May 16, 2026 • 40 mins
The Kowal team help plan your retirement
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Speaker 1 (00:00):
It's time for the retirement clinic. This is Wya San.
Happy Saturday morning, everyone with me. Your host Aaron Kolewaal
with Creative Planning formerly the Coowal Investment Group. Aaron, to you,
I say, good morning, great to have you back on
the show.
Speaker 2 (00:15):
Good morning, great to be with you.
Speaker 1 (00:17):
We heard from Chauncey. Did you hear what the inside
joke has become with Chauncey wisen Cell? If you call
Creative Planning and ask for Chauncey wisen Cell, you may
forget the last name. So just remember the word Chauncey.
According to Chauncy, the only one there. Yes, that's what
he said there. I'm pretty sure there's no other Chauncey's there,
(00:37):
So that was sort of an inside joke. He hosted
last week's show. Jeff and Chauncey were on the week
before erin it's your turn this week, and you got
a lot of stuff, a lot of stuff on the
plate before we get started, talk about Creative Planning. Just
give us that that elevator's speech for the background.
Speaker 2 (00:57):
Right, I do have a lot. I mean I could
do several shows with what I am not bringing on
the show today. But yeah, Creative Planning is a large
RAA that we joined up with at the end of
twenty twenty four. We've been very blessed to be able
to work with them. We're able to do to handle
anything and everything financial related in house, taxes, in how
(01:22):
and advising, in house, state plan and prep and document execution,
anything business services for one k's where Creative Planning is
one of the largest providers of for one k's in
the country. You know insurance, you know home and auto
and life, and I mean anything financial related we can
now do in house, so everything's coordinated. Then everything is
(01:46):
is really pulling in the same direction, which is something
we've always been talking about. And so we're really able
to have i mean unrivaled results for for clients because
everything's done here and and I think we do a
tremendous job for our clients.
Speaker 1 (02:07):
So you mentioned one of those acronyms. It stood out
again r A A. You said you joined Creative Planning.
Speaker 3 (02:14):
R i A.
Speaker 1 (02:16):
Oh, registered investment.
Speaker 2 (02:19):
Yes, that's correct you sorry, no, uh yeah, Registered investment advisors.
Speaker 1 (02:24):
I stand corrected, Registered investments independent. And also you were
congratulated officially by the Wall Street Journal back in February
as what's the I want to.
Speaker 2 (02:35):
Get this right, the best of the best ra a
UH in the country, in the country planning r A
in the country.
Speaker 1 (02:45):
Yes, yeah, So kudos to you guys. You joined Creative
Planning over a year ago. Aaron, it's been some time.
If you're a client, you know all about it. If
you're not a client, by way background, you remember this
show the Retirement Clinic back to two thousand and one
when your father just started it with the Kowal Investment Group,
and locally nothing has changed. People can go to the
(03:06):
Retirement Clinic dot com. That can go to Creative Planning
dot com. And here's the most important part. If you
have a question two six two five two two forty
forty I will say this as an aside. Last week's show,
we touched on taxes with Chauncey, and I can't remember
the last time I got so many emails regarding a topic. Hey,
(03:27):
at ten forty you guys are talking about taxes. At
ten thirty three, you're talking about taxing. How do I
get in touch with that company? Here? It is two
six two five two two forty forty one. Nice kind
old man said to me, you need to talk slower
and give out the number more often.
Speaker 2 (03:46):
All right, I know my mom's been telling me that
since I was a kid, they need to talk slower too, So, uh,
Gramma can't hear you, So uh two six two five
two two forty forty is the phone number. It's the same,
it's the same locations that we've always had, the same people.
You know, nothing's changed, so we except we've gotten a
(04:09):
lot better and have a lot more capabilities for clients.
Speaker 1 (04:13):
And then this year we focus on retirement. It's called
the Retirement Clinic. And if you're wondering about locations around town, again,
same on Bluemont Road in Brookfield, you're in della Field.
You're in Racine Port, Washington, Wisconsin. Cape Coral, Florida. Cape Coral, Florida.
Said that what am I missing? Phoenix, Arizona, And I
guess we should know. Creative planning licensed in all fifty states.
(04:37):
That being said, you talked about these great topics. I
think we're going to start out with the great Wealth Transfer,
and first off, you need to explain and define what
that means. Although it's kind of self explanatory, but the
great Wealth Transfer airon what's going on.
Speaker 2 (04:52):
There, So great wealth transfer can What I'm referring to
here is is baby boomers get older and passing on
their assets because they've accumulated quite a bit of of
assets too, and so passing it on to Gen X
and millennials. And so that's what the great wealth transfer,
(05:16):
because you know, they can't you can't die and take
it with you, and so it's got to go somewhere.
And but it's actually speeding up, and it's projected. You know,
it's no longer some future event. They kind ofs are
projecting decades away. I mean, I remember earlier in my
career it was, okay, the first baby boomers are turning
(05:36):
sixty five. It's like, okay, here we go, you know,
So it's happening right now.
Speaker 1 (05:42):
Yeah, as we speak the great wealth transfer. Just stepping
back before you do a deep dive here and explain there.
And this is a good thing, isn't it. The fact
that they obtained that wealth and they're transferring it to
either their kids or whatever. It is a good thing.
Investment in the stock market, all of this seems like
(06:02):
a positive thing to me.
Speaker 2 (06:04):
Yeah, I mean, there's with anything, there's positives and negatives,
you know, but there are certainly some positives I mean negatives,
I would say, like you know, inflated housing, you know,
like their costs of baby boomers. A lot of times
there how, costs of homes were a lot less relative
you know, to inflation than today, Uh, you know, more afforable.
(06:25):
But those assets will also be passed, you know, passed
on for the most part too, to family. So there's
there is positive negatives to to everything. But we get
into the facts and what's going on, you know, so
it is happening right now. It's not on the horizon.
(06:46):
You know, baby boomers are aging, they're passing assets to children, grandchildren.
You know, asset's still commonly placed. Total transfer well into
tens of trillions of dollars over the next two decades. Uh.
