mean?

While they are tremendously important ideas (or perhaps abstractions) to define when answering the question of whether retiring with 2 million dollars is “doable” (and is enough money), we will reserve opining on what “comfortable” and “retirement” means to the intimate conversations we have with each of our current and prospective clients. Needless to say, different people define these two terms very differently. Instead, let us explore five specific steps that will put accumulating 2 million dollars within reach for you, while leaving yourself enough time in retirement to actually enjoy and spend some of it! And no, playing and winning the lottery is not one of the steps…

Step 1 – Don’t Wait, Start Investing NOW!

The fastest path to retiring with 2 million dollars, in our opinion? Drop everything, stop reading this newsletter (!), establish a plan to begin investing, and immediately begin to pay yourself first. Right now! As you can see below, the sooner you start, the more time your assets have to compound and grow:

And if you already are proactively saving and investing, stop reading this newsletter (!), drop everything, and make an incremental increase to the dollar amount, or percentage, or both, that you consistently add to your nest egg. When it comes to retiring with 2 million dollars, time is money, and the sooner you start to invest, and the more consistently you do so, the easier it will be to hit this very achievable goal.

Step 2 – Properly Diversify Your Investment Portfolio, and Be Wary of Individual Stocks!

The idea of diversification is basic yet essential to most investors. Unless you are truly willing to lose everything, do not put all of your eggs into only one or two baskets. Protecting against the risk of “significant shrinkage” of your retirement nest egg is critical; it is important (we argue essential) to allocate your resources and investments over a broad spectrum of asset classes and sectors:

Being diversified does not assure a profit nor guarantee against a loss, but it does help to insulate your retirement nest egg against major market declines. Retiring with 2 million dollars is a lofty goal, and the importance of managing your downside should be as much of a priority as consistently growing your portfolio. Adding additional types of assets to a portfolio will help it last longer, and help you avoid major pitfalls in your journey towards a financially-independent retirement.

Additionally, we believe it is important to exercise extreme caution when considering investing in individual stocks. While it can be fun and “sexy” to own specific companies, investing is not meant to be fun nor sexy. Do not confuse speculation with investing.

Chase individual stocks at your own risk. Individual equity ownership oftentimes becomes a short-term bet – even an outright gamble – which is the antitheses to a longer-term strategy geared to helping you retire with $2 million. While all investing involves risk, this risk materially increases when focusing on or owning just a few stocks. The statistics bear this out:

Source: Morningstar, 12/31/2020

History is replete with examples of blue-chip companies that have crumbled miserably, and correctly picking a long-lasting, top-performing stock is usually a product of blind luck rather than skill. Don’t be overconfident in either your acumen to evaluate the investment merits of a single company or stock, your ability to consistently predict the future, nor your ability to consistently guess correctly which individual equities might outperform.

A little boring? Perhaps. But being boring and disciplined in how you grow, protect, and diversify your nest egg, is an excellent way to improve your odds of successfully retiring with 2 million dollars.

Step 3 – Take Advantage of FREE MONEY

We believe that there is no EASIER way to compound your wealth and improve your odds of retiring with 2 million dollars than by fully understanding, and then maximizing all employer matching program opportunities within your company sponsored retirement plan:

If your employer offers a match, be sure to find out the following:

  • Is there a waiting period until you are eligible for it? Common waiting periods are six months, twelve months, or sometimes no waiting period
  • What is the actual formula your employer uses to compute their match? Put differently, what percentage of your own contributions will your employer match? $0.50 on the dollar? Dollar for dollar? Up to what maximum of your contributions?
  • How much do you have to contribute to qualify for the match? Oftentimes, you have to contribute a minimum amount of your pay into your company-sponsored retirement plan in order to receive the maximum match, which hopefully is not a problem in your pursuit of retiring with 2 million dollars…!
  • When do the company matching contributions vest? Put differently, how long do you have to wait, or work for your employer, before the company’s matching contributions are 100% yours to keep?

Another form of FREE MONEY that employers may offer is a profit sharing plan, in which employers give workers a portion of the company’s profits in the form of pre-tax cash contributions to an employee retirement account.

Regardless of what the rules are, or in what form the FREE MONEY is packaged, if your employer makes available matching contributions and/or profit sharing, taking full advantage of it makes retiring with 2 million dollars that much easier.

Step 4 – Don’t Panic When the Market Declines

A market decline of 10% or more is also known as a correction. And they happen regularly. How regularly? On average, once a year!

If you are able to develop and cultivate a mindset that allows you to anticipate, perhaps even expect, a market correction (decline) to happen, you will be much less inclined to hurt yourself by getting scared, hitting the panic button and selling low to “stop the bleeding.” Don’t kid yourself, this happens, regularly, even to investors who posture as “disciplined,” “objective,” and “unemotional.”

