March 14, 2026 • 40 mins
The Kowal team help plan your retirement
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Speaker 1 (00:00):
It is time for the Retirement Clinic.
Speaker 2 (00:01):
Welcome to News Talk eleven thirty WISN Your host today
Aaron Kowal from Creative Planning formerly the Cowal Investment Group
on this radio station now since two thousand and one,
doing this show, the Retirement Clinic. Aarin to you, good morning,
great to have you back.
Speaker 3 (00:20):
Good morning, agreat to be back as always and get
to chat with you on this on these topics, and.
Speaker 2 (00:26):
Those topics are always retirement related. As if people don't know,
this show is called the Retirement Clinic. Your website is
the Retirement Clinic dot com or more information is always
available at Creative Planning dot com as well. By the way,
a recognition from the Wall Street Journal. Do you know
about this yet, Aaron?
Speaker 1 (00:48):
Have you heard?
Speaker 4 (00:48):
Oh?
Speaker 3 (00:48):
Yeah, of course I do. But you could talk about
it though.
Speaker 2 (00:51):
I mean, you know, Creative Planning has been recognized as
the best riia in America for comprehensive wealth management. First off,
kudos to you and everybody at Creative Planning.
Speaker 3 (01:03):
And it's all because of me, right.
Speaker 1 (01:06):
It is, I mean, and you should take full credit
for it.
Speaker 3 (01:08):
Yeah, it is a big recognition. It's a it's a
great honor. To to get that from from the Wall
Street Journal. The Journal, there's thousands of ras out there,
and you know what we've been saying all along is
is I think we do it better than anybody this.
Uh it's because we take care of our clients. We
are the same size clients and uh, you know, you
(01:31):
do the right thing and you get recognized for not
that we are out seeking recognition. Uh, it's just you know,
the way we work and the way we we go
about our day, and so it's really exciting. You know.
Peter Maluke is a fantastic leader for for our company,
(01:52):
and it's you know a huge reason we partnered with
with Creative Planning, and we're just we're really last and
it's just a wonderful company overall.
Speaker 2 (02:03):
You know what we need to do is explain exactly.
It's one of the many acronyms. I joke about this
all the time on your show. You know, I are
a everything is an R M d S. And now
we just said the Wall Street Journal named you guys,
Created Planning as the best r I A in America.
Speaker 1 (02:21):
What's that stand for?
Speaker 3 (02:23):
Eron Registered Investment Advisor, That's what it stands for.
Speaker 2 (02:28):
Uh.
Speaker 3 (02:28):
Yes, So we give advice based on your situation and
uh make suggestions. So that's that's what our A stands for.
It's as opposed to like a registered representative of a
broker dealer that sells you stocks and bonds, you know,
or or a broker that meets makes a commission off
of off of selling you. I said, stocks, bonds, mutual
(02:51):
funds and other financial products. We we don't sell products.
We give advice and and so it really truly puts
us on the same side of the table as well
as others. And Wall Street Journal just says we do
it better than anybody else. And I would tend to
agree with them on this one.
Speaker 2 (03:10):
Yeah, I wouldn't argue. I'd take it right. That's a
pretty pretty cool thing. And it's for comprehensive wealth management.
We talk about that a lot on the program. Later
in the show, Jeff colewalt to join us, and he's
got an interesting topics about parents that are facing a
tug of war between paying for retirement and college.
Speaker 1 (03:29):
And it is a tug of war.
Speaker 2 (03:31):
I'm a parent and two kids now out of college
and they're starting you know, adulting as we call it,
having a family, having kids that's being an adult, having
a house, mortgage, payments.
Speaker 1 (03:42):
A career, and taxes.
Speaker 3 (03:44):
Taxes.
Speaker 1 (03:45):
Oh my goodness, that's adulting, right, being an adult.
Speaker 2 (03:48):
So that'll be good to hear from Jeff after the
first commercial break. This show is one hour in length
every week. In addition, Monday through Friday, market reports during
the afternoon three pm and five pm news blow done
by Creative Planning. Aaron Coal is one of the many
advisors that you hear from for an update on the markets.
Speaker 1 (04:07):
And now we dive into.
Speaker 2 (04:08):
You've got a plethora of topics today. They're all retirement related. Aaron,
You've got about three or four. I'll let you dive
in and tease what's coming up and then get started
with number one.
Speaker 3 (04:20):
Yeah, so first topic is the retirement danger zone. What
does that mean. We'll get into that, which which goes
into should retire zone stocks in their seventies and eighties.
And then for the wealth management preservations segment, which could
be its own standalone main segment here, but I want
(04:41):
to get into the great wealth transfer state planning essentials
for multi generational families. So we've got a lot of
great things to talk about today, and we can start
with the retirement danger zone. And so the retirement danger
zone is it's typically the five years, four and five
(05:01):
years after retirement. It suppere when your portfolio is typically
its largest and withdrawals are beginning. A major market decline
during this window can permanently damage retirement income. Even strong
future returns may not fully recover the loss. And so
many people assume retirement risk begins after they stop working.
(05:21):
In reality, risk begins before retirement because there's little time
to recover from market declients. If the market drops right
before retirement can force people to delay retirement or reduce spending.
Planning ahead reduces that risk. And we worked with a
lot of people through the two thousand and eight financial crisis,
and that was an interesting, very interesting time. Clients buy
(05:46):
in large for best joy did very well relative to
the markets, and that's just because we know we specialize
in retirement, uh and we're tending to be a little
more more conservative than the than the rest of the
market overall, and that really helped them. Especially we had
clients retire right in the middle of that and none
(06:06):
of them had to go back to work. You know,
it's because we're we're experts in this is where we
really focus, is that this retirement danger zone, so to speak,
and clients tend to stick around with us the great
work we do, but also because of the the work
during that period of time, so they tend to stick
(06:28):
with tend to stick with us for a long time,
you know. So this period introduces something called a sequence
of returns risk. I don't if you're familiar with that
or that, but you know, two retirees with the same
average returns can have very different outcomes depending on when
market losses occur. Losses early in retirement are far far
more damaging than losses later. Timing matters more than most
(06:50):
investors realize. A large market decline right as withdrawals begin
can accelerate portfolio depletion. When retirees to draw money during
a downturn, they're selling investments at depressed prices. As you're
you're you're selling things that are essentially on sale. UH.
These assets are no longer available when markets recover and
can shorten the life of a portfolio. UH. And many
(07:13):
investors remain too aggressive entering the danger zone. They spent
decades focusing on growth and find it hard to shift
towards preservation. But the goal changes from maximizing returns to
protecting income. Risk management becomes far more important the dangers
on often exposed portfolios that are never built for retirement income.
Many investors accumulate assets without a clear withdrawal strategy. You know,
(07:38):
all gas, no brakes, right, and so retirement requires turning
those assets into retired, reliable income streams. And without planning,
retires can withdraw too much too soon, and no one,
it's not ideal, Paul, for for us to tell someone,
you know, there's sevent these dazy I go back to work,
(07:59):
you know, because they withdrew too much. So we generally
try to try to avoid that as much as we can.
So we're not yes men. We don't tell you what
you want to hear. We tell you what you need
to hear. And and so that's you know that that
is is very important when it comes to working with
an advisor. Emotional investing becomes especially dangerous during this phase.
(08:23):
If the markets fall sharply right before retirement, panic selling
becomes tempting, and so you're locking losses that can derail
a retirement plan permanently. A structured strategy helps investors stay disciplined.
Speaker 1 (08:34):
Hey under it.
Speaker 2 (08:36):
I just got to chime in and ask you because
we're going through this right now. Let's be honest. People
see what's happening with Iran oil prices go up, gas
goes up, and they might see this happened in COVID,
but that was extreme thirty five percent.
Speaker 1 (08:50):
This is a little bit different.
Speaker 2 (08:51):
But you it's easy to say, I understand how many
times have we said, over through almost three decades, do
not panic, can sell?
Speaker 1 (09:00):
It's the it's the worst thing you can do, am
I right.
Speaker 3 (09:05):
Yeah, it is because you're locking in losses that.
Speaker 1 (09:08):
Those uh guaranteed you, yes exactly.
Speaker 3 (09:13):
Can't come can't come back when the markets eventually do
come back, which they always will.
Speaker 1 (09:18):
He always happen, proven over and over and over again.
Speaker 3 (09:21):
Yeah, even when it seems like you know, we're going
to hell in a handbasket. Uh, And it's always your
markets always turn tend to have usually, I should say,
she can't say always we're talking about the markets, but
usually turn positive when there really isn't dating positive out there.
(09:42):
So if you're investing on emotions, you're not and waiting
until you feel nice and happy, you've already missed out
on a lot of the gains. You know, John White
in our office talks all the time about how you know,
if you miss out on the few days towards the
market bottom, you're missing out on the best days in
(10:03):
the market, and you lose out on a lot of return,
and so it's you know, you're really emotional. Investing is
really bad, especially around market volatility, and so a lot
of also retirees underestimate how long retirement may last. A
sixty five year old couple today has a strong chance
(10:24):
that one spouse will live into their nineties. That means
portfolio may need to last thirty years or more. Longevity
dramatically increases planning complexity. Inflation remains one of the biggest
threats to retirees. Even modern inflation can significantly erode purchasing
power over time. Retirement plan must include assets that grow
faster than inflation, otherwise spending power slowly to clients, and.