And that's I mean, that's really hard for people to fathom,
is how much money it is. The scale is unlike
anything the financial industry has ever seen. Many families are
(07:10):
completely unprepared for both the opportunities and the emotional challenges
that come with it. A surprising number of wealthy families
do not actually have a fully coordinated estate plan. They
may I mean, we talked about this over years that
how many what percentage of people actually have on a
state plan It's not a lot.
Speaker 1 (07:29):
You know.
Speaker 2 (07:29):
They may have a will drafted years ago, but beneficiary designations, trusts,
retirement accounts, and titling of assets often don't match. One
outdated IRA beneficiary form can completely override the intentions written
in a trust or will. This creates family conflict more
often than people realize. State planning is not a set
it and forget it process. As you know, I think
(07:51):
that's one of my favorite sayings. You know that this
is not a set it and forget. It's not a
wrong co retissory cooker. And I like that good. I
like that you laugh at that lame joke every time.
I don't mind those, right right, I know, I know,
as my kids would say, it's a dad joke.
Speaker 1 (08:12):
Oh yeah, I'm the master of bad dad jokes and
I can't even remember those. So if I get through
on it's a success. I know.
Speaker 2 (08:19):
I know the You know, so we we really need
to update that. We've talked about this in a lot
of times. That you might have an outdated beneficiary designation,
an IRA or four oh one K there might be
on a ex spouse or someone that you really don't
(08:41):
you know, or an ex son in law, our daughter
in law on there, and that supersedes anything else that
you have. If you if you have a trust for
the money to go to one person and it says
to go to someone else in the beneficiary designation, tough luck.
That's too bad. You need to update that. That's something
that we always do when we when we start working
(09:02):
with new people's take a look a beneficiary destinations to
make sure that they're accurate. You know, many errors receive
substantial wealth with little to no financial education. I mean,
you know, we bemoaning the state of financial education for
forever that we don't learn the things that we need
(09:23):
to learn in high school or college that you know,
on taxes and finally taxes and saving money and all that.
So uh, it's people are just not educated. So then
they receive wealth. And you know, so parents often avoid
discussing money because they fear entitlement or family tension. The
result is adult children inheriting large sums without understanding taxes, investing,
(09:46):
or responsible planning, and studies repeatedly show inherited wealth is
often substantially depleted within two generations. Communication and preparation are
just as important as legal documents.
Speaker 1 (09:57):
Oh, communication, there's a right time and a place to
have discussions about family money, don't you agree, especially if
it's going to be a serious kind of a sit down.
For instance, last weekend was Mother's Day. We had a
fantastic Mother's Day. We got together. That's not when you
want to bring up, you know, the family.
Speaker 2 (10:15):
Mom, how about you leaving me when you die.
Speaker 1 (10:18):
Happy Mother's Day. Here's a card and some flowers. Now
how much do I get? Again? No, you want to
celebrate it. There's a right time and a place even
if there's a way to approach the conversation erin.
Speaker 2 (10:29):
Yeah, yeah, there there is, and you can it doesn't
have to be. You can have it scheduled and say, okay,
we're gonna be talking about this and it doesn't need
to be. And we can help with that. We can
help facilitate some of these, uh, you know, these discussions.
You know, creative planning for decades has been helping with
these types of things for you know, for many many people.
(10:51):
So we can you know, wealth manager can certainly help
with that. We we can, you know, we can help
and so you know, retirement accounts are also becoming one
of the biggest problem areas in estate planning. Under current
inherited diarray rules, many non spouse beneficiaries must fully distribute
(11:11):
inherited retirement accounts within ten years. So when we think
about non spousely, oh, my wife's didn't get everything, Well, okay,
what about kids and grandkids? And you know, so you
got to think about that too, you know, and so
must uh for higher earners. That can create enormous tax consequences.
So if your children or grandchildren are successful, that can
create a big tax problem for them. If they're taking
(11:33):
out a large IRA in one year over ten years,
that can create big tax issues. So someone inheriting and
a lot of times when when parents die, it's their
kids are in their peak what's called peak earning years,
So it's what when their income is going to be
the highest. So someone inheriting a large IRA during their
peak earning years may suddenly find themselves pushed into significantly
(11:56):
higher tax brackets. And families who ignore this planning opportunity
can unintentionally lose hundreds of thousands of dollars to taxes,
which really bugs me.
Speaker 1 (12:06):
The government taking that bugs you. The government taken taking money,
taxing you I should say it does, You're right out
of all the things that especially if it can aaron
be avoided, agreed.
Speaker 2 (12:18):
Right, right, and you know, well there's no waste, fraud
or abuse in government. So your money is going somewhere
good that is going to help the you know, for
the greater good as some say.
Speaker 1 (12:31):
You so.
Speaker 2 (12:31):
But the emotional side also of inheritance planning is often underestimated.
Parents may want fairness, but equal is now not always equitable.
One child may have worked in the family business while
another pursuit is separate career. One child may need more
support because of health and personal challenges. These are difficult conversations,
but avoiding them can create resentment after the parents are gone. Uh,
(12:56):
you know. In real estate is becoming a major issue
within the wealth transfer conversation. Many families owned vacation homes,
rent properties, farmland, or commercial real estate that children may
not actually want to manage. Some heirs live out of
state and have no interest in becoming landlords. Others emotionally
want to keep a property even when financially makes little sense.
(13:18):
Family should discuss these expectations long before assets transfer, and
then we're also seeing Aaron.
Speaker 1 (13:25):
Just on that note, they might inherit the house for
mom and dad after both are past. However, they may
not want the responsibilities, so they want to sell the house.
So in other words, they might want the money the
proceeds from the value of the property, but not want
to keep the house. I think that's pretty common with.
Speaker 2 (13:42):
Families, right, Yeah, it's very it's very common. But you
know what else is common is one wants to keep
it and one wants yeah, yes, yes, And so that
is a fight waiting to happen. That happens all time.
And so you know it's I say, as the clients,
(14:04):
it's you got to get it set up the way
you want it, and you envisioned it and communicated. And
if kids don't like it, they can be mad at
you instead of their living siblings. Uh, you know. And
so it's it's a lot harder to be mad at
somebody that is has passed. Then somebody's right there and
(14:24):
you can look them in the eyes and say, I
don't like what you did. I disagree. Maybe you stronger language.