Want to improve your probability of retiring with 2 million dollars? Be smarter than your neighbor, know that declines happen, and that there will be years when you have less money on December 31 than you did on January 1. It is never fun, and can even be be outright painful, to experience a year-over-year decline in the value of your overall net worth, but enduring these periods is absolutely necessary. Fortunately, history has continually proven and strongly suggests that the odds are in your favor, especially if you have a little bit of time to patiently wait for the recovery to occur:

Who summarized this concept best? We are torn. Please click HERE and vote for your favorite!

I.     The legendary investor Peter Lynch:

II.     The legendary investor Shelby Davis:

III.     The legendary investor Warren Buffett:

Step 5 – Trust in America, and Own Real Estate

Stocks, bonds, and mutual funds are wonderful investment vehicles, and are excellent tools to build wealth. However, like any investment vehicle, they have their drawbacks – namely, they can be volatile, tax inefficient, intangible, and expensive to leverage. Contemporaneously, real estate is a wonderful investment vehicle to build and accumulate wealth, for reasons similar to stock/bond/mutual fund ownership, and also for a number of reasons that are quite different.

Real estate values, like the stock market, predictably increase over time. This long-term growth is representative of the value continually created by the advancements in our standard of living and in our economic productivity, both here in America and globally.

The growth in the value of stocks, bonds, and real estate is directly correlated to the continued growth of our gross domestic product, or GDP.

Put differently, and we would argue much more eloquently, by Warren Buffett:

“The American miracle, the American magic has always prevailed, and

it will do so again. Nothing can basically stop America.

Don’t let the negativity of today’s 24/7 news cycle (in which bad news sells!), sway your opinion – we live in an amazing place, in an amazing point in time. Please click below for an excellent 1-minute video of Warren supporting his opinion, shot on May 2, 2020, just months after the coronavirus shock began:

Let’s look closer at two main reasons to own real estate:

1. Income tax benefits

When insidious income taxes are avoided or deferred, retiring with 2 million dollars becomes much easier, as compounding the growth of your overall investment portfolio occurs much more quickly when Uncle Sam is not taking a big bite out of your nest egg. Consider:

Income tax breaks and deductions. There are a myriad of tax breaks and deductions potentially available to real estate investors that are not available to those who invest in stocks, bonds, and mutual funds. Deductions of the expenses associated with owning real estate (property taxes, property insurance, mortgage interest, property management fees, maintenance and repair costs, advertising, legal and accounting fees) are oftentimes tax deductible, as is depreciation.

Section 1031 tax-free exchanges. A 1031 exchange allows an investor to do a tax-free swap, or exchange, of one investment property for another one, while deferring the payment of capital gains taxes on the transactions. Unfortunately, “1031s” are not allowable nor applicable to the sale of traditional stocks, bonds, nor mutual funds.

Capital gains tax exemption on the sale of a primary residence. If you are single, you will pay no capital gains tax on the first $250,000 of profit on the sale of your primary residence; married couples are entitled to a full $500,000 exemption. And while this $250K/$500K exemption is allowable only once every two years, it is a very powerful way to have more of your money compoundwithout paying Uncle Sam, as you pursue the goal of retiring with 2 million dollars. Additionally, many people consider moving and downsizing their primary residence as they enter into retirement, which can potentially unlock significant equity that can then be added to your retirement nest egg.

2. Leverage

While all-cash transactions have recently become more popular in today’s red-hot and competitive real estate market, the most common way to buy real estate continues to be by borrowing money to do so. This is also known as leverage. While it can be a double-edged sword (problems can quickly arise if property values decline, too much money is borrowed, or the interest paid on borrowed funds is too high), leverage provides a wonderful opportunity to own MORE of an asset for less money, expanding your potential to see your nest egg grow.

The simplest example of leverage is the down payment “obligation” when purchasing a primary residence. You typically only have to put down, 20% of the cash to buy and own100% of the asset! And while the borrowing and down payment terms may not be quite as favorable, the same leverage opportunity holds true when buying and owning investment real estate. In today’s ultra-low interest rate environment, larger amounts of money can be borrowed more cheaply (read: at lower interest rates), affording investors additional leverage when building and growing their overall net worth. This can be quite helpful in accomplishing the goal of retiring with 2 million dollars!

Bonus Step – AFTER You Have Retired with 2 Million Dollars – Pick the Right Place to Retire

Clearly, maximizing your lifestyle post-retirement requires attention to the cost of living. Stretching a dollar is always important, and retiring with 2 million dollars “buys” you options, specifically, on where you choose to live.

Click the thumbnail below for the ThinkAdvisor.com slideshow that focuses on the 8 Best U.S. Cities for Retirement Over the Past 5 Years:

It is important to note that accumulating enough money is only Act One when determining whether retiring on $2 million is feasible. Figuring out how to properly, and sustainably, withdraw money (AKA decumulate) from your nest egg is Act Two, and is just as, if not more important to get right. A way-too-simplified back-of-the-envelope computation might look like this:

  • $2,000,000 nest egg x 3.5% annual withdrawal rate = $70,000/year
  • $70,000/year – 25% in assumed federal and state income taxes = $52,500/year net retirement income, or $4,375/month

Information is intended to be general in nature, for simplistic illustrative purposes only, and is not intended to serve as Investment

advice, since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances.