Speaker 2 (10:50):
That gets tricky with just an investor that do it
yourself for you know, obviously we tell people all the time,
work with an advisor if you're serious about your plan,
but knowing what you're invested in. There are a lot
of people, including for a while myself, that just opened
up before one game. Just you know, the company offers this,
it's diversified and let's just go with it. It's nice,
(11:14):
especially as you gain some wealth Aaron to ask somebody
that knows what you're investing in.
Speaker 3 (11:21):
Right, Yeah, And so it's you know it is you
got to know what you're investing in. And I mean,
I can't stress it enough. Is the emotional detachment from
the investments. You have to have an investment plan, and
you have to stick towards the investment plan because there's
a lot of things that threaten it, from volatility to inflation.
You know, like I said, inflation is one of the
biggest threats. You know that over time that spending par
(11:44):
slowly declients. And there's been so many times that I've
met with with clients and future clients and you say, okay,
you want to spend I don't know, one hundred thousand
dollars today, but in your in your eighty is that's
you know, you didn't need one hundred and eighty thousand
dollars to buy it. One hundred thousand dollars buyas today
(12:04):
or or way more. And that's just at a three
percent inflation rate. Yeah, you know. So we've had times
where recently where we had a higher inflation rate, you know,
and who knows, you know, I don't have a crystal ball.
I don't know the long term outcome of of this
current conflict, you know. But so that could set you know,
(12:28):
gas prices higher as well.
Speaker 2 (12:30):
But you made a great point. That's always the case, Aaron.
You guys don't have a crystal ball. I don't have
a crystal ball Wall Street. Donald President Trump doesn't have
a I don't know why I said, Donald first. President
Trump doesn't have a crystal ball, Which is why you
invest appropriately because you don't know where life is going
to take us.
Speaker 1 (12:50):
You don't want to panic, that is for sure, right.
Speaker 3 (12:54):
And so you know, healthcare costs come into their Social
Security decisions often occur during this period. Two, you know,
tax planning becomes more complicated. Retirement retires move from earning
income to withdrawing from multiple count types. So the order
in which accounts are use can can have an impact
on taxes significantly. You know, Strategical withdrawals can reduce lifetime
(13:17):
tax bills. Many retirees face requirementum distributions later in retirement,
so those force withdrawals can push retires into higher tax brackets.
A plan ahead for those to reduce that impact. Spending
patterns also changed during retirement. Many retires spend more in
the early years while they travel and enjoy hobbies. You know,
leader spending often slows down. Understanding this pattern, howp structure
(13:41):
withdrawals properly. Debt entering and retirement can create unnecessary pressure.
Mortgage payments and other obligations increase withdrawal needs. So you
got to reduced debt before retirement. You maintain a cash reserve.
They can protect retirees during market downturns. So cash allows
retirees to avoid selling stocks to into clients. Diversification becomes
(14:02):
even more important in near retirement, and which leads into
our next Our next topic here is should retire his
own stocks in their seventies and eighties? What do you
think Paul should retire his own stocks in the seventies
and eighties?
Speaker 2 (14:19):
Absolutely is my opinion. I might be wrong, but yeah,
I think they should earn own stocks. They should be
a part of your portfolio. We don't stop investing when
we retire.
Speaker 1 (14:30):
Am I wrong?
Speaker 3 (14:31):
Yes? You are? I know you are one hundred percent
good they should. You know, many retirees assume that they
should move almost entirely into bonds once they reach their seventies,
and the logic is that stocks are two brisk at
that stage of life. However, completely eliminating stocks can create
a different risk, running out of money. Retirement can last
(14:52):
twenty five thirty years, so growth is still necessary. Stocks
historically provide higher long term returns than most other asset las,
and those returns help portfolios keep up with inflation and
rising expenses such as health care and everything else. Uh,
and just general inflation energy costs. Without growth, assets purchasing
park and eroad slowly over time, and retirees still need
(15:15):
some level of growth even later in life. Inflation is
a major reason retirees often keep stocks in their portfolios.
Prices rarely stay stable for long periods, and even modern
inflation compounds significantly over decades. You know, we say, well
it's just three you know, three percent, but yes, three
percent this year on top of three percent last year,
on top of three percent the year before. Yeah, well,
(15:38):
after a few years, year over ten per you know,
just a few years, three four years, you're over ten
percent then, so it's okay, it's not three percent on
the original either. Three you know, so if you want,
you know, if you count for inflation, one hundred thousand dollars,
that's three thousand dollars of three percent, So it's one
hundred and three thousand. Well, I don't have a calculator here,
(15:58):
but that three percent on one hundred and three thousand
dollars because it never goes back down unless you have deflation,
and that causes other problems. You know, it's three percent
of a higher number, and then three percent of an
even higher number, so it just accelerates from there. So many,
you know, many retirees underestimate how long their investments must last.
(16:19):
A healthy seventy year old could easily live to their nineties,
like we talked about, you know, so they eliminating growth
assets too early can create problems later. One approach planner
is often used reducing stock exposure exposure gradually instead of
eliminating it entirely. A retiree might move from a growth
heavy portfolio toward a more balanced to allocation. This reduces
(16:41):
volatility while still longing for long term growth. The goal
is balanced rather than extremes. Some retirees maintaining forty to
sixty percent stock exposure even later in life. While that
may sound aggressive, the long term horizon often justifies it.
Lower equity exposure may increase the risk of running out
of money. The correct allocation depends on income needs and
risk tolerance. You know, what can you sleep at night with?
(17:04):
Income sources play a major role in this decision. Retirees
with strong guaranteed income from social security or pensions can
often afford to keep more money in stocks. Those income
streams cover basic living expenses in the portfolio that can
can then focus more on growth. Market volatility becomes more
concerning as retirees age, so large downturns can cause stress
(17:28):
and uncertainty. However, volatilely alone does not necessarily mean stocks
should be avoided. Proper diversification can help manage that risk.
Dividend paying stocks can provide an additional benefit for retirees.
Many large companies distribute regular income through dividends, and this
income can supplement retirement withdrawals and allows retirees to avoid
selling shares during market downturns. You know. Another benefit of
(17:50):
stocks is long term tax efficiency. Capital gains taxes may
be lower than ordinary income tax rates. Many retires can
manage withdrawals strategically to minimize taxes. Tax playing often favors
holding growth assets. Summer tiriies mistakenly believe bonds are always
safer than stocks. Well, bonds are typically less volatile, they
(18:12):
carry risks as well. Out of the street changes you
can reduce a bond prices.
Speaker 2 (18:17):
When you brought that up at the beginning of the
Should retirees move all, you know, strictly into bonds. I've
heard that from many people as I'm getting up there
in age, Aaron, I turned sixty this June.
Speaker 1 (18:28):
Guys my age are like, well, you gotta you.
Speaker 2 (18:29):
Know, you gotta really get conservatives as you age, Paul and.
Speaker 1 (18:32):
Your retire Why what do you mean?
Speaker 2 (18:35):
I mean, sure you can make you always make tweaks, right, Aaron,
you never set it and forget it.
Speaker 3 (18:41):
Correct, Correct, you never said it forgetting make tweaks? What
lets you sleep at night? You know? But inflation can
erode bond purchasing power as well, and so you know,
all you all this has to be tied to a
withdrawal strategy. You know, for tireies, withdrawal too much from
volatile portfolio the increase the risk of running out of
money money. Sustainable withdrawal planning helps manage that risk. Portfolio design,
(19:05):
withdrawal strategies must work together. You're not in a vacuum here,
and especially if you're if you've been investing in a
while and then there's some volatility, you know, you may
lose some of the gains. So you're you know a
lot of times, if you've been investing in the market
a long time, a lot of what you have is
gains overall over your principle, and so you just might
(19:30):
hear some of your gains might go down, but eventually
they should recover. They always have. I can't say that
they always will for reasons, you know, but if you
have to be disciplined. So discipline is the name of
the game there. So Review asked allocation talk with an
advisor about about this, talk with us about this is
what we what we do. As you mentioned, Paul Wall
(19:53):
Street Journal named us best are in the country, So
why not talk to us? And ultimately, the question of
whether or not retire shit on stocks? The real question
is how much stock exposure. It's not whether retires stocks. Rather,
real question is how much stock exposure makes sense giving
your income needs. Risk tolerance and longevity, and for many
retire resub equity exposure remains essential. Eliminating stocks entirely often
(20:15):
creates more risk than it removes.
Speaker 1 (20:18):
And that's good stuff. Maybe that's why Wall Street Journal
named you guys. Right, that's what you got the the
best r I. That's Registered Investment Advisor. Right.
Speaker 2 (20:28):
The acronym recently recognized by the Wall Street Journal. That's
Creative Planning. That's Aaron colewaal on WYSM. This is a
retirement clinic. One thing we haven't done is give out
your phone number locally. The location is where you've been
for many, many years, and that's an in Brookfield. We're
Red and Blue Mound in Port Washington up in Ozaki County.