And it's a lot on the radio, but you know,
these conversations need to happen, and people hate talking about it,
but uh, you know, it really needs to happen. So
we're starting. I'm starting these conversations with my kids, you
(14:45):
know what happens, you know, if if we pass, and uh,
they're a little too young to appreciate, especially the almost
eight year old, but your oldest one of the teenagers.
Speaker 1 (14:56):
Yeah, and they kind of aware of the you know
at that point. I mean, once they're an adult, it's
legally it's totally different. But I think it's good for
kids to be somewhat engaged and know about their you know,
what's going to happen in the future. And those conversations,
albeit as uncomfortable as they might be, Aaron, are almost necessary,
(15:17):
aren't they The conversation with mom and dad and kids
while everybody is alive and coherent, healthy, And I think
that's why we get an estate plan done, whether it's
a trust, a power of attorney or will you need
to have those get your affairs in order right before
it's too late, and then trouble can ensue. And you
hate to see families fight over that stuff if it
(15:38):
can be abrighted.
Speaker 2 (15:41):
Absolutely, yeah, absolutely, you know we're also seeing, Paul, we're
also seeing that more affluent retirees are prioritizing gifting while
they're alive instead of waiting till death. And that's I
think a really great trend. You know, for the longest time,
it's like, no, I want to I want to enjoy
as I work for this, they'll be fine. But now
(16:02):
we're starting to see more more people, more baby boomers,
gifting their assets while they're alive to their kids so
that they can see their grown children and grandchildren, so
that they can see them enjoy this. They're realizing they're
not gonna they're not gonna you know, they're gonna outlive it.
Speaker 1 (16:21):
And so this is a great, I think point. You're
right after you pass. You don't see the enjoyment in
your kids' faces when they get whatever it is that
you leave to them if you're alive, and it doesn't
have to be sometimes, you know, massive amounts of money,
but Aaron Boyce sure get to see the smile on
your face, on their faces when you give it to
them when you're alive.
Speaker 2 (16:44):
You know, many parents enjoy helping their kids with home purchases, education,
funding their business opportunities today when they can witness the
impact that it has. Approach this approach can allow families
to gradually educate years and managing money responsibly. Yeah, it's
a way to see you can find tune near estate
plan and we give some money now and let's see
(17:04):
if you spend it or if you waste it?
Speaker 1 (17:07):
And so are you're testing them to see on the hands.
Speaker 2 (17:10):
Yeah, so yeah, so okay, I'm gonna put the trust.
Then do you get this money when I pass or
do you get it at thirty some at thirty five,
some at forty five, some at fifty five and sixty five,
you know, for example, So you can spread that out
then so to see if there's a spend thrift or not.
So one one major misconception also we talked about taxes
(17:33):
a little bit earlier, is that it's only about taxes.
And for many affluent families today, taxes are no longer
the primary issue because the current exemption levels under existing law. Instead,
family dynamics, asset protection and efficient administration often matter more,
and avoiding probate delays and reducing family conflict, you know,
it can be a lot more valuable than squeezing out
(17:55):
one more extra percentage point of tax savings. Good planning
is about control and clarity, and we say don't let
the tax tail wag the dog.
Speaker 1 (18:04):
You know, you.
Speaker 2 (18:06):
Can't let all of your decisions be around to be
around taxes. And so that's you know, that's charitable charitable planning.
I got a lot, you know, a lot here, but
you know, family business creation can help come can create
some of the most complex wealth transfer situations we've got. Yeah,
(18:27):
we got charitable planning. Second marriages, incapacity planning. So there's
a lot transfer wealth. It's not just about money, you know,
and may families knowledge and decision making ability matter even
more than assets themselves.
Speaker 1 (18:42):
Second marriage could be a third marriage in the In
the US, I mean, there's so many blended families and
you've got step children involved, and you might have to
change beneficiaries. Maybe it's the fourth marriage, or maybe God forbid,
there's a tragic death in the family and you need
to make changes there. I just got one, no more
than thirty seconds to spend on this. Did you watch
(19:02):
Yellowstone the series?
Speaker 2 (19:04):
Yes?
Speaker 1 (19:05):
So the I mean I don't want to give away
any spoiler alerts. I think it's so well done. Now
the new one, the Dutton ranch is coming out the
spin off, right, so without giving away endings or spoiler
alerts Aaron, it was, you know, the great transfer of wealth,
Who's getting the ranch? All of this stuff? And uh,
you saw the one bad black sheep in the family.
I think his name was Jamie, the scumming attorney son right,
(19:29):
uh uh huh uh, and he was at odds with
the father. Then there's Beth, the wild daughter, and she
marries Rip and does Rip get the money? Well, that's
why spoiler I said, does Rip get the money? I
didn't say so without giving away the ending.
Speaker 2 (19:42):
There's there are you know, for those that don't know,
Yellowstone is a gigantic ranch in Montana and massive they
have to they have to you know, it's a cattle ranch,
and so they have to deal with uh with taxes
on inheritance and and all the stuff in real estate
and and so that becomes an issue on the show
(20:07):
that they have to address. And it's kind of cool
as a financial planner and be like, oh, they're actually
aware of this stuff because you know, in Hollywood they
get it wrong. That may not fit the ner. Taxes
may not fit the narrative.
Speaker 1 (20:23):
What you also hear about the reading of the wheel,
and it's dramatized, but they actually talk about the trust
in Yellowstone and a lot of it was albeit these
people are mega millionaires. It was a TV show, but yeah,
it's you can boil that down to a basic American family.
It's the same thing, right, there's siblings that quarrel. The
(20:43):
Jamie guy did not get along with Beth very well,
did he?
Speaker 2 (20:46):
He just I would say that's an underthat.
Speaker 1 (20:49):
I love that show. If you haven't watched Yellowstone, I
mean there's my advice watch it. And then the next
one is Dunton Ranch that's coming up I think soon.
Speaker 2 (20:58):
So, uh, you need to like the eighteen eighty three also,
that was very good.
Speaker 1 (21:02):
You know we never saw that, so you recommend that.