However, there are a myriad of additional variables and considerations that factor into this “retirement calculus.” What about pensions? Inflation? Social Security? Income from part-time work? Variability in market growth and investment returns? Appropriateness and sustainability of a 3.5% annual withdrawal rate? Increases in health care and insurance expenses as you age? Legacy and philanthropic planning and objectives? The list of important and yet very subjective considerations goes on and on. When developing a customized retirement income plan, the nuance in working through and deciphering each consideration cannot be understated.

Is retiring with 2 million dollars doable? Is $2 million enough to be happy and comfortable? As our President communicated to his wife, “it depends ,” and without a much deeper analysis of the variables mentioned above, it can be very difficult to accurately answer. However, what we can say with confidence is that if you have, or have nearly, accumulated $2 million for retirement, you have an excellent head start, and have probably secured yourself many attractive options. In our opinion, wealth is not defined by a set amount of dollars, but by the freedom it affords you. And having options and choices on how to live your life is the essence of what freedom, and retirement, truly is.

What’s Happening at TPW?

When the cat’s away, the mice will play!

A happy Towerpoint Wealth family (minus President, Joseph Eschleman) enjoyed a pre-Thanksgiving lunch (complete with oysters) together at Camden Spit & Larder in downtown Sacramento!

Our President spent his Thanksgiving week in Surf City, USA (AKA Huntington Beach, CA), where he enjoyed a successful day of deep sea fishing. That’s a California scorpionfish on Joseph’s line – don’t touch those dorsal spines, they are very poisonous!

While our entire TPW family was out of the office on the Friday after Thanksgiving, we were all still working (with some help from the little ones!) in our respective WFH offices!

Chart / Infograph of the Week

Inflation is no longer being called “transitory” and is now here more permanently, according to Federal Reserve chairman, Jerome Powell.

Thanks to Visual Capitalist for the infographic below. Understanding that it has been virtually impossible to avoid, please reply to this email and let us know what recent purchase you’ve made where you have specifically noticed today’s inflationary pressures.

Quote of the Week

In the spirit of the Thanksgiving holiday, we enjoyed American Trappist monk, writer, theologian, mystic, poet, social activist, and scholar Thomas Merton’s quote below…

Cartoon of the Week

A snarky and insightful cartoon from Real Life Adventures, roasts not only how buying high and selling low is an all-too-common problem, but also how novice investors lose money and disciplined investors make money during a market panic.

Ah, the folly of the investing world…

As the 24/7 news cycle churns, twists, and turns, a number of trending and notable events have occurred over the past few weeks:

As always, we sincerely value our relationships and partnerships with each of you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to reach out to us at any time (916-405-9140info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an extremely unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

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– Joseph, Jonathan, Steve, Lori, Nathan, and Michelle

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Social Security Explained 09.07.2021

Imagine you are offered a job, and you are counting on it to provide income for you and your family for many, many years. But you didn’t ask about 1.) starting date, 2.) salary, nor 3.) benefits.

Now, change “job” to “Social Security” and you get a sense of the general lack of knowledge many Americans have about this bedrock retirement income stream.

Are you, or will you be, eligible for Social Security benefits? Do you have concerns about the solvency of the Social Security system? Are you confused about when to start taking your social security benefit—about whether to take it early or wait? Are there things you don’t understand about spousal benefits? You aren’t alone.

Towerpoint Wealth is a boutique wealth management firm in downtown Sacramento. In this post, Towerpoint’s CEO, Joseph Eschleman, will help you answer these important questions about your social security benefits.

Social Security is an essential retirement income stream for many Americans, and it is also a confusing, complicated, and evolving system, one that is next to impossible to properly navigate without a complete and thorough understanding of the rules. Importantly, knowing when to take Social Security —claiming your Social Security benefits at the RIGHT TIME—means SIGNIFICANTLY more money in your pocket.

With this post, we seek to accomplish three things: 1.) social security explained 2.) review a number of important yet oftentimes misunderstood filing strategies, and 3.) discuss what lies in store for the future of the $2.9 TRILLION Social Security trust fund.

Social Security Benefits 101

Back in 1935, President Theodore Roosevelt signed the Social Security Act, creating a social insurance program designed to give older Americans an additional income stream in retirement. Current American workers pay Social Security taxes to provide benefits to those who are eligible to receive Social Security right now.

Typically, the amount you receive from Social Security will increase or decrease based on when you elect to claim your benefit, relative to what is known as your FRA, or full retirement age. When you were born will determine what your FRA is. If you were born between 1943-1954, your FRA is 66. If you were born after 1954 but before 1960, the FRA gradually climbs from 66 towards 67, based on the year you were born, increasing two months every year. For example, if you were born in 1956, your FRA would be 66 + four months. Lastly, and much more simply, if you were born in 1960 and beyond, your FRA is 67.