(20:50):
Great for those northern clients, North side clients, Riscine great
for the south part of the state in Delafield as well,
and then license in all fifth stays. So you've also
got an office in Cape Coral, Florida, Phoenix, Arizona. More
information is at Creative Planning dot com or the Retirement
Clinic dot com. The number two sixty two five two
(21:11):
two forty forty. Please if you have any questions call
two six two five two two forty forty.
Speaker 1 (21:20):
That was good stuff. Erin full of information today.
Speaker 3 (21:24):
Thank you, thank you.
Speaker 2 (21:25):
I hope well done. Jeff Cowal joining us right after
this commercial break. He's got a segment that has to
do with parents and parents are facing a tug of war.
And if you're listening and you get it, you get
it right. If not, you still need to pay attention.
A tug of war between paying for retirement and college.
That's coming up after the break. And then erin what
do you have for us coming up later in the hour.
Speaker 3 (21:49):
Yeah, I've got the Great Wealth Transfer State Planning Essentials
for multi generational families.
Speaker 2 (21:54):
That is all ahead as the Retirement Clinic continue Saturday mornings.
Speaker 1 (21:59):
We are on at ten am today.
Speaker 2 (22:02):
Aaron Cohall, of course, is your host, and I'm Paul
kronforst On News Talk eleven thirty WISN.
Speaker 4 (22:07):
We'll be right back and Jeff Cohaugh Planning, Planning, planning.
We emphasize its importance with all of our clients. Parents
often have competing objectives both worthy.
Speaker 5 (22:19):
I wanted to address.
Speaker 4 (22:21):
College versus retirement. I'm going to start with a profound statement,
believe it or not, and then expand on it. Here
goes you ready for the profound statement, parents can borrow
for college but not for retirement. Profound right, you can
borrow for college, but you cannot borrow for retirement.
Speaker 5 (22:40):
Let's get into some details.
Speaker 4 (22:42):
The basis of this was a Baron's article recently titled
Parents face a tug of war between paying for retirement
and college.
Speaker 5 (22:50):
And how to pull it off. Some a couple of
key points that.
Speaker 4 (22:53):
Many parents prioritize retirement savings, with fifty nine percent citing
its their top financial goal, while thirty nine percent prioritize
children's education. Then there's an America Price survey that will
get into a little more detail. It says that nine
to ten parents plan to contribute to their children's college education,
(23:15):
with a third also funding graduate school.
Speaker 5 (23:18):
Here's some of the details.
Speaker 4 (23:20):
Parents planning for a future often find themselves stuck between
two goals that seem to conflict. Building enough for a
secure retirement while helping their children afford college. With budgets
stretched by every day cost, many families end up making
trade offs that can ripple for years. And the decision
isn't whether to pay for college, it's how much financial
support you can afford.
Speaker 5 (23:41):
To give.
Speaker 4 (23:42):
This gets an amer Price survey that found nearly nine
to ten parents plan to pay for at least part
of their children's college education. A third will contribute to
graduate school. When I ask about the top financial goal again,
nearly sixty a side paying for retirement and the thirty
(24:02):
nine percent said paying for college. The push and pull
is why advisors urge parents to shore up their retirement
first before committing heavily to college savings. This is just
how we viewed in our office, and I think it's
a proper way to do planning. You can't help others
unless you take care of your planning first, because you
don't want to have to go back to your kids
(24:25):
after you retire and ask them for money, whether it's
for rent or for healthcare or anything. You want to
make sure your planning is short up so you don't
have to go back to them.
Speaker 5 (24:34):
They'll have their own lives to live.
Speaker 4 (24:37):
The starting point making sure parents don't jeopardize their own
financial security and the process of helping their children.
Speaker 5 (24:44):
The article says something that I say all the time.
Speaker 4 (24:47):
There's a lot of validity to the airline analogy.
Speaker 5 (24:52):
Put your own.
Speaker 4 (24:53):
Oxygen mask on first before helping your kids. One role
that they emphasize in the article is that any employer
sponsored retirement match, you have to make sure that you
put enough in that you get the company match before
directing any money elsewhere anywhere. That is a given that
is really a high priority, very important. Next thing is
(25:15):
when I mentioned at the beginning, you can borrow for college,
but not for retirement. Are you expecting your twenty five
year old to help with your retirement retirement income?
Speaker 5 (25:24):
Probably not, but that's what you'll be facing.
Speaker 4 (25:27):
If you don't plan for your own retirement, your twenty
five year old eventually will have to help you.
Speaker 5 (25:32):
With your retirement income.
Speaker 4 (25:35):
Number three is that once they have secured their retirement,
families can begin to think more deliberately about how and
how much to save for college. Five twenty nine plans
is a great way to save for college. There are
also trade offs with that contributions are made with after
tax dollars, but the investment earnings grow tax free and
can be withdrawn tax free if used for qualifying qualified
(25:59):
education instance. A retirement first approach can help families set
boundaries around college costs rather than trying to cover everything.
Many parents aim to fund a defined portion of expenses.
As an example, when we were doing a lot of
planning for our clients for college education, we would say,
let's plan for a state school. So let's say you'll
(26:20):
have one hundred percent of state school paid for, so
you will not be denied your child will not be
denied college education.
Speaker 5 (26:27):
But then if they.
Speaker 4 (26:28):
Want to go to a private school or go somewhere else,
they're going to have to rely on scholarships, loans, other things,
grants to get the balance of it if they want
to do something other than that, so they would not
be denied a college education. This is an example that
the article gave from again as a Baron's article, balance
(26:48):
the actory resonates with parents like Kayden nirona Columbus, Georgia,
who she and her spouse tried to balance savings as
they planned for a two son's futures and their own.
We're saving for retirement college at the same time. While
helping their sons mattered, protecting their own ability to retire
did as well to manage costs. Both sons went to
(27:09):
college in Virginia, again a state school. They were from Virginia,
where the family lived at the time. In addition, each
son was made a fifty percent beneficiary of her husband's
post nine to eleven GI bill benefits, which covered about
two years of their costs and the game they said.
Speaker 5 (27:26):
The aim, they said, was to give the kids a
valuable head start as adults, and it worked. So there
are a lot of different ways to do it.
Speaker 4 (27:33):
Again, I want to emphasize it's most important in our opinion,
to make sure that you take care of your retirement first.
Make sure you have everything in the order. We've got
cash flow projections. It's called the vision builder that helps
with those where we can actually reduce it to writing
and say what happens if you plan for your retirement,
what happens if you have a long term care event?
(27:55):
Then what happens if you take care of those things?
What happens if you start giving money for college? Or
say money for college? Can you do it all? Put
a pencil to it. Make sure you don't just eyeball it.
Give our call, give a call to one of our
great producier advisors, or go online to the Retirement Clinic
dot com and schedule appointment.
Speaker 2 (28:14):
Retirement Clinic we continue every Saturday morning.
Speaker 1 (28:17):
Thank you for joining us.
Speaker 2 (28:18):
I'm Paul kron Forced with creative Planning's Aaron Kowal. If
you've got questions about any retirement issue, a lack of
a plan on your end, if you have no advisor
or just one a second opinion, here's the phone number
two six two five two two forty forty. We heard
from Jeff Kowal with that parent's tug. That was a
(28:39):
good segment hearing from that's your father for those that
don't know Aaron Kolewaal and Jeff Cowal.
Speaker 3 (28:45):
Not a massive coincidence, right, you're right, last name.
Speaker 2 (28:49):
It's no secret. We're not trying to hide anything. You've
been doing the show for many, many many years. As
we said, we started in two thousand and one, just
one week before nine to eleven actually, and we've been
doing it ever since. On Saturdays, the retirement Clinic is back.
Speaker 3 (29:03):
And twenty five years is here.
Speaker 2 (29:04):
Yeah, that's a quarter century a retirement talk. Yes here
in w I said, Now this is about wealth transfer.
The theme is about wealth management and preservation. That's what
we do every week in this segment of the show,
but specifically at wealth transfer. Aaron explain what that's all about.
Speaker 3 (29:22):
So it's the great wealth transfer of State Planning Essentials
for multi generational families. What happens when you die? How
do you get your money to last for generations? You
know a lot of people don't care, some really do
and so and some haven't thought about it. So I
guess this is more for people that haven't thought about
it or really care, you know, about how what happens
(29:45):
to their money when they die. You know, obviously the
goal is not to give it all the government or
to have future generations spend it all on frivolous things.
So you know the require And this is from actually,
if anybody wants this, I can send it to them.
It's it's from an article from Creative Planning, you know,
(30:09):
and so if you need it, if you want to
let me know, reach out Aaron dot co wal at
Creative Planning dot com. But it requires you. So the
takeaway is that preparing for the great Wealth Transfer requires
advanced multi generational state planning strategy. So we're gonna go
through some of this as much as we can in
the time remaining. So I'm gonna read from this, but
(30:30):
we'll get well, we'll comment on it as well. So
as the great Wealth Transfer accelerates, an unprecedented amount of
wealth is expected to pass from baby boomers and older
generations to their children and grandchildren. For high net worth
and ultra high networth families, this shift raises important questions.