Speaker 2 (21:06):
Very much. Yeah, nineteen twenty three little, yeah, but uh,
eighteen eighty three was fantastic. Tim mcraw isn't it And
he is a.
Speaker 1 (21:16):
Wonderful that's right. And Costner was the original Yellowstone one, right, Yes, boy,
the acting is good in there here. It's confusing. I
don't know where to watch this stuff. I go to
google how to stream you know the Dunton Ranch US
It's on Paramount Plus yep, and I get it. Some
people are like I've just given up on streaming because
I don't know where this stuff is. Just go to
(21:37):
Google how to stream and then type it in. You'll
figure it out. Highly recommend it. And before we break
and wrap this one up, the great wealth transfer this
topic that on, It's going on the right now in
front of us.
Speaker 2 (21:52):
It is, it is, And so I just have one
more point about this. You know, the great wealth transfers
it's will and is reshaping investment, philanthropy, business ownership, and
real estate markets. And it's going to over the next
twenty years. Younger generations may allocate money differently than the
parents did. Advisors, attorneys, and families all need to adapt,
and this is why we all have them in house
(22:13):
in one place. They all need to adapt changing priorities
and expectations, and families that prepare proactively a lot of
our families will likely preserve both wealth and relationships more effectively.
And the ones that avoid the conversation may discover too
late that wealth alone does not create harmony.
Speaker 1 (22:32):
Oh that, and don't wait. If you can do it now,
do it, get that, get it done, Get your affairs
in order, as they say, and you can reach out
to create a plan because you guys do all of
that now. Arin, As you said, it's kind of under
everything under one roof, right, Yeah, absolutely, two six two
it is five to two to two forty forty. For
(22:53):
our listeners that say, Paul, say the number again, I
will do this. I'm not being sarcastic. I took the advice.
I'm actually using our listener's advice. Two six two five
two two forty forty one phone number for all locations
for creative planning around town. Easy to meet and talk
to an advisor. You can make the phone call. I think, Aaron,
(23:16):
you're open to anything. It could be on a speaker
phone with your siblings around. It could be on a
zoom meeting. If you're out of study. It doesn't matter, right,
as long as you meet and get it done.
Speaker 2 (23:29):
One hundred percent Yes, absolutely so.
Speaker 1 (23:31):
Creative Planning dot com, the Retirement Clinic dot com, and
two six two five two two forty forty. There is
a topic coming up right after the commercial break, your father,
Jeff Cowaal is going to talk about. This fascinates me
because it's a Wall Street Journal article. The thesis, I
guess the main thrust of it is about people that
are going to retire because they don't want to learn AI.
(23:55):
So in other words, they're at that age we're in.
We're around a bubble. I like my job, but now
we've got to start brand new and learn this AI stuff.
So they're just going to retire rather than learn about
artificial intelligence. Before we get to Jeff, doesn't that intrigue you?
Speaker 2 (24:08):
Erin, Yeah, you know, yeah it does. And I give
credits to my dad. He's always been one to embrace
new technology. And we say, okay, this is what we're
using now He's like, all right, show me how to
do it, and I'll do it. And so that, I mean,
it does make sense because it is changing dramatically how
everybody's doing their work and enhancing or unfortunately we're replacing
(24:31):
two in some areas it is.
Speaker 1 (24:33):
It's going to be a good segment coming up next.
Workers that opt to retire rather than learning AI Artificial intelligence.
Aaron Kolewal is your host. This is wy Since Retirement
Clinic every Saturday at ten o'clock, also Monday through Friday,
twice a day, three and five PM news blocks During
the afternoon Dan O'Donnells show with those daily market updates.
(24:54):
You guys have been doing that for decades on on
this show, the show which has been around since two
thousand and one on WISN with Aaron Kohal and Paul
Kronford Station.
Speaker 4 (25:04):
There's so much talk and some fear about AI, artificial
intelligence in the workplace. Well, how does it affect your
thoughts on retirement? This Wall Street Journal addresses that the
title of it is the workers opting to retire instead
of taking on AI. Their career span a personal computing,
(25:26):
Internet and smartphone waves. But some older workers see AI's
arrival as a queue to exit. They give an example
of somebody here, Luke Michael has already lived through two
technology overhauls in his career, first desktop publishing in the
nineteen eighties and online publishing later on.
Speaker 1 (25:46):
But AI.
Speaker 4 (25:47):
He's had enough, so as an employer made an early
retirement offer to some staff last year to sixty eight
year old content content strate just decided to speed up
his exit before he had expected to work a couple
more years. The time and energy you have to devote
to learning a whole new vocabulary and the whole new
skill set, it wasn't worth it. He goes on to
(26:10):
say that isn't that he's shunning artificial intelligence. He's embracing
it in other areas of his life. But at this
point he's less eager to endure all the ways that
technology promises to upend his work. He goes on to say,
after rising for decades, and he's I want to use
(26:31):
my own purposes. I want to use it for my
own purposes and not for somebody else's. After rising for
decades and then hovering around forty percent and the twenty tens,
the share of Americans over fifty five years old in
the workforce has slipped the thirty seven point two percent.
Speaker 1 (26:48):
Let me repeat that.
Speaker 4 (26:51):
Around the twenty tens till now, it's been about forty
percent of people in the workforce are fifty five and older.
Now it's thirty seven point two percent, the lowest level
in twenty years, and so gives some reasons for it too.
Financial cushion of rising home equity and stock market returns
is driving some of the decline, but for some older professionals,
(27:15):
money is only part of the equation. They say they
don't want to spend the last years of their career
going through a two molt of AI adoption. Many people
retire when key elements of their work lives are disrupted
at once. Maybe their autonomy is being challenged or changed,
their friends are leaving the workplace. I think that's a
big part of it too, or they disagree with the
(27:36):
company's direction. When two or three of these things show up,
that's when people start to opt out.
Speaker 2 (27:41):
And AI is a big one.
Speaker 4 (27:43):
So Michael, the president they were referring to here, he
just had to learn new skills during his career, and
he was always eager to do that. He always embraced
new technology, but just didn't want to go along with
this one. Your battery doesn't hold the charge as long
as it used to. I thought that was an interesting comment.