To be eligible for Social Security benefits, you must earn a minimum of 40 “credits” throughout your working career. You can earn up to four credits a year, so it takes a minimum of 10 full years of work to qualify for Social Security.

Your specific Social Security benefit is computed based on the 35 calendar years in which you earned the MOST money. You can increase your Social Security benefit at any time by replacing a low, or zero, income year with a year in which you earned a higher income. Importantly, Social Security benefits do have a maximum, depending on the age you retire. For someone at full retirement age (or FRA), the maximum monthly benefit is $3,113 in 2021. If you wait until age 70 to file, the maximum monthly Social Security benefit amount is $3,895.

Social Security protects you against inflation through what are known as cost of living adjustments, or COLAs, which help beneficiaries keep up with ever-increasing living expenses. This inflation protection is extremely valuable, especially in today’s inflationary environment. While the Social Security COLA for 2021 was “only” 1.3%, many estimate that the COLA in 2022 could be higher than 6%!

When to Take Social Security – Social Security Explained

Now that you better understand how Social Security works, let’s discuss optimizing when and how to take it. Many people have multiple sources of income in retirement, which can impact the decision about when to claim Social Security. This is an extremely important decision, and here at Towerpoint Wealth, it is one that we work closely with our clients to get right, as there are a myriad of variables, rules, and assumptions that must be accounted for when developing a customized strategy for yourself.

You are allowed to begin collecting Social Security as early as age 62, but taking your benefit early will result in a major haircut, reducing your benefit by as much as 25 or 30% as compared to waiting until you reach your FRA. Obviously waiting until your full retirement age will result in receiving 100% of your earned benefits, but importantly, you can also choose to delay claiming your Social Security benefit, all the way to age 70 if you would like.

Should I wait to take Social Security?

There is a big economic incentive to waiting, as your monthly Social Security benefit will grow an additional 8% (!) a year until age 70. Add in any cost of living adjustments, which also are included if you wait, and the financial incentive to delay claiming Social Security becomes even greater. With certain Towerpoint Wealth clients, we will set up a supplemental, or “bridge income” plan, and have you temporarily withdraw more money from your nest egg for just a few years to allow your Social Security benefit time to grow larger. Additionally, waiting to claim your Social Security income can benefit your heirs, as a higher earning spouse can ensure their lower-earning spouse will receive a higher survivor benefit in the event the higher-earning spouse dies first. Not always fun to talk or think about, but life throws us lots of twists and turns that need to be considered.

Some individuals implement what is known as a “split strategy” in which the higher wage earner waits to take their benefit, but the lower wage earner claims their Social Security early, getting cash flowing into the household sooner, and yet ensuring that whoever outlives the other will receives the highest possible survivor benefit.

Children, family, and divorcee benefits

Additionally, unmarried children can receive Social Security benefits if they are younger than age 18, or between 18 and 19 and a full time student, or 18 or older with a disability that began before age 22. To get benefits, a child must have a parent who is disabled or retired and entitled to Social Security benefits; or a parent who died after having worked long enough in a job where they paid Social Security taxes. Benefits stop when your child reaches age 18 unless your child is a student or disabled.

Within a family, a child can receive up to half of the parent’s full retirement or disability benefit. If a child receives Survivors benefits, he or she can get up to 75 percent of the deceased parent’s basic Social Security benefit.

Widows and widowers are also eligible for Social Security benefits, as are divorcees. Just like a regular spousal benefit, you can get up to 50% of your ex-spouse’s benefit, or less if you claim early, before full retirement age.

Is your head spinning yet??

You can reverse your Social Security claim

Complicating things further, you can always “take a mulligan” and undo a Social Security claiming decision, and while Social Security benefits were tax free prior to 1984, they aren’t anymore, and you will have to pay federal taxes on your Social Security benefit. For those who are upper middle income or upper income, 85% of a security benefit is taxable, and 15% is tax free. Additionally, 13 states also assess state income taxes on benefits.

Social Security Solutions

Now, it is no secret that the Social Security system is stressed and is facing challenges. With the COVID-19 pandemic causing record-high unemployment, coupled with many people retiring or changing careers, there are fewer people paying into the system now than ever, and estimates that Social Security will run out of funds even faster than projected even two years ago have created large concerns.

However, it is very important to realize that changes to the system have occurred regularly since its birth in 1935, and politicians, while reticent to make difficult decisions until they absolutely have to, have consistently drafted legislation to address these Social Security financial problems and economic shortfalls. And here at Towerpoint Wealth, we feel that our elected leaders have quite a few options at their disposal: 1.) Increasing the Social Security, or FICA, payroll tax. Currently, each worker pays 6.2% and the employer also pays 6.2%, for a 12.4% total payroll tax. Increasing this tax, while not popular, is always an option to shore up the system. 2.) Increasing the FRA, or full retirement age, for younger workers, has historical precedent and could be politically attractive to provide economic support to the Social Security system. 3.) Instead of tying Social Security COLA benefit increases to the consumer price index, or CPA, the government could make a shift to what is known as the “Chained CPI,” which reduces the amount a benefit will go up over time, and 4.) our politicians could always increase the earnings CAP on Social Security taxes.