How will the wealth impact future generations? How can you
transfer assets efficiently, tax efficiently while also preserving the values, stories,
(30:55):
and relationships that define your family. Thoughtful multi generational state
plan and can help ensure your wealth transfer plan reflects
both your financial goals and your vision for your legacy.
The first step in planning is the first step in
planning for successful multi generational transfer of wealth is to
understand understand exactly what legacy goals you hope to achieve.
(31:19):
Start which really is you want to know before you
even start doing this? What are you hoping to accomplish here?
It's not ready shoot, Aim, Ready aim, Shoot, and so
start by reflecting questions such as what values define your family?
How do I hope to be remembered, What charitable causes
are important to us, What core principles have guided my
(31:41):
life so far? What unique circumstances but does my family
face require actually planning? What are my family's short and
long term goals? So to answer those questions should be
used to guide all of your legacy planning decisions going forward.
For example, if you have family owned business, you'll need
to make sure your business succession plans align with your
personal financial INNST plans. Or if you have a special
(32:02):
needs loved one that you wish to support, I may
you need to take extra steps to support that level
one without negatively having an impact on their eligibility for
government benefits. UH. In order to incorporate your values, may
need decide to establish a trust for your children with
specific payout milestones that align with those values. So some
(32:24):
of these values might include educational milestones. So if you
value high higher education, could you you could establish a
predetermined financial payout for graduating college or receiving advanced degree.
Business startup. If you wish to incentivize your children's entrepreneurial ambitions,
you could authorize the distribution of seed money to start
a new business, subject to basic business planning requirements. Income matching.
(32:49):
If it's important to you that your children learn to
support themselves, you could match a percentage of their salaries
to incentivize them to keep working. For example, say you
authorize an annual distribute you should go up to fifty
percent of your daughter's salary, and she makes one hundred
thousand dollars in a year, she'd receive an additional fifty
thousand dollars. Terrible commitment. So if charitable giving is important
(33:10):
family value, consider authorizing a matching donation to the charitable
causes your children's support and tying distributions to their own
giving smart financial decisions. To encourage smart financial choices, consider
offering distributions for taking steps toward a more secure financial future,
such as meeting with an advisor, following a budget, establishing
(33:33):
a financial plan, saving for retirement, or saving for a
child's college education. Clear legacy goals become the blueprint for
how you structure trusts, family governance, and decision making across generations.
Speaker 1 (33:43):
And I got a quick question for you.
Speaker 2 (33:45):
That term legacy We hear a lot, right, and what
do you want your legacy to be? And the whole
premise of this segment is about transferring wealth to your
next generation, your kids, possibly your grandchildren, and even the
generation beyond that.
Speaker 1 (33:59):
Here's my question.
Speaker 2 (34:00):
Is it your experience decades of experience now Aaron dealing
with clients that most people, when I say most over fifty.
They want to leave money for their kids. Some people,
you know, they're like, listen, this is my money. I
worked hard for it. I'm gonna spend every last penny
of it.
Speaker 3 (34:19):
You know, it's split. Sometimes it's difference in generations. To
be blunt. Uh some uh, you know, some generations, uh,
you know, really want to leave as much as they
can for their descendants. Some say, no, I earn this money.
They're doing fine on their own. I'm gonna, you know,
I want to bounce a check to the grave digger.
And you know, and so it really is split, and
(34:43):
it really is predominant among generations, you know, from greatest
generations of Baby Boomers to Gen X has different attitudes
on a lot of this, and so, uh, you know,
you got to use trusts that to start sure multi
generational wealth transfer. That's the only structure that really works.
(35:03):
So there's different kinds of trusts, living trusts, vocal trusts.
Not going to get into all the details of the
trust right now. It does get into it in the
article from Creative Planning, Asset protection trusts, charitable trusts, dynasty trusts,
which is also known as generation skipping trust. A dynasty
trust facilitates the transfer of wealth to grandchildren and later
(35:23):
generations while minimizing these state taxes that would typically be
due when assets pass from generation to generation, and so
when properly structured, dynasty trusts can help perserve family wealth
for many decades.
Speaker 5 (35:35):
There's special needs.
Speaker 3 (35:36):
Trusts and then air vocal life insurance trusts which hold
life insurance policies to be passed down. So you want
to align your state plan with family governance and values,
and for many affluent families, the biggest legacy planning concern
isn't how to pass along their assets, but rather how
to teach their children and grandchildren be responsible stewards of wealth.
(35:56):
Will also are being motivated to find their own success
in life, where family governance and ongoing education become critical.
Some people don't want to deal with this, Paul. Family
governance can include a written family mission statement or a
legacy letter expressing your values and intentions, family meetings to
discuss shared goals, philanthropy and the responsibilities that come with wealth,
clear goals for family members involved in family businesses, trusts,
(36:18):
and foundations, and integrating family governance with your state plane,
documents and trusts to ensure that your wealth transfers. Strategy
supports and not undermines your family culture. Be open and
honest with your loved ones, you know, focus on family communication.
A lot of people hate talk about this with their kids,
so lead by example. Prioritizing financial responsibility and your everyday
(36:41):
life shows your children, grandchildren what it looks like to
be a good steward of wealth. Even young children can
learn about the importance of saving for the future and
the positive feelings that come with helping others talk about
money in store of your wealth. Have open, honest discussions
with your kids about money. Tell them the history of
your wealth. Did you start with nothing, grow your wealth
through hard work and determination, or would you inherit wealth
(37:02):
and learn to be a good steward of it so
that you could pass it on so that you could
pass it along to the next generation. High net worth
families often shy away from talking about money, but being
open and honest about your experience can help you pass
on your values and expectations to next generation. Involved loved
ones and decisions over time, you know, to really kind
(37:26):
of help give them some sense of responsibility, and then
partner with an advisory team for multi generational wealth planning.
Could you use some planning for an efficient multi generational
generational transfer of wealth. We're here for you an experienced
advisory team. You can help clarify your legacy and wealth
transfer goals, coordinate estate planning documents and trust structures with
(37:46):
your tax and investment strategies, facilitate family meetings and communication
around sensitive wealth topics, and align your multi generational plan
with evolving tax laws and planning opportunities. So that's that's it.
In an you can spend many shows talking about all communication.
Speaker 1 (38:04):
I think it's you talk about communication with your kids.
Speaker 2 (38:08):
Listen, they want to be in the same page at
least let them know, and if there is a trust,
they're probably going to be involved. We should mention creative planning.
Since you guys have now joined forces, you do have
his state planning people to help with this process.
Speaker 1 (38:22):
Open communication.
Speaker 2 (38:23):
We've talked about that all the you know, over the
years in the show with your children as to what
your plans are your legacy. Are you leaving them money
or you know, the house, all of that stuff, And
the sooner it gets done, the better you can, you know,
kind of get it out of the way then and
it might be awkward, but I think you feel better
when that conversation is finished.
Speaker 1 (38:43):
If you've got a question, stay tuned.
Speaker 2 (38:45):
All of the contact information as we continue the Retirement
Clinic with Aaron Coal Today. It's coming up next. The
phone number is two six two five two two forty
forty or the Retirement Clinic dot com. As we wrap
up today's Retirement Clinic, we thank you for joining us,
and thank you the host of today, Aerin Kolewaal.
Speaker 1 (39:05):
We covered a lot of ground.
Speaker 2 (39:06):
What's the best way to reach out and get this
retirement plan started?
Speaker 3 (39:10):
Yeah, give us a call at two six' two five
two two forty forty or go To Creative planning dot
com or The Retirement clinic dot com as.
Speaker 2 (39:19):
Well, yeah a lot of good stuff on today's four
or five big Topics we heard From Jeff kowal and
locations all around town In. Brookfield we Mentioned Delafield, Port
washington In, racine license in all fifty. States Creative planning
dot com for more. Information monday Through, friday market updates
three and five. Pm news blocks Every. Saturday The Retirement
(39:42):
clinic is on at ten o'clock ON Wisn. Milwaukee thanks
for joining. Us news is coming up.
Speaker 6 (39:47):
Next Creative planning was ranked By The Wall Street Journal's
buyside as the best INDEPENDENT ira for comprehensive wealth management
In february twenty twenty. Six this ranking is not based
on any specific time period the. Preceding this program is
furnished By Creative, planning AN sec registered investment advisory. Firm Creative,
planning along with its Affiliate United Capital Financial, advisors currently
(40:08):
manages or advises on a combined three hundred and twenty
five billion dollars in assets as Of june, thirtieth twenty twenty.
Four the host works For Creative, planning and all opinions
expressed by the host and or their guests are solely
their own and do not necessarily represent the opinion Of Creative.
Planning the show is designed to be informational in nature
and does not constitute, investment tax or legal. Advice different
(40:29):
types of investments involve varying degrees of, risk and there
can be no assurance that the future performance of any
specific investment or investment, strategy including those discussed on the,
show will be profitable or equal any historical performance. Levels
the information contained herein has been obtained from sources deemed.
Speaker 1 (40:45):
Reliable but is not.
Speaker 6 (40:46):
Guaranteed if you would like our, help request to speak
to an advisor by going to creative planning dot. Com Creative, planning,
tax and legal are separate entities that must be engaged.
