The San Francisco Nouveau Riche and Retirement Planning

Filed in CPA Blog by on May 5, 2015
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Nouveau Riche is a term used to describe those who acquire their wealth, themselves, rather than via inheritance. It can sometimes be a bit negative, but here in San Francisco we are using it only in the best of ways. Today’s “Internet boom” is cascading across the San Francisco Bay Area, and might be a sort of “second” Internet bubble. Facebook, LinkedIn, Google, Twitter, and other companies too numerous to mention are creating a new generation of wealth in the city. At the same time older investors are investing “in” to these Internet startups, and given the performance of the stock market and private equity markets also “cashing in” on San Francisco’s boom.

San Francisco Retirement and Tax PlanninBut the boom won’t last; they never do. Sooner or later, things will come down from the sky-high valuations of today. The same goes for real estate. What goes up, must come down (at least a little). Now, don’t get us wrong, we’re not pessimists about San Francisco, but we are realists. Facts over fantasies. And here’s a fact everyone has to grapple with: retirement.

San Francisco’s May Tax Bulletin

In this month’s lively Tax Bulletin (yes we think it’s lively, but that’s because we love tax), we have a discussion on retirement vs. non-retirement accounts, stocks vs. bonds, and holding for the long term. Contrary to popular belief, it’s not self-evident that you should hold all of your funds in tax-deferred accounts because (unless you have an employer match), in some situations it is advantageous to have some stocks and bonds in non-retirement accounts so that any losses can go against other income. In addition, “capital gains” are taxed at much lower rates than straight income… so here, again, you might do better to have some in one, and some in another.

And if you are invested in any San Francisco start-ups or have stock options or other sorts of complex financial instruments at your hand… well we can advise what you should do when, how, and why to minimize the tax bite. You can read our monthly newsletter, here, or just contact us for an analysis of your retirement strategy and possible tax implications.

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