Currently, the limit on the amount of earnings subject to Social Security taxes is $142,800. If the cap were fully removed, the Social Security system would be fully solvent. President Biden’s tax plan proposes a donut hole for Social Security taxes, where the first $142,800 is taxed, as well as any income over $400,000. Needless to say, it remains to be seen what solutions will be implemented, but fortunately the government has a number of arrows in its quiver to address these shortfalls. Bottom line – if you want to take Social Security early, we strongly encourage you to consider two things: 1. “The system is going bankrupt” is a poor reason for doing so, and 2. The pay raise that you earn by waiting is compelling.

Reach out to Discuss a Sound Social Security Strategy

Ensuring that you have a sound and well thought out Social Security claiming strategy can literally mean hundreds of thousands of additional dollars in benefits in your pocket. Please share this article with your friends who are thinking about Social Security. And please, email us at info@towerpointwealth.com to begin a conversation about developing an optimized strategy for you, to determine the best year and month for you and/or your spouse to begin claiming your Social Security benefit.

Joseph Eschleman, CIMA®, Certified Investment Management Analyst, CIMA®

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Worried About The Obscurity of YOUR Social Security? 07.30.21

Imagine you were offered a job, and were counting on it to provide income for you AND your family for many many years. BUT, you didn’t ask about 1.) the starting date, 2.) the salary, nor 3.) the benefits!

Now, change ‘job’ to ‘Social Security’ and you get a sense of the general lack of knowledge many Americans have about this bedrock retirement income stream.

However, why is the very foundation of retirement security for millions of Americans so confusing? When should you take your Social Security benefit? Early at 62? At normal retirement age (NRA)? Delay and take it at 70?

Social Security Benefits waiting until 70

Do you have concerns about the solvency of the Social Security system (hint: as long as workers and employees pay payroll/FICA taxes, it’s not going anywhere), and how that might affect your benefit?

Social Security Explained system

Have you heard of Social Security spousal benefits and survivor benefits, but not sure you understand how they work?

Social Security spousal benefits survivor social security benefits

Social Security Explained | Other FAQ’s about Social Security include:

  1. What exactly is Social Security?
  2. When am I eligible for Social Security?
  3. How is my eligibility determined?
  4. How much do I pay in to the Social Security system?
  5. How much will I get from Social Security?
  6. What happens to my Social Security benefit if I still work?
  7. Do I owe taxes on my Social Security income?
  8. How do I qualify for Social Security disability benefits?
  9. What is the average Social Security benefit?
  10. What will COVID-19 do to Social Security?

Still confused? Have more questions? Hungry for clear answers? Found below is a simple educational video we just produced, designed to break down the complicated topic of Social Security, specifically arranged in a digestible and easy-to-understand format.

Click HERE to watch the video!

Towerpoint Wealth social security explained

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Understanding it is an imperfect system, Social Security continues to be a central and essential component of the retirement income planning and optimization we do with virtually all of our clients at Towerpoint Wealth, with literally hundreds of thousands of dollars at stake depending on how you claim it.

What’s Happening at TPW?

Most of the Towerpoint Wealth team spent some time earlier this week prepping new backpacks full of back-to-school supplies we purchased for low income and homeless students in the greater Sacramento area.


Cheers and thumbs up to Jesuit High School here in Sacramento for coordinating this program, as it is enjoyable to do little things like this to give back and help our local community.

Towerpoint Wealth Backpack Packing for jesuit high donation 7_27_2021

Happy 37th birthday on Wednesday to our smart, YOUNG, fun, sincere, affable, and hard-working Partner, Wealth Advisor, Jonathan LaTurner. Jon’s amazing birthday dinner was held at Canon | East Sac, and his amazing birthday cakes were prepared by Freeport Bakery – mmmmm!

Towerpoint Wealth Partner Wealth Advisor Jonathan LaTurner

Graphs of the Week

Some say low interest rates, a perennial shortage of housing supply, and the new geographic mobility of would-be homebuyers all mean the white-hot real estate market has more room to run (click HERE to watch an excellent TPW-produced video on this subject).


Others believe the OPPOSITE – that soon-to-be rising interest rates, artificially-high prices, the end of mortgage forbearance and foreclosure moratorium programs, and the divergence between home prices and wages all portend an upcoming end to the massive residential real estate bull market.

What do you think is going to happen to home prices over the next 12 months? Click HERE to message us and let us know your thoughts!

More room to run for home prices?

interest rates home prices

or the end of the road for price increases?