Speaker 3 (40:55):
Independently
It is time for the Retirement Clinic.
Speaker 2 (00:01):
Welcome to News Talk eleven thirty WISN Your host today
Aaron Kowal from Creative Planning formerly the Cowal Investment Group
on this radio station now since two thousand and one,
doing this show, the Retirement Clinic. Aarin to you, good morning,
great to have you back.
Speaker 3 (00:20):
Good morning, agreat to be back as always and get
to chat with you on this on these topics, and.
Speaker 2 (00:26):
Those topics are always retirement related. As if people don't know,
this show is called the Retirement Clinic. Your website is
the Retirement Clinic dot com or more information is always
available at Creative Planning dot com as well. By the way,
a recognition from the Wall Street Journal. Do you know
about this yet, Aaron?
Speaker 1 (00:48):
Have you heard?
Speaker 4 (00:48):
Oh?
Speaker 3 (00:48):
Yeah, of course I do. But you could talk about
it though.
Speaker 2 (00:51):
I mean, you know, Creative Planning has been recognized as
the best riia in America for comprehensive wealth management. First off,
kudos to you and everybody at Creative Planning.
Speaker 3 (01:03):
And it's all because of me, right.
Speaker 1 (01:06):
It is, I mean, and you should take full credit
for it.
Speaker 3 (01:08):
Yeah, it is a big recognition. It's a it's a
great honor. To to get that from from the Wall
Street Journal. The Journal, there's thousands of ras out there,
and you know what we've been saying all along is
is I think we do it better than anybody this.
Uh it's because we take care of our clients. We
are the same size clients and uh, you know, you
(01:31):
do the right thing and you get recognized for not
that we are out seeking recognition. Uh, it's just you know,
the way we work and the way we we go
about our day, and so it's really exciting. You know.
Peter Maluke is a fantastic leader for for our company,
(01:52):
and it's you know a huge reason we partnered with
with Creative Planning, and we're just we're really last and
it's just a wonderful company overall.
Speaker 2 (02:03):
You know what we need to do is explain exactly.
It's one of the many acronyms. I joke about this
all the time on your show. You know, I are
a everything is an R M d S. And now
we just said the Wall Street Journal named you guys,
Created Planning as the best r I A in America.
Speaker 1 (02:21):
What's that stand for?
Speaker 3 (02:23):
Eron Registered Investment Advisor, That's what it stands for.
Speaker 2 (02:28):
Uh.
Speaker 3 (02:28):
Yes, So we give advice based on your situation and
uh make suggestions. So that's that's what our A stands for.
It's as opposed to like a registered representative of a
broker dealer that sells you stocks and bonds, you know,
or or a broker that meets makes a commission off
of off of selling you. I said, stocks, bonds, mutual
(02:51):
funds and other financial products. We we don't sell products.
We give advice and and so it really truly puts
us on the same side of the table as well
as others. And Wall Street Journal just says we do
it better than anybody else. And I would tend to
agree with them on this one.
Speaker 2 (03:10):
Yeah, I wouldn't argue. I'd take it right. That's a
pretty pretty cool thing. And it's for comprehensive wealth management.
We talk about that a lot on the program. Later
in the show, Jeff colewalt to join us, and he's
got an interesting topics about parents that are facing a
tug of war between paying for retirement and college.
Speaker 1 (03:29):
And it is a tug of war.
Speaker 2 (03:31):
I'm a parent and two kids now out of college
and they're starting you know, adulting as we call it,
having a family, having kids that's being an adult, having
a house, mortgage, payments.
Speaker 1 (03:42):
A career, and taxes.
Speaker 3 (03:44):
Taxes.
Speaker 1 (03:45):
Oh my goodness, that's adulting, right, being an adult.
Speaker 2 (03:48):
So that'll be good to hear from Jeff after the
first commercial break. This show is one hour in length
every week. In addition, Monday through Friday, market reports during
the afternoon three pm and five pm news blow done
by Creative Planning. Aaron Coal is one of the many
advisors that you hear from for an update on the markets.
Speaker 1 (04:07):
And now we dive into.
Speaker 2 (04:08):
You've got a plethora of topics today. They're all retirement related. Aaron,
You've got about three or four. I'll let you dive
in and tease what's coming up and then get started
with number one.
Speaker 3 (04:20):
Yeah, so first topic is the retirement danger zone. What
does that mean. We'll get into that, which which goes
into should retire zone stocks in their seventies and eighties.
And then for the wealth management preservations segment, which could
be its own standalone main segment here, but I want
(04:41):
to get into the great wealth transfer state planning essentials
for multi generational families. So we've got a lot of
great things to talk about today, and we can start
with the retirement danger zone. And so the retirement danger
zone is it's typically the five years, four and five
(05:01):
years after retirement. It suppere when your portfolio is typically
its largest and withdrawals are beginning. A major market decline
during this window can permanently damage retirement income. Even strong
future returns may not fully recover the loss. And so
many people assume retirement risk begins after they stop working.
(05:21):
In reality, risk begins before retirement because there's little time
to recover from market declients. If the market drops right
before retirement can force people to delay retirement or reduce spending.
Planning ahead reduces that risk. And we worked with a
lot of people through the two thousand and eight financial crisis,
and that was an interesting, very interesting time. Clients buy
(05:46):
in large for best joy did very well relative to
the markets, and that's just because we know we specialize
in retirement, uh and we're tending to be a little
more more conservative than the than the rest of the
market overall, and that really helped them. Especially we had
clients retire right in the middle of that and none
(06:06):
of them had to go back to work. You know,
it's because we're we're experts in this is where we
really focus, is that this retirement danger zone, so to speak,
and clients tend to stick around with us the great
work we do, but also because of the the work
during that period of time, so they tend to stick
(06:28):
with tend to stick with us for a long time,
you know. So this period introduces something called a sequence
of returns risk. I don't if you're familiar with that
or that, but you know, two retirees with the same
average returns can have very different outcomes depending on when
market losses occur. Losses early in retirement are far far
more damaging than losses later. Timing matters more than most
(06:50):
investors realize. A large market decline right as withdrawals begin
can accelerate portfolio depletion. When retirees to draw money during
a downturn, they're selling investments at depressed prices. As you're
you're you're selling things that are essentially on sale. UH.
These assets are no longer available when markets recover and
can shorten the life of a portfolio. UH. And many
(07:13):
investors remain too aggressive entering the danger zone. They spent
decades focusing on growth and find it hard to shift
towards preservation. But the goal changes from maximizing returns to
protecting income. Risk management becomes far more important the dangers
on often exposed portfolios that are never built for retirement income.
Many investors accumulate assets without a clear withdrawal strategy. You know,
(07:38):
all gas, no brakes, right, and so retirement requires turning
those assets into retired, reliable income streams. And without planning,
retires can withdraw too much too soon, and no one,
it's not ideal, Paul, for for us to tell someone,
you know, there's sevent these dazy I go back to work,
(07:59):
you know, because they withdrew too much. So we generally
try to try to avoid that as much as we can.
So we're not yes men. We don't tell you what
you want to hear. We tell you what you need
to hear. And and so that's you know that that
is is very important when it comes to working with
an advisor. Emotional investing becomes especially dangerous during this phase.
(08:23):
If the markets fall sharply right before retirement, panic selling
becomes tempting, and so you're locking losses that can derail
a retirement plan permanently. A structured strategy helps investors stay disciplined.
Speaker 1 (08:34):
Hey under it.
Speaker 2 (08:36):
I just got to chime in and ask you because
we're going through this right now. Let's be honest. People
see what's happening with Iran oil prices go up, gas
goes up, and they might see this happened in COVID,
but that was extreme thirty five percent.
Speaker 1 (08:50):
This is a little bit different.
Speaker 2 (08:51):
But you it's easy to say, I understand how many
times have we said, over through almost three decades, do
not panic, can sell?
Speaker 1 (09:00):
It's the it's the worst thing you can do, am
I right.
Speaker 3 (09:05):
Yeah, it is because you're locking in losses that.
Speaker 1 (09:08):
Those uh guaranteed you, yes exactly.
Speaker 3 (09:13):
Can't come can't come back when the markets eventually do
come back, which they always will.
Speaker 1 (09:18):
He always happen, proven over and over and over again.
Speaker 3 (09:21):
Yeah, even when it seems like you know, we're going
to hell in a handbasket. Uh, And it's always your
markets always turn tend to have usually, I should say,
she can't say always we're talking about the markets, but
usually turn positive when there really isn't dating positive out there.
(09:42):
So if you're investing on emotions, you're not and waiting
until you feel nice and happy, you've already missed out
on a lot of the gains. You know, John White
in our office talks all the time about how you know,
if you miss out on the few days towards the
market bottom, you're missing out on the best days in
(10:03):
the market, and you lose out on a lot of return,
and so it's you know, you're really emotional. Investing is
really bad, especially around market volatility, and so a lot
of also retirees underestimate how long retirement may last. A
sixty five year old couple today has a strong chance
(10:24):
that one spouse will live into their nineties. That means
portfolio may need to last thirty years or more. Longevity
dramatically increases planning complexity. Inflation remains one of the biggest
threats to retirees. Even modern inflation can significantly erode purchasing
power over time. Retirement plan must include assets that grow
faster than inflation, otherwise spending power slowly to clients, and.