AARP survey last summer of five thousand people over fifty
(28:07):
twenty five percent of those who plan to retire sooner
than I expect to counter work stress and burnout as factors.
About half of those retired said they left work at
least partly because they had the financial security to do so.
About AI. Research shows that about thirty percent people from
(28:28):
ages thirty to forty nine said they used chat GPT
on the job. That's thirty percent from thirty to forty
nine thirty to forty nine, nearly double the share of
those fifty and older. Baby boomers and Gen X also
experienced a sharp decline and confidence in using AI technology. Okay,
(28:50):
having said that that baby boomers and Gen X don't
have confidence. Being a baby boomer myself, I love the
artificial intelligence applications in our business, whether it's no taking
or scanning tax returns. But I'm also surrounded by younger
people who really embrace it and can support me with it,
(29:11):
and that I think makes a huge difference. They understand
that they get it, they embrace it, and they can
help me along with it. Just a couple more things
from the article. This is a Wall Street Journal article.
When I came to write reports and reviews, colleagues would
suggest that this woman used chat GPT. She says, I
have no idea how to use it, and I have
(29:31):
no interest in using AI write anything for me. It
would have been more prudent to work until she was
closer to medicare. She retired at age sixty, but by
waiting until her chill a out of college and some
of her stock grants had vested, the math still worked
out for her.
Speaker 1 (29:48):
And she was able to retire.
Speaker 4 (29:51):
I think that last part was it was pretty important,
and I'm going to use that as a wrap up
in a minute. But employers already are under pressure to
cut work, such as the tech industry, may welcome some
of the retirements. That's according to a chief economists at
Burning Glass Institute, which studies labor market data. Again, employers
under pressure to cut workers say if somebody retires, they
(30:13):
don't have to fire somebody, so that's good. There's no
right or wrong answer to how people approach AI and
retirement planning again is the key. If you do the planning,
actually look at the numbers for retirement, including potential pitfalls
like long term care, nursing, home drops in the market,
(30:35):
things like that, they plan for that and it still
works out financially. Then guess what, It's your choice as
to whether or not your retire. I like having control.
It's your choice, not the company's choice. If you want
to embrace AI, that's great. If you don't, you can
see that you have enough money to retire and avoid
all the potential pitfalls. Call us and set up a
(30:57):
time to meet with us. An appointment at two six
two five to two two six two five to two
four zero four zero our go online to the Retirement
Clinic dot com.
Speaker 1 (31:12):
We are back w I said, Wisconsin's most listened to
radio station in case you were wondering. And it's thanks
to guys like this guy, Aaron Kowal all my weekend
shows Saturday mornings, We are back by the way with
Aaron and the Retirement Clinic with Creative Planning formally the
Coal Investment Group. They join forces. And in this segment,
(31:32):
you're going to talk about concentrated stock. I guess first
start by defining that and then take it from there.
Speaker 2 (31:40):
So yeah, So concentrated stock is generally defined as some
you know, if you have ten percent or more of
your net worth tied up in a single company stock
and so like Formwaukee Milwaukee area executives, you know, Northwest
at Northwestern Mutual, Rockwell, Johnson Controls, Harley Davidson, Cole's, or
any of the other major employers in the area. This
(32:03):
is an extremely common situation, typically builds up over a
career through stock options, restricted stock units, employee stock purchase
plans for one k's that sort of thing. The position
often represents enormous embedded gains, which is exactly why so
many people delayed dealing with it. The longer you wait,
the bigger the position usually gets, and more painful the
(32:25):
tax bill becomes when you finally act. You know the
risk profile of single stock. Not to get too much
into you know the weeds, you know, but the risk
profile a single stock is fundamentally different from a diverse
fied portfolio. Diverse fied equity portfolio might have a standard deviation,
(32:46):
which is a range of expected returns up or down
and so, but of like fifteen to eighteen percent. An
individual stock typically runs thirty to fifty percent, sometimes much higher.
So you could have a much more volatility in concentrated stock.
(33:06):
So that's why we need to look at diversifying. About
half the risk of an individual stock is company specific
and doesn't get compensated by the market, meaning you're taking
a risk you don't get paid for. Several high profile Yeah,
several high profile examples like Enron, Layman Brothers, bear Stearns,
General Electric have shown that even seemingly bulletproof companies can
(33:28):
lose eighty to one hundred percent of their value in
a matter of months. Loyalty to an employer is admirable,
but shouldn't determine your retirement security. So there's several strategies
to deal with this. I've only got a few minutes,
so I can't get too deep into all of these,
but strategy one is very doable, is A, and I
(33:49):
can get you the rest if you'd like. Strategy one
is a discipline multi year selling plan that spreads the
tax hit across calendar years. This is the simplest approach
and often the most under selling proportionally across several tax heres.
Lets you fill specific capital gains brackets without spilling into
the higher twenty percent rate or triggering the three point
(34:10):
eight percent net investment income tax. It also keeps you
under IRMA thresholds for Medicare premium, so if you hit
certain incomes you know income levels, you're paint more in
Medicare premiums and avoid stacking gains on top of business
sale proceeds or large roth conversions. The discipline matters more
(34:31):
than the cleverness. If people want to get cute and so,
but the discipline is what matters most, and most people
say they'll diversify next year but never actually do.
Speaker 1 (34:41):
By the way, Irma is not a woman's name, right
in this case, it's another acronym, income related monthly adjustment amount.
Are you impressed that I knew that?
Speaker 2 (34:52):
I'm very oppressed that you knew that fall that I
have a top of your.
Speaker 1 (34:54):
Head that I have Google right now here.
Speaker 2 (34:57):
I couldn't hear your keyboard tapping at all.
Speaker 1 (35:00):
It's it's pretty easy for me to look it up,
but I wanted to make sure because there's so many
acronyms income related monthly adjustment amount. That's what IERMA means.
All right, go ahead, sorry, yes.