Price increase home divergence

As the 24/7 news cycle churns, twists, and turns, there have been a number of trending and notable events have occurred over the past few weeks:

As always, we sincerely value our relationships and partnerships with each of you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to reach out to us at any time (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an extremely unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

Click here to Download

– Joseph, Jonathan, Steve, Lori, Nathan, and Michelle

Towerpoint Wealth Sacramento Independent Financial Advisor
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NEW Rules to Ensure That Your Retirement is SECURE? 07.09.2021

Here we go! “How much do I need to retire? How much in retirement savings should I have?” – two questions virtually all of us have asked ourselves as our non-working, non-earning years draw closer.

If (or perhaps we should say WHEN) the Secure Act 2.0 becomes law, many pre-retirees will have a myriad of additional new options and opportunities to save and invest for retirement, and to build and protect their net worth. And while there is no such thing as a “sure thing” in Washington D.C., the Securing a Strong Retirement Act of 2021 has bipartisan support, and was approved unanimously by the House Ways and Means Committee just over two months ago.

What is changing, and what kind of new net worth building and retirement saving options and opportunities will be available? Click the link below to watch an engaging six-minute educational video that we just recently published, featuring our President, Joseph Eschleman, *jam-packed* with information highlighting six MAJOR ways your retirement savings plan may change (for the better!) if the Secure Act 2.0 becomes law:

Click HERE to watch Joe’s video.

Build Wealth Joseph Eschleman Secure Act 2.0 You Tube Retirement Savings

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“How much savings do I need for retirement?” is a question we look forward to helping clients, colleagues, and friends (i.e., YOU) succinctly and tangibly answer. We specialize in retirement income planning, and – understanding how unique everyone’s personal and financial circumstances are – we encourage you to click HERE to contact us and begin a no-strings-attached dialogue about how to answer this important question for yourself.

Shifting gears, the June 23 cryptocurrency/Bitcoin webinar we hosted along with our partners at Eaglebrook Advisors was extremely well-received. Please click on the story tile below to read Eaglebrook’s latest white paper, Bitcoin’s Role in Model Portfolios, and if you missed our 6/23 webinar…Click HERE to watch the replay!

Bitcoins Role in Model Portfolios

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What’s Happening at TPW?

Our President, Joseph Eschleman, and Director of Tax and Financial Planning, Steve Pitchford, couldn’t be happier being vaccinated and getting back out to spend IN PERSON face-to-face time with a number of important Towerpoint Wealth clients and colleagues!

Joseph and Steve Shaffer in downtown Davis, CA

johnny and dorace lynch joe Towerpoint Wealth Sacramento Wealth Management

 Joseph, Dorace Lynch, and Johnny Lynch in Vacaville, CA

bill kendall and nancy kendall meeting with steve and joe retirement savings


Joseph, Nancy Kendall, Bill Kendall, and Steve in Elk Grove, CA

Cartoon of the Week

As the cartoon below illustrates, inflation is not always immediately visible, and not always “feelable” (although if you have purchased a tank of gas, a new home, or a new or used car lately, your wallet has certainly felt it!) and its insidious nature can be quite problematic when investing to grow your net worth. Trying to answer the question “How much do I need to retire?” cannot be done without considering the impact that inflation will have on the cost of your future retirement lifestyle.

inflation and summer of recovery

At Towerpoint Wealth, we feel that avoiding risk when investing (i.e. prioritizing that your nest egg and retirement funds do not fluctuate up and down in value) by focusing on owning CDs, money market funds, and cash “safely” in the bank, is akin to letting inflation peck away and erode your net worth. We believe that “risk,” in and of itself, is not a bad thing – it is one of the few variables we have direct controlover. The binary question of “if” risk should be taken is inappropriate in our opinion – instead, we believe that evaluating, measuring, and justifying exactly howmuch and/or what level of risk should be taken is the more important consideration.

Highlighted by the deterioration in value (in REAL dollars) that “safe” investments can and oftentimes do experience due to inflation (and income taxes), it is important to understand that both “safety” and “risk” are relative terms, and to think critically about both concepts when developing, implementing, and managing a customized financial, investment, and retirement plan and strategy.

first class mail Stamp cost

In addition to new legislation and inflation gyration, a number of trending and notable events have occurred over the past few weeks:

As always, we sincerely value our relationships and partnerships with each of you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to reach out to us at any time (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an extremely unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

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– Joseph, Jonathan, Steve, Lori, Nathan, and Michelle

Towerpoint Wealth Sacramento Independent Financial Advisor
Steve Pitchford No Comments

Is Your 401(k) in Disarray 03.29.2021

As a small business owner, we know that you are an “around the clock” grinder, with a myriad of responsibilities that often supersede the core responsibilities you have to the growth of your business. And understanding that a regular review of your business’s retirement plan may not be a top priority of yours, at Towerpoint Wealth we have created this 401(k) “healthcheck” for your benefit. We regularly come across 401(k) and other company-sponsored retirement plans that, as currently structured, are in serious need of attention and improvement, and we are experienced in helping you, as a trustee and fiduciary to your company’s retirement plan, minimize the hassle of giving your plan the attention it needs.