Speaker 2 (10:50):
That gets tricky with just an investor that do it
yourself for you know, obviously we tell people all the time,
work with an advisor if you're serious about your plan,
but knowing what you're invested in. There are a lot
of people, including for a while myself, that just opened
up before one game. Just you know, the company offers this,
it's diversified and let's just go with it. It's nice,
(11:14):
especially as you gain some wealth Aaron to ask somebody
that knows what you're investing in.
Speaker 3 (11:21):
Right, Yeah, And so it's you know it is you
got to know what you're investing in. And I mean,
I can't stress it enough. Is the emotional detachment from
the investments. You have to have an investment plan, and
you have to stick towards the investment plan because there's
a lot of things that threaten it, from volatility to inflation.
You know, like I said, inflation is one of the
biggest threats. You know that over time that spending par
(11:44):
slowly declients. And there's been so many times that I've
met with with clients and future clients and you say, okay,
you want to spend I don't know, one hundred thousand
dollars today, but in your in your eighty is that's
you know, you didn't need one hundred and eighty thousand
dollars to buy it. One hundred thousand dollars buyas today
(12:04):
or or way more. And that's just at a three
percent inflation rate. Yeah, you know. So we've had times
where recently where we had a higher inflation rate, you know,
and who knows, you know, I don't have a crystal ball.
I don't know the long term outcome of of this
current conflict, you know. But so that could set you know,
(12:28):
gas prices higher as well.
Speaker 2 (12:30):
But you made a great point. That's always the case, Aaron.
You guys don't have a crystal ball. I don't have
a crystal ball Wall Street. Donald President Trump doesn't have
a I don't know why I said, Donald first. President
Trump doesn't have a crystal ball, Which is why you
invest appropriately because you don't know where life is going
to take us.
Speaker 1 (12:50):
You don't want to panic, that is for sure, right.
Speaker 3 (12:54):
And so you know, healthcare costs come into their Social
Security decisions often occur during this period. Two, you know,
tax planning becomes more complicated. Retirement retires move from earning
income to withdrawing from multiple count types. So the order
in which accounts are use can can have an impact
on taxes significantly. You know, Strategical withdrawals can reduce lifetime
(13:17):
tax bills. Many retirees face requirementum distributions later in retirement,
so those force withdrawals can push retires into higher tax brackets.
A plan ahead for those to reduce that impact. Spending
patterns also changed during retirement. Many retires spend more in
the early years while they travel and enjoy hobbies. You know,
leader spending often slows down. Understanding this pattern, howp structure
(13:41):
withdrawals properly. Debt entering and retirement can create unnecessary pressure.
Mortgage payments and other obligations increase withdrawal needs. So you
got to reduced debt before retirement. You maintain a cash reserve.
They can protect retirees during market downturns. So cash allows
retirees to avoid selling stocks to into clients. Diversification becomes
(14:02):
even more important in near retirement, and which leads into
our next Our next topic here is should retire his
own stocks in their seventies and eighties? What do you
think Paul should retire his own stocks in the seventies
and eighties?
Speaker 2 (14:19):
Absolutely is my opinion. I might be wrong, but yeah,
I think they should earn own stocks. They should be
a part of your portfolio. We don't stop investing when
we retire.
Speaker 1 (14:30):
Am I wrong?
Speaker 3 (14:31):
Yes? You are? I know you are one hundred percent
good they should. You know, many retirees assume that they
should move almost entirely into bonds once they reach their seventies,
and the logic is that stocks are two brisk at
that stage of life. However, completely eliminating stocks can create
a different risk, running out of money. Retirement can last
(14:52):
twenty five thirty years, so growth is still necessary. Stocks
historically provide higher long term returns than most other asset las,
and those returns help portfolios keep up with inflation and
rising expenses such as health care and everything else. Uh,
and just general inflation energy costs. Without growth, assets purchasing
park and eroad slowly over time, and retirees still need
(15:15):
some level of growth even later in life. Inflation is
a major reason retirees often keep stocks in their portfolios.
Prices rarely stay stable for long periods, and even modern
inflation compounds significantly over decades. You know, we say, well
it's just three you know, three percent, but yes, three
percent this year on top of three percent last year,
on top of three percent the year before. Yeah, well,
(15:38):
after a few years, year over ten per you know,
just a few years, three four years, you're over ten
percent then, so it's okay, it's not three percent on
the original either. Three you know, so if you want,
you know, if you count for inflation, one hundred thousand dollars,
that's three thousand dollars of three percent, So it's one
hundred and three thousand. Well, I don't have a calculator here,
(15:58):
but that three percent on one hundred and three thousand
dollars because it never goes back down unless you have deflation,
and that causes other problems. You know, it's three percent
of a higher number, and then three percent of an
even higher number, so it just accelerates from there. So many,
you know, many retirees underestimate how long their investments must last.
(16:19):
A healthy seventy year old could easily live to their nineties,
like we talked about, you know, so they eliminating growth
assets too early can create problems later. One approach planner
is often used reducing stock exposure exposure gradually instead of
eliminating it entirely. A retiree might move from a growth
heavy portfolio toward a more balanced to allocation. This reduces
(16:41):
volatility while still longing for long term growth. The goal
is balanced rather than extremes. Some retirees maintaining forty to
sixty percent stock exposure even later in life. While that
may sound aggressive, the long term horizon often justifies it.
Lower equity exposure may increase the risk of running out
of money. The correct allocation depends on income needs and
risk tolerance. You know, what can you sleep at night with?
(17:04):
Income sources play a major role in this decision. Retirees
with strong guaranteed income from social security or pensions can
often afford to keep more money in stocks. Those income
streams cover basic living expenses in the portfolio that can
can then focus more on growth. Market volatility becomes more
concerning as retirees age, so large downturns can cause stress
(17:28):
and uncertainty. However, volatilely alone does not necessarily mean stocks
should be avoided. Proper diversification can help manage that risk.
Dividend paying stocks can provide an additional benefit for retirees.
Many large companies distribute regular income through dividends, and this
income can supplement retirement withdrawals and allows retirees to avoid
selling shares during market downturns. You know. Another benefit of
(17:50):
stocks is long term tax efficiency. Capital gains taxes may
be lower than ordinary income tax rates. Many retires can
manage withdrawals strategically to minimize taxes. Tax playing often favors
holding growth assets. Summer tiriies mistakenly believe bonds are always
safer than stocks. Well, bonds are typically less volatile, they
(18:12):
carry risks as well. Out of the street changes you
can reduce a bond prices.
Speaker 2 (18:17):
When you brought that up at the beginning of the
Should retirees move all, you know, strictly into bonds. I've
heard that from many people as I'm getting up there
in age, Aaron, I turned sixty this June.
Speaker 1 (18:28):
Guys my age are like, well, you gotta you.
Speaker 2 (18:29):
Know, you gotta really get conservatives as you age, Paul and.
Speaker 1 (18:32):
Your retire Why what do you mean?
Speaker 2 (18:35):
I mean, sure you can make you always make tweaks, right, Aaron,
you never set it and forget it.
Speaker 3 (18:41):
Correct, Correct, you never said it forgetting make tweaks? What
lets you sleep at night? You know? But inflation can
erode bond purchasing power as well, and so you know,
all you all this has to be tied to a
withdrawal strategy. You know, for tireies, withdrawal too much from
volatile portfolio the increase the risk of running out of
money money. Sustainable withdrawal planning helps manage that risk. Portfolio design,
(19:05):
withdrawal strategies must work together. You're not in a vacuum here,
and especially if you're if you've been investing in a
while and then there's some volatility, you know, you may
lose some of the gains. So you're you know a
lot of times, if you've been investing in the market
a long time, a lot of what you have is
gains overall over your principle, and so you just might
(19:30):
hear some of your gains might go down, but eventually
they should recover. They always have. I can't say that
they always will for reasons, you know, but if you
have to be disciplined. So discipline is the name of
the game there. So Review asked allocation talk with an
advisor about about this, talk with us about this is
what we what we do. As you mentioned, Paul Wall
(19:53):
Street Journal named us best are in the country, So
why not talk to us? And ultimately, the question of
whether or not retire shit on stocks? The real question
is how much stock exposure. It's not whether retires stocks. Rather,
real question is how much stock exposure makes sense giving
your income needs. Risk tolerance and longevity, and for many
retire resub equity exposure remains essential. Eliminating stocks entirely often
(20:15):
creates more risk than it removes.
Speaker 1 (20:18):
And that's good stuff. Maybe that's why Wall Street Journal
named you guys. Right, that's what you got the the
best r I. That's Registered Investment Advisor. Right.
Speaker 2 (20:28):
The acronym recently recognized by the Wall Street Journal. That's
Creative Planning. That's Aaron colewaal on WYSM. This is a
retirement clinic. One thing we haven't done is give out
your phone number locally. The location is where you've been
for many, many years, and that's an in Brookfield. We're
Red and Blue Mound in Port Washington up in Ozaki County.