Speaker 2 (35:12):
Second strategy and this is something you know that really
not great for radio, but equity collar hedge hedge a
position without triggering immediate tax events, so you use puts
and calls around the stock to eventually move out of
It's appropriate for executives who still believe in the company
(35:34):
long term. But when protection gets a short term drop
while waiting out a blackout period or a pre i
po lock up, and we can get into that, it's
more of a very specific case by case you know need.
Strategy three is exchange funds. Let you swap into a
diverse filed portfolio without pain capital gains today. So in
exchange fund sometimes called the swap fund, pools concentrated stock
(35:57):
for many investors. To create an instant diverse, fied portfolio,
you contribute your single stock position in exchange for partnership
units in the fund, and that exchange is generally generally
non taxable event and after a seven year holding period,
you can redeem your share and receive a diversified basket
of stocks rather than your original concentrated position. Your cost
basis carries over, so the gain isn't eliminated, it's deferred
(36:19):
and spread across diversified holdings. You know, they do come
with some significant practical constraints, but we can go into
that individual basis. Strategy four is a charitable remainder trust
solves diversification and charitable goals simultaneously. A CRT is an
irrevocable so you can't undo it irrevocable trust into which
(36:42):
you contribute the appreciated stock. The trust sells the stock
without paying any capital gains and that's the magic of
the structure, and reinvests the full proceeds into a diversified portfolio.
You receive an annual income stream from the trust for
life or for a fixed term of up to twenty years.
Whatever remains is the trust, or whatever remains in the
(37:03):
trust at the end, it goes to one of the
more one or more charities you've designated. It also generates
an immediate charitable income tax deduction. And the strategy five
is to donate appreciate chairs directly to a donor advice
fund for outright giving. If you give to charity every
year anyways, giving appreciated stock rather than cash is almost
(37:26):
always more efficient. You avoid the capital gains tax entirely,
you get a deduction for full fair market value, and
the charity sells the stock at zero tax, and so
bunching several years of giving you to a single contribution
to a donor advice fund maximizes the deduction in years
when you have other large income events for someone saying
a bit, selling a business, exercising options, or taking a
(37:47):
large roth conversion. Layering in a donor advice fund contribution
funded with constraight stock is often the most efficient single
tax move available, So give us a call. If you've
got constraint stocks, we can help you mitigate that and
save a lot of money over the long term. Do
nothing path is usually.
Speaker 1 (38:05):
The worst exactly that is always and that set it
and forget it that you hear so often. You just
can't do that with anything. Not a good path to
go down to. Now here's that phone number. I'm gonna
give it out to reach Aeron Kohwal or any of
the fantastic advisors at Creative Planning two six y two
five two two two six two five two two forty forty.
(38:27):
We've got more coming up with Aaron Kowal Wisn's Retirement Clinic.
I'm Paul Cronford. Before we get out of here for
this week. We are back next week on the Retirement
Clinics Saturdays at ten o'clock. Aaron Kohal, good stuff today
with the Great Wealth Transfer. You talked about concentrated stocks.
We heard from Jeff Kowal. If you instead of continuing
(38:48):
to work, some people are just opting for retirement when
it comes time to learning about AI. All of that
compressed into a good hour, Aaron, How do I reach
out to you guys off the air?
Speaker 2 (38:59):
Yeah, reach out to us at two six' two five
two two forty. Forty go To Creative planning dot com
or The Retirement clinic dot com as, well and or
you can email Me aaron dot coall At Creative planning
dot com and we're certainly happy to help.
Speaker 1 (39:17):
All was a jam packed. Hour it seems like we
squeeze so much In, aaron and of Course monday Through,
friday every day three and five pm in the afternoon
During Daniel donalds, show you do the market updates. Report
you and your staff do a great job with. That
we thank everybody for joining. Us we are back again
Next saturday on The Retirement clinic here IN Wysn milwaukee
(39:38):
With Aaron. Kolewall I'm PAUL.
Speaker 3 (39:39):
Cronforcet the preceding program is furnished By Creative planning AT
sec registered investment advisory. Firm Creative, planning along with its
Affiliate United Capital Financial, advisors currently 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 guest are solely their own and
(40:01):
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 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
(40:24):
contained herein has been obtained from sources deemed, reliable but
is not. 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 1 (40:36):
Independently
It's time for the retirement clinic. This is Wya San.
Happy Saturday morning, everyone with me. Your host Aaron Kolewaal
with Creative Planning formerly the Coowal Investment Group. Aaron, to you,
I say, good morning, great to have you back on
the show.
Speaker 2 (00:15):
Good morning, great to be with you.
Speaker 1 (00:17):
We heard from Chauncey. Did you hear what the inside
joke has become with Chauncey wisen Cell? If you call
Creative Planning and ask for Chauncey wisen Cell, you may
forget the last name. So just remember the word Chauncey.
According to Chauncy, the only one there. Yes, that's what
he said there. I'm pretty sure there's no other Chauncey's there,
(00:37):
So that was sort of an inside joke. He hosted
last week's show. Jeff and Chauncey were on the week
before erin it's your turn this week, and you got
a lot of stuff, a lot of stuff on the
plate before we get started, talk about Creative Planning. Just
give us that that elevator's speech for the background.
Speaker 2 (00:57):
Right, I do have a lot. I mean I could
do several shows with what I am not bringing on
the show today. But yeah, Creative Planning is a large
RAA that we joined up with at the end of
twenty twenty four. We've been very blessed to be able
to work with them. We're able to do to handle
anything and everything financial related in house, taxes, in how
(01:22):
and advising, in house, state plan and prep and document execution,
anything business services for one k's where Creative Planning is
one of the largest providers of for one k's in
the country. You know insurance, you know home and auto
and life, and I mean anything financial related we can
now do in house, so everything's coordinated. Then everything is
(01:46):
is really pulling in the same direction, which is something
we've always been talking about. And so we're really able
to have i mean unrivaled results for for clients because
everything's done here and and I think we do a
tremendous job for our clients.
Speaker 1 (02:07):
So you mentioned one of those acronyms. It stood out
again r A A. You said you joined Creative Planning.
Speaker 3 (02:14):
R i A.
Speaker 1 (02:16):
Oh, registered investment.
Speaker 2 (02:19):
Yes, that's correct you sorry, no, uh yeah, Registered investment advisors.