Is your 401(k) plan structured and optimized properly to help you and your employees maximize the myriad of economic, investment, and tax benefits? Are you properly managing your fiduciary responsibility? Ask yourself the questions found below to quickly gauge whether your 401(k) needs adjusting or improving.

 Does my plan have a safe harbor structure?

You want to ensure that your 401K) retirement plan passes the annual non-discrimination testing conducted by the IRS. In its simplest sense, non-discrimination testing ensures that an employer is making contributions to each employee’s retirement account that equals the same percentage of salary for everyone. Importantly, if a plan fails a non-discrimination test, the 401(k) may lose its tax-qualified status.1

Retirement Plan 401(k) Disarray Towerpoint Wealth White paper 2021

[1]The most common reason a 401(k) plan fails this non-discrimination testing is when one or more of the business owners make much greater 401(k) contributions compared to their employees.

A safe harbor 401(k) plan structure ensures that you meet the non-discrimination regulatory requirements by following strict guidelines specific-to employer plan contributions, participant disclosures, and much more. 

Does my plan have a profit-sharing component and if so, am I optimizing its structure?

For a business owner to maximize the personal net worth building benefits associated with sponsoring a company retirement plan and receive the maximum 401(k) annual contribution amount of $58,000 in 2021[1] (employee deferrals + employer contributions), pairing a profitsharing component in the plan’s design is essential.

All profit sharing plan structures – same dollar amount, comptocomp, new comparability, etc.[2] – are not created equal. In particular, the new comparability strategy is becoming increasingly more common in modern 401(k) plans as this type of profit-sharing plan allows for unique flexibility in allocating the profits among the business owner(s) and employees.

Is my investment fund lineup optimized?

401(k) investment fund lineups vary from basic to advanced and passive to active. And with employees having better and more diverse investment options outside of 401(k) plans, annually reviewing your company’s fund lineup for improvements is critical to ensure that employees do not look to invest their hard-earned dollars elsewhere, and also to meet your fiduciary responsibility as plan trustee.

It is also a requirement that a business owner (usually with help from an investment professional) formulate, and review at least annually, an investment policy statement (IPS) for their 401(k).

Is my ERISA fidelity bond fund amount appropriate?  

The Employee Retirement Income Security Act (ERISA) requires 401(k) plans to hold a fidelity bond, which protects the plan from losses resulting from improper handling of the funds.

While fidelity bonds are generally inexpensive for the coverage offered, we often see the amount protected as either 1.) inadequate or 2.) overkill.  

[1] Increased to $64,500 for business owners 50 years of age or older.

[2] There are often several different terms that refer to the exact same type of profit-sharing structure.

Does my plan currently allow for after-tax Roth contributions?

While changing for the better, many 401(k) plans still do not allow after-tax Roth contributions. 

For business owners and employees that are in a temporarily low income tax bracket –  a business owner “winding down” and closing in on retirement or a younger employee at the beginning of their career and earning curve – offering an after-tax Roth contribution option, particularly given it typically costs nothing to do so, is a valuable and often overlooked plan benefit.

Is my vesting schedule appropriate?

Retirement Plan 401(k) Disarray Towerpoint Wealth White paper 2021

In order to incentivize employees to stay with your company, having a vesting schedule for any  employer-matching profit sharing contributions that is not overly generous is important. For a number of Towerpoint Wealth’s clients who are business owners, a vesting schedule of six years (with 0% vesting in the first year of participation) is appropriate, but each business and retirement plan is unique.

Have I considered automatically distributing an employee’s 401(k) balance when they leave the company?

Many 401(k) plan administrators charge their fees based on the number of employees that the plan has. 

In order to keep fees to a minimum, it is advisable to consider automatically distributing account balances below a certain threshold when an employee separates from service.

Am I managing my fiduciary responsibility and minimizing my fiduciary liability?

All business owners who offer a 401(k) for themselves and their employees have a fiduciary responsibility to ensure that they are acting in the employees’ best interests, being prudent, diversifying plan investment assets, and adhering to all provisions of the retirement plan documents.

There are concrete steps that a business owner can take to uphold their fiduciary duty and at the same time, minimize their fiduciary liability.

Retirement Plan 401(k) Disarray Towerpoint Wealth White paper 2021

Wealth management firms that specialize in helping business owners optimize their retirement plans, such as Towerpoint Wealth, are able to help guide you through these murky waters.

Am I doing everything I can to maximize my own personal net worth within my company’s retirement plan?

Even if a small business owner has a well-structured plan that meets everyone’s needs, is it important to remember that 401(k)s, and other types of company-sponsored retirement plans, are uniquely customizable. And often, there are overlooked plan features that may help the business owner maximize their ability to accumulate wealth within the plan. 