(20:50):
Great for those northern clients, North side clients, Riscine great
for the south part of the state in Delafield as well,
and then license in all fifth stays. So you've also
got an office in Cape Coral, Florida, Phoenix, Arizona. More
information is at Creative Planning dot com or the Retirement
Clinic dot com. The number two sixty two five two
(21:11):
two forty forty. Please if you have any questions call
two six two five two two forty forty.
Speaker 1 (21:20):
That was good stuff. Erin full of information today.
Speaker 3 (21:24):
Thank you, thank you.
Speaker 2 (21:25):
I hope well done. Jeff Cowal joining us right after
this commercial break. He's got a segment that has to
do with parents and parents are facing a tug of war.
And if you're listening and you get it, you get
it right. If not, you still need to pay attention.
A tug of war between paying for retirement and college.
That's coming up after the break. And then erin what
do you have for us coming up later in the hour.
Speaker 3 (21:49):
Yeah, I've got the Great Wealth Transfer State Planning Essentials
for multi generational families.
Speaker 2 (21:54):
That is all ahead as the Retirement Clinic continue Saturday mornings.
Speaker 1 (21:59):
We are on at ten am today.
Speaker 2 (22:02):
Aaron Cohall, of course, is your host, and I'm Paul
kronforst On News Talk eleven thirty WISN.
Speaker 4 (22:07):
We'll be right back and Jeff Cohaugh Planning, Planning, planning.
We emphasize its importance with all of our clients. Parents
often have competing objectives both worthy.
Speaker 5 (22:19):
I wanted to address.
Speaker 4 (22:21):
College versus retirement. I'm going to start with a profound statement,
believe it or not, and then expand on it. Here
goes you ready for the profound statement, parents can borrow
for college but not for retirement. Profound right, you can
borrow for college, but you cannot borrow for retirement.
Speaker 5 (22:40):
Let's get into some details.
Speaker 4 (22:42):
The basis of this was a Baron's article recently titled
Parents face a tug of war between paying for retirement
and college.
Speaker 5 (22:50):
And how to pull it off. Some a couple of
key points that.
Speaker 4 (22:53):
Many parents prioritize retirement savings, with fifty nine percent citing
its their top financial goal, while thirty nine percent prioritize
children's education. Then there's an America Price survey that will
get into a little more detail. It says that nine
to ten parents plan to contribute to their children's college education,
(23:15):
with a third also funding graduate school.
Speaker 5 (23:18):
Here's some of the details.
Speaker 4 (23:20):
Parents planning for a future often find themselves stuck between
two goals that seem to conflict. Building enough for a
secure retirement while helping their children afford college. With budgets
stretched by every day cost, many families end up making
trade offs that can ripple for years. And the decision
isn't whether to pay for college, it's how much financial
support you can afford.
Speaker 5 (23:41):
To give.
Speaker 4 (23:42):
This gets an amer Price survey that found nearly nine
to ten parents plan to pay for at least part
of their children's college education. A third will contribute to
graduate school. When I ask about the top financial goal again,
nearly sixty a side paying for retirement and the thirty
(24:02):
nine percent said paying for college. The push and pull
is why advisors urge parents to shore up their retirement
first before committing heavily to college savings. This is just
how we viewed in our office, and I think it's
a proper way to do planning. You can't help others
unless you take care of your planning first, because you
don't want to have to go back to your kids
(24:25):
after you retire and ask them for money, whether it's
for rent or for healthcare or anything. You want to
make sure your planning is short up so you don't
have to go back to them.
Speaker 5 (24:34):
They'll have their own lives to live.
Speaker 4 (24:37):
The starting point making sure parents don't jeopardize their own
financial security and the process of helping their children.
Speaker 5 (24:44):
The article says something that I say all the time.
Speaker 4 (24:47):
There's a lot of validity to the airline analogy.
Speaker 5 (24:52):
Put your own.
Speaker 4 (24:53):
Oxygen mask on first before helping your kids. One role
that they emphasize in the article is that any employer
sponsored retirement match, you have to make sure that you
put enough in that you get the company match before
directing any money elsewhere anywhere. That is a given that
is really a high priority, very important. Next thing is
(25:15):
when I mentioned at the beginning, you can borrow for college,
but not for retirement. Are you expecting your twenty five
year old to help with your retirement retirement income?
Speaker 5 (25:24):
Probably not, but that's what you'll be facing.
Speaker 4 (25:27):
If you don't plan for your own retirement, your twenty
five year old eventually will have to help you.
Speaker 5 (25:32):
With your retirement income.
Speaker 4 (25:35):
Number three is that once they have secured their retirement,
families can begin to think more deliberately about how and
how much to save for college. Five twenty nine plans
is a great way to save for college. There are
also trade offs with that contributions are made with after
tax dollars, but the investment earnings grow tax free and
can be withdrawn tax free if used for qualifying qualified
(25:59):
education instance. A retirement first approach can help families set
boundaries around college costs rather than trying to cover everything.
Many parents aim to fund a defined portion of expenses.
As an example, when we were doing a lot of
planning for our clients for college education, we would say,
let's plan for a state school. So let's say you'll
(26:20):
have one hundred percent of state school paid for, so
you will not be denied your child will not be
denied college education.
Speaker 5 (26:27):
But then if they.
Speaker 4 (26:28):
Want to go to a private school or go somewhere else,
they're going to have to rely on scholarships, loans, other things,
grants to get the balance of it if they want
to do something other than that, so they would not
be denied a college education. This is an example that
the article gave from again as a Baron's article, balance
(26:48):
the actory resonates with parents like Kayden nirona Columbus, Georgia,
who she and her spouse tried to balance savings as
they planned for a two son's futures and their own.
We're saving for retirement college at the same time. While
helping their sons mattered, protecting their own ability to retire
did as well to manage costs. Both sons went to
(27:09):
college in Virginia, again a state school. They were from Virginia,
where the family lived at the time. In addition, each
son was made a fifty percent beneficiary of her husband's
post nine to eleven GI bill benefits, which covered about
two years of their costs and the game they said.
Speaker 5 (27:26):
The aim, they said, was to give the kids a
valuable head start as adults, and it worked. So there
are a lot of different ways to do it.
Speaker 4 (27:33):
Again, I want to emphasize it's most important in our opinion,
to make sure that you take care of your retirement first.
Make sure you have everything in the order. We've got
cash flow projections. It's called the vision builder that helps
with those where we can actually reduce it to writing
and say what happens if you plan for your retirement,
what happens if you have a long term care event?
(27:55):
Then what happens if you take care of those things?
What happens if you start giving money for college? Or
say money for college? Can you do it all? Put
a pencil to it. Make sure you don't just eyeball it.
Give our call, give a call to one of our
great producier advisors, or go online to the Retirement Clinic
dot com and schedule appointment.
Speaker 2 (28:14):
Retirement Clinic we continue every Saturday morning.
Speaker 1 (28:17):
Thank you for joining us.
Speaker 2 (28:18):
I'm Paul kron Forced with creative Planning's Aaron Kowal. If
you've got questions about any retirement issue, a lack of
a plan on your end, if you have no advisor
or just one a second opinion, here's the phone number
two six two five two two forty forty. We heard
from Jeff Kowal with that parent's tug. That was a
(28:39):
good segment hearing from that's your father for those that
don't know Aaron Kolewaal and Jeff Cowal.
Speaker 3 (28:45):
Not a massive coincidence, right, you're right, last name.
Speaker 2 (28:49):
It's no secret. We're not trying to hide anything. You've
been doing the show for many, many many years. As
we said, we started in two thousand and one, just
one week before nine to eleven actually, and we've been
doing it ever since. On Saturdays, the retirement Clinic is back.
Speaker 3 (29:03):
And twenty five years is here.
Speaker 2 (29:04):
Yeah, that's a quarter century a retirement talk. Yes here
in w I said, Now this is about wealth transfer.
The theme is about wealth management and preservation. That's what
we do every week in this segment of the show,
but specifically at wealth transfer. Aaron explain what that's all about.
Speaker 3 (29:22):
So it's the great wealth transfer of State Planning Essentials
for multi generational families. What happens when you die? How
do you get your money to last for generations? You
know a lot of people don't care, some really do
and so and some haven't thought about it. So I
guess this is more for people that haven't thought about
it or really care, you know, about how what happens
(29:45):
to their money when they die. You know, obviously the
goal is not to give it all the government or
to have future generations spend it all on frivolous things.
So you know the require And this is from actually,
if anybody wants this, I can send it to them.
It's it's from an article from Creative Planning, you know,
(30:09):
and so if you need it, if you want to
let me know, reach out Aaron dot co wal at
Creative Planning dot com. But it requires you. So the
takeaway is that preparing for the great Wealth Transfer requires
advanced multi generational state planning strategy. So we're gonna go
through some of this as much as we can in
the time remaining. So I'm gonna read from this, but
(30:30):
we'll get well, we'll comment on it as well. So
as the great Wealth Transfer accelerates, an unprecedented amount of
wealth is expected to pass from baby boomers and older
generations to their children and grandchildren. For high net worth
and ultra high networth families, this shift raises important questions.
How will the wealth impact future generations? How can you
transfer assets efficiently, tax efficiently while also preserving the values, stories,
(30:55):
and relationships that define your family. Thoughtful multi generational state
plan and can help ensure your wealth transfer plan reflects
both your financial goals and your vision for your legacy.
The first step in planning is the first step in
planning for successful multi generational transfer of wealth is to
understand understand exactly what legacy goals you hope to achieve.
(31:19):
Start which really is you want to know before you
even start doing this? What are you hoping to accomplish here?
It's not ready shoot, Aim, Ready aim, Shoot, and so
start by reflecting questions such as what values define your family?
How do I hope to be remembered, What charitable causes
are important to us, What core principles have guided my
(31:41):
life so far? What unique circumstances but does my family
face require actually planning? What are my family's short and
long term goals? So to answer those questions should be
used to guide all of your legacy planning decisions going forward.
For example, if you have family owned business, you'll need
to make sure your business succession plans align with your
personal financial INNST plans. Or if you have a special
(32:02):
needs loved one that you wish to support, I may
you need to take extra steps to support that level
one without negatively having an impact on their eligibility for
government benefits. UH. In order to incorporate your values, may
need decide to establish a trust for your children with
specific payout milestones that align with those values. So some
(32:24):
of these values might include educational milestones. So if you
value high higher education, could you you could establish a
predetermined financial payout for graduating college or receiving advanced degree.
Business startup. If you wish to incentivize your children's entrepreneurial ambitions,
you could authorize the distribution of seed money to start
a new business, subject to basic business planning requirements. Income matching.
(32:49):
If it's important to you that your children learn to
support themselves, you could match a percentage of their salaries
to incentivize them to keep working. For example, say you
authorize an annual distribute you should go up to fifty
percent of your daughter's salary, and she makes one hundred
thousand dollars in a year, she'd receive an additional fifty
thousand dollars. Terrible commitment. So if charitable giving is important
(33:10):
family value, consider authorizing a matching donation to the charitable
causes your children's support and tying distributions to their own
giving smart financial decisions. To encourage smart financial choices, consider
offering distributions for taking steps toward a more secure financial future,
such as meeting with an advisor, following a budget, establishing
(33:33):
a financial plan, saving for retirement, or saving for a
child's college education. Clear legacy goals become the blueprint for
how you structure trusts, family governance, and decision making across generations.
Speaker 1 (33:43):
And I got a quick question for you.
Speaker 2 (33:45):
That term legacy We hear a lot, right, and what
do you want your legacy to be? And the whole
premise of this segment is about transferring wealth to your
next generation, your kids, possibly your grandchildren, and even the
generation beyond that.
Speaker 1 (33:59):
Here's my question.
Speaker 2 (34:00):
Is it your experience decades of experience now Aaron dealing
with clients that most people, when I say most over fifty.
They want to leave money for their kids. Some people,
you know, they're like, listen, this is my money. I
worked hard for it. I'm gonna spend every last penny
of it.
Speaker 3 (34:19):
You know, it's split. Sometimes it's difference in generations. To
be blunt. Uh some uh, you know, some generations, uh,
you know, really want to leave as much as they
can for their descendants. Some say, no, I earn this money.
They're doing fine on their own. I'm gonna, you know,
I want to bounce a check to the grave digger.
And you know, and so it really is split, and
(34:43):
it really is predominant among generations, you know, from greatest
generations of Baby Boomers to Gen X has different attitudes
on a lot of this, and so, uh, you know,
you got to use trusts that to start sure multi
generational wealth transfer. That's the only structure that really works.
(35:03):
So there's different kinds of trusts, living trusts, vocal trusts.
Not going to get into all the details of the
trust right now. It does get into it in the
article from Creative Planning, Asset protection trusts, charitable trusts, dynasty trusts,
which is also known as generation skipping trust. A dynasty
trust facilitates the transfer of wealth to grandchildren and later
(35:23):
generations while minimizing these state taxes that would typically be
due when assets pass from generation to generation, and so
when properly structured, dynasty trusts can help perserve family wealth
for many decades.
Speaker 5 (35:35):
There's special needs.
Speaker 3 (35:36):
Trusts and then air vocal life insurance trusts which hold
life insurance policies to be passed down. So you want
to align your state plan with family governance and values,
and for many affluent families, the biggest legacy planning concern
isn't how to pass along their assets, but rather how
to teach their children and grandchildren be responsible stewards of wealth.
(35:56):
Will also are being motivated to find their own success
in life, where family governance and ongoing education become critical.
Some people don't want to deal with this, Paul. Family
governance can include a written family mission statement or a
legacy letter expressing your values and intentions, family meetings to
discuss shared goals, philanthropy and the responsibilities that come with wealth,
clear goals for family members involved in family businesses, trusts,
(36:18):
and foundations, and integrating family governance with your state plane,
documents and trusts to ensure that your wealth transfers. Strategy
supports and not undermines your family culture. Be open and
honest with your loved ones, you know, focus on family communication.
A lot of people hate talk about this with their kids,
so lead by example. Prioritizing financial responsibility and your everyday
(36:41):
life shows your children, grandchildren what it looks like to
be a good steward of wealth. Even young children can
learn about the importance of saving for the future and
the positive feelings that come with helping others talk about
money in store of your wealth. Have open, honest discussions
with your kids about money. Tell them the history of
your wealth. Did you start with nothing, grow your wealth
through hard work and determination, or would you inherit wealth
(37:02):
and learn to be a good steward of it so
that you could pass it on so that you could
pass it along to the next generation. High net worth
families often shy away from talking about money, but being
open and honest about your experience can help you pass
on your values and expectations to next generation. Involved loved
ones and decisions over time, you know, to really kind
(37:26):
of help give them some sense of responsibility, and then
partner with an advisory team for multi generational wealth planning.
Could you use some planning for an efficient multi generational
generational transfer of wealth. We're here for you an experienced
advisory team. You can help clarify your legacy and wealth
transfer goals, coordinate estate planning documents and trust structures with
(37:46):
your tax and investment strategies, facilitate family meetings and communication
around sensitive wealth topics, and align your multi generational plan
with evolving tax laws and planning opportunities. So that's that's it.
In an you can spend many shows talking about all communication.
Speaker 1 (38:04):
I think it's you talk about communication with your kids.
Speaker 2 (38:08):
Listen, they want to be in the same page at
least let them know, and if there is a trust,
they're probably going to be involved. We should mention creative planning.
Since you guys have now joined forces, you do have
his state planning people to help with this process.
Speaker 1 (38:22):
Open communication.
Speaker 2 (38:23):
We've talked about that all the you know, over the
years in the show with your children as to what
your plans are your legacy. Are you leaving them money
or you know, the house, all of that stuff, And
the sooner it gets done, the better you can, you know,
kind of get it out of the way then and
it might be awkward, but I think you feel better
when that conversation is finished.
Speaker 1 (38:43):
If you've got a question, stay tuned.
Speaker 2 (38:45):
All of the contact information as we continue the Retirement
Clinic with Aaron Coal Today. It's coming up next. The
phone number is two six two five two two forty
forty or the Retirement Clinic dot com. As we wrap
up today's Retirement Clinic, we thank you for joining us,
and thank you the host of today, Aerin Kolewaal.
Speaker 1 (39:05):
We covered a lot of ground.
Speaker 2 (39:06):
What's the best way to reach out and get this
retirement plan started?
Speaker 3 (39:10):
Yeah, give us a call at two six' two five
two two forty forty or go To Creative planning dot
com or The Retirement clinic dot com as.
Speaker 2 (39:19):
Well, yeah a lot of good stuff on today's four
or five big Topics we heard From Jeff kowal and
locations all around town In. Brookfield we Mentioned Delafield, Port
washington In, racine license in all fifty. States Creative planning
dot com for more. Information monday Through, friday market updates
three and five. Pm news blocks Every. Saturday The Retirement
(39:42):
clinic is on at ten o'clock ON Wisn. Milwaukee thanks
for joining. Us news is coming up.
Speaker 6 (39:47):
Next Creative planning was ranked By The Wall Street Journal's
buyside as the best INDEPENDENT ira for comprehensive wealth management
In february twenty twenty. Six this ranking is not based
on any specific time period the. Preceding this program is
furnished By Creative, planning AN sec registered investment advisory. Firm Creative,
planning along with its Affiliate United Capital Financial, advisors currently
(40:08):
manages or advises on a combined three hundred and twenty
five billion dollars in assets as Of june, thirtieth twenty twenty.
Four the host works For Creative, planning and all opinions
expressed by the host and or their guests are solely
their own and do not necessarily represent the opinion Of Creative.
Planning the show is designed to be informational in nature
and does not constitute, investment tax or legal. Advice different
(40:29):
types of investments involve varying degrees of, risk and there
can be no assurance that the future performance of any
specific investment or investment, strategy including those discussed on the,
show will be profitable or equal any historical performance. Levels
the information contained herein has been obtained from sources deemed.
Speaker 1 (40:45):
Reliable but is not.
Speaker 6 (40:46):
Guaranteed if you would like our, help request to speak
to an advisor by going to creative planning dot. Com Creative, planning,
tax and legal are separate entities that must be engaged.
Speaker 3 (40:55):
Independently
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