Speaker 1 (02:24):
I stand corrected, Registered investments independent. And also you were
congratulated officially by the Wall Street Journal back in February
as what's the I want to.
Speaker 2 (02:35):
Get this right, the best of the best ra a
UH in the country, in the country planning r A
in the country.
Speaker 1 (02:45):
Yes, yeah, So kudos to you guys. You joined Creative
Planning over a year ago. Aaron, it's been some time.
If you're a client, you know all about it. If
you're not a client, by way background, you remember this
show the Retirement Clinic back to two thousand and one
when your father just started it with the Kowal Investment Group,
and locally nothing has changed. People can go to the
(03:06):
Retirement Clinic dot com. That can go to Creative Planning
dot com. And here's the most important part. If you
have a question two six two five two two forty
forty I will say this as an aside. Last week's show,
we touched on taxes with Chauncey, and I can't remember
the last time I got so many emails regarding a topic. Hey,
(03:27):
at ten forty you guys are talking about taxes. At
ten thirty three, you're talking about taxing. How do I
get in touch with that company? Here? It is two
six two five two two forty forty one. Nice kind
old man said to me, you need to talk slower
and give out the number more often.
Speaker 2 (03:46):
All right, I know my mom's been telling me that
since I was a kid, they need to talk slower too, So, uh,
Gramma can't hear you, So uh two six two five
two two forty forty is the phone number. It's the same,
it's the same locations that we've always had, the same people.
You know, nothing's changed, so we except we've gotten a
(04:09):
lot better and have a lot more capabilities for clients.
Speaker 1 (04:13):
And then this year we focus on retirement. It's called
the Retirement Clinic. And if you're wondering about locations around town, again,
same on Bluemont Road in Brookfield, you're in della Field.
You're in Racine Port, Washington, Wisconsin. Cape Coral, Florida. Cape Coral, Florida.
Said that what am I missing? Phoenix, Arizona, And I
guess we should know. Creative planning licensed in all fifty states.
(04:37):
That being said, you talked about these great topics. I
think we're going to start out with the great Wealth Transfer,
and first off, you need to explain and define what
that means. Although it's kind of self explanatory, but the
great Wealth Transfer airon what's going on.
Speaker 2 (04:52):
There, So great wealth transfer can What I'm referring to
here is is baby boomers get older and passing on
their assets because they've accumulated quite a bit of of
assets too, and so passing it on to Gen X
and millennials. And so that's what the great wealth transfer,
(05:16):
because you know, they can't you can't die and take
it with you, and so it's got to go somewhere.
And but it's actually speeding up, and it's projected. You know,
it's no longer some future event. They kind ofs are
projecting decades away. I mean, I remember earlier in my
career it was, okay, the first baby boomers are turning
(05:36):
sixty five. It's like, okay, here we go, you know,
So it's happening right now.
Speaker 1 (05:42):
Yeah, as we speak the great wealth transfer. Just stepping
back before you do a deep dive here and explain there.
And this is a good thing, isn't it. The fact
that they obtained that wealth and they're transferring it to
either their kids or whatever. It is a good thing.
Investment in the stock market, all of this seems like
(06:02):
a positive thing to me.
Speaker 2 (06:04):
Yeah, I mean, there's with anything, there's positives and negatives,
you know, but there are certainly some positives I mean negatives,
I would say, like you know, inflated housing, you know,
like their costs of baby boomers. A lot of times
there how, costs of homes were a lot less relative
you know, to inflation than today, Uh, you know, more afforable.
(06:25):
But those assets will also be passed, you know, passed
on for the most part too, to family. So there's
there is positive negatives to to everything. But we get
into the facts and what's going on, you know, so
it is happening right now. It's not on the horizon.
(06:46):
You know, baby boomers are aging, they're passing assets to children, grandchildren.
You know, asset's still commonly placed. Total transfer well into
tens of trillions of dollars over the next two decades. Uh.
And that's I mean, that's really hard for people to fathom,
is how much money it is. The scale is unlike
anything the financial industry has ever seen. Many families are
(07:10):
completely unprepared for both the opportunities and the emotional challenges
that come with it. A surprising number of wealthy families
do not actually have a fully coordinated estate plan. They
may I mean, we talked about this over years that
how many what percentage of people actually have on a
state plan It's not a lot.
Speaker 1 (07:29):
You know.
Speaker 2 (07:29):
They may have a will drafted years ago, but beneficiary designations, trusts,
retirement accounts, and titling of assets often don't match. One
outdated IRA beneficiary form can completely override the intentions written
in a trust or will. This creates family conflict more
often than people realize. State planning is not a set
it and forget it process. As you know, I think
(07:51):
that's one of my favorite sayings. You know that this
is not a set it and forget. It's not a
wrong co retissory cooker. And I like that good. I
like that you laugh at that lame joke every time.
I don't mind those, right right, I know, I know,
as my kids would say, it's a dad joke.
Speaker 1 (08:12):
Oh yeah, I'm the master of bad dad jokes and
I can't even remember those. So if I get through
on it's a success. I know.
Speaker 2 (08:19):
I know the You know, so we we really need
to update that. We've talked about this in a lot
of times. That you might have an outdated beneficiary designation,
an IRA or four oh one K there might be
on a ex spouse or someone that you really don't
(08:41):
you know, or an ex son in law, our daughter
in law on there, and that supersedes anything else that
you have. If you if you have a trust for
the money to go to one person and it says
to go to someone else in the beneficiary designation, tough luck.
That's too bad. You need to update that. That's something
that we always do when we when we start working
(09:02):
with new people's take a look a beneficiary destinations to
make sure that they're accurate. You know, many errors receive
substantial wealth with little to no financial education. I mean,
you know, we bemoaning the state of financial education for
forever that we don't learn the things that we need
(09:23):
to learn in high school or college that you know,
on taxes and finally taxes and saving money and all that.
So uh, it's people are just not educated. So then
they receive wealth. And you know, so parents often avoid
discussing money because they fear entitlement or family tension. The
result is adult children inheriting large sums without understanding taxes, investing,
(09:46):
or responsible planning, and studies repeatedly show inherited wealth is
often substantially depleted within two generations. Communication and preparation are
just as important as legal documents.
Speaker 1 (09:57):
Oh, communication, there's a right time and a place to
have discussions about family money, don't you agree, especially if
it's going to be a serious kind of a sit down.
For instance, last weekend was Mother's Day. We had a
fantastic Mother's Day. We got together. That's not when you
want to bring up, you know, the family.
Speaker 2 (10:15):
Mom, how about you leaving me when you die.
Speaker 1 (10:18):
Happy Mother's Day. Here's a card and some flowers. Now
how much do I get? Again? No, you want to
celebrate it. There's a right time and a place even
if there's a way to approach the conversation erin.
Speaker 2 (10:29):
Yeah, yeah, there there is, and you can it doesn't
have to be. You can have it scheduled and say, okay,
we're gonna be talking about this and it doesn't need
to be. And we can help with that. We can
help facilitate some of these, uh, you know, these discussions.
You know, creative planning for decades has been helping with
these types of things for you know, for many many people.
(10:51):
So we can you know, wealth manager can certainly help
with that. We we can, you know, we can help
and so you know, retirement accounts are also becoming one
of the biggest problem areas in estate planning. Under current
inherited diarray rules, many non spouse beneficiaries must fully distribute
(11:11):
inherited retirement accounts within ten years. So when we think
about non spousely, oh, my wife's didn't get everything, Well, okay,
what about kids and grandkids? And you know, so you
got to think about that too, you know, and so
must uh for higher earners. That can create enormous tax consequences.
So if your children or grandchildren are successful, that can
create a big tax problem for them. If they're taking
(11:33):
out a large IRA in one year over ten years,
that can create big tax issues. So someone inheriting and
a lot of times when when parents die, it's their
kids are in their peak what's called peak earning years,
So it's what when their income is going to be
the highest. So someone inheriting a large IRA during their
peak earning years may suddenly find themselves pushed into significantly
(11:56):
higher tax brackets. And families who ignore this planning opportunity
can unintentionally lose hundreds of thousands of dollars to taxes,
which really bugs me.
Speaker 1 (12:06):
The government taking that bugs you. The government taken taking money,
taxing you I should say it does, You're right out
of all the things that especially if it can aaron
be avoided, agreed.
Speaker 2 (12:18):
Right, right, and you know, well there's no waste, fraud
or abuse in government. So your money is going somewhere
good that is going to help the you know, for
the greater good as some say.
Speaker 1 (12:31):
You so.
Speaker 2 (12:31):
But the emotional side also of inheritance planning is often underestimated.
Parents may want fairness, but equal is now not always equitable.
One child may have worked in the family business while
another pursuit is separate career. One child may need more
support because of health and personal challenges. These are difficult conversations,
but avoiding them can create resentment after the parents are gone. Uh,
(12:56):
you know. In real estate is becoming a major issue
within the wealth transfer conversation. Many families owned vacation homes,
rent properties, farmland, or commercial real estate that children may
not actually want to manage. Some heirs live out of
state and have no interest in becoming landlords. Others emotionally
want to keep a property even when financially makes little sense.
(13:18):
Family should discuss these expectations long before assets transfer, and
then we're also seeing Aaron.
Speaker 1 (13:25):
Just on that note, they might inherit the house for
mom and dad after both are past. However, they may
not want the responsibilities, so they want to sell the house.
So in other words, they might want the money the
proceeds from the value of the property, but not want
to keep the house. I think that's pretty common with.
Speaker 2 (13:42):
Families, right, Yeah, it's very it's very common. But you
know what else is common is one wants to keep
it and one wants yeah, yes, yes, And so that
is a fight waiting to happen. That happens all time.
And so you know it's I say, as the clients,
(14:04):
it's you got to get it set up the way
you want it, and you envisioned it and communicated. And
if kids don't like it, they can be mad at
you instead of their living siblings. Uh, you know. And
so it's it's a lot harder to be mad at
somebody that is has passed. Then somebody's right there and
(14:24):
you can look them in the eyes and say, I
don't like what you did. I disagree. Maybe you stronger language.
And it's a lot on the radio, but you know,
these conversations need to happen, and people hate talking about it,
but uh, you know, it really needs to happen. So
we're starting. I'm starting these conversations with my kids, you
(14:45):
know what happens, you know, if if we pass, and uh,
they're a little too young to appreciate, especially the almost
eight year old, but your oldest one of the teenagers.
Speaker 1 (14:56):
Yeah, and they kind of aware of the you know
at that point. I mean, once they're an adult, it's
legally it's totally different. But I think it's good for
kids to be somewhat engaged and know about their you know,
what's going to happen in the future. And those conversations,
albeit as uncomfortable as they might be, Aaron, are almost necessary,
(15:17):
aren't they The conversation with mom and dad and kids
while everybody is alive and coherent, healthy, And I think
that's why we get an estate plan done, whether it's
a trust, a power of attorney or will you need
to have those get your affairs in order right before
it's too late, and then trouble can ensue. And you
hate to see families fight over that stuff if it
(15:38):
can be abrighted.
Speaker 2 (15:41):
Absolutely, yeah, absolutely, you know we're also seeing, Paul, we're
also seeing that more affluent retirees are prioritizing gifting while
they're alive instead of waiting till death. And that's I
think a really great trend. You know, for the longest time,
it's like, no, I want to I want to enjoy
as I work for this, they'll be fine. But now
(16:02):
we're starting to see more more people, more baby boomers,
gifting their assets while they're alive to their kids so
that they can see their grown children and grandchildren, so
that they can see them enjoy this. They're realizing they're
not gonna they're not gonna you know, they're gonna outlive it.
Speaker 1 (16:21):
And so this is a great, I think point. You're
right after you pass. You don't see the enjoyment in
your kids' faces when they get whatever it is that
you leave to them if you're alive, and it doesn't
have to be sometimes, you know, massive amounts of money,
but Aaron Boyce sure get to see the smile on
your face, on their faces when you give it to
them when you're alive.
Speaker 2 (16:44):
You know, many parents enjoy helping their kids with home