One of these particularly powerful features is allowing for after-tax deferrals (not the same as after-tax Roth deferrals), which then affords the business owner to take advantage of the “Mega Backdoor” Roth IRA strategy.

Some other questions that are worth your thoughtful attention: Do I allow for hardship distributions and if not, should I? What about allowing rollovers from other retirement plans? Is it risky to offer loans to employees? Are my plan’s expenses and fees reasonable?

How Can We Help?

Steve Pitchford, CPA, CFP®
Director of Tax and Financial Planning

At Towerpoint Wealth, we are a legal fiduciary to you, and specialize in optimizing retirement plan structures for business owners.. If you would like to speak with us regarding any other tax questions you may have, we encourage you to call (916-405-9166) or email (spitchford@towerpointwealth.com) to open an objective dialogue.

Towerpoint Wealth, LLC is a Registered Investment Adviser. This material is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Towerpoint Wealth, LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Towerpoint Wealth, LLC unless a client service agreement is in place.


Towerpoint Wealth No Comments

The Donald vs. Joe – Which Way Will Your Income Taxes Go?

As of yesterday, more than 17 million people across 44 states and Washington D.C. have already voted. It is projected that a record-setting 150 million people will vote in 2020’s presidential election, representing approximately 65% of eligible voters, which would be the highest rate since 1908! As a country, we are truly rocking the vote this year!

For many voters, considering and sorting through all of the complicated issues can sometimes be a confusing and overwhelming responsibility:

As is typically the case, income taxes rank highly on the list of topics important to voters. According to a mid-September Gallup poll, 61% of voters said that the presidential candidates’ position on income taxes was either an extremely important or very important influence on who they vote for.

Understanding the upcoming election will be pivotal when it comes to tax policy, as well as how divergent the two candidates are regarding virtually every single issue, the dichotomy between Trump and Biden in tax policy and philosophy should come as no surprise. Both candidates have a plan, each with far-reaching consequences, for the following:

  • Individual tax rates
  • Capital gains and dividends
  • Individual tax credits and deductions
  • Education tax credits
  • Corporate taxes
  • Payroll taxes
  • Estate taxes

Hungry for more information?

  1. Click HERE for a concise “low down” on each candidate’s position on the major tax issues, courtesy of Grant Thornton.
  2. Click HERE For a fresh (filmed just this morning) take from Michael Zezas, Head of U.S. Public Policy Research at Morgan Stanley, on what Biden and Trump’s tax policy proposals mean for investors, the markets, and the election.

What seems to be clear is that who wins in November could very well spell the difference between cementing the Tax Cuts and Jobs Act of 2017 as a permanentshift in U.S. tax policy, or instead, reversing major portions of this three-year-old legislation in favor of more progressive tax policies.

Either way, let’s not forget that there almost assuredly will be a substantial difference between what is promised on the campaign trail and what actually passes into law!

What’s Happening at TPW?


Lori and Raquel. On Tuesday. Together. With Bob Ross (on the right)! That’s all. 

Our President, Joseph Eschleman (and his wife, Megan Eschleman), and our Partner, Wealth Advisor, Jonathan LaTurner (and his fiancée, Katie McDonald), escaped to Oregon to do some wine tasting in the Willamette Valley this past weekend!

TPW Service Highlight – Tax Minimization Planning

Keeping with the theme of today’s newsletter, we at Towerpoint Wealth believe our energy is best spent helping our clients plan for things we have some control over, while being aware of, but not reactionary to, things we do not. And while paying taxes is as exacting and constant today as it was the day Benjamin Franklin penned his famous Death and Taxes quote in 1789, that doesn’t mean it can’t be planned around and minimized.

We are fortunate to have two team members who are licensed CPAs here at TPW, our Director of Tax and Financial Planning, Steve Pitchford, and our new Wealth Advisor, Matt Regan. Fortunately for us (and our clients!), both Steve and Matt are extremely well-versed and experienced in helping TPW clients reduce the income tax “drag” on their net worth and investments, specifically monitoring and focusing on the following areas:

  • Tax efficient investing
  • Tax loss harvesting
  • Tax legislation updates and changes
  • Asset/investment account drawdown
  • Account withdrawal tax optimization
  • Charitable trust planning
  • Charitable giving planning and analysis
  • Income tax credit and deduction analysis
  • Direct coordination and planning with your CPA/tax advisor
  • Tax return analysis
Steve Pitchford, CPA, CFP®
Director of Tax and Financial Planning
(916) 405-9166
spitchford@towerpointwealth.com
Matt Regan, CPA
Wealth Advisor
(916) 405-9164
mregan@towerpointwealth.com

Graph of the Week

Will it be a landslide, or will it be close? Will it be contested, or will it go smoothly? Reply to this email and let us know what you think!

As always, we sincerely value our relationships and partnerships with each of you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to reach out to us at any time (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an extremely complicated place, and we are here to help you properly plan for and make sense of it.

– Steve, Jonathan, Lori, Joseph, Raquel, Nathan, and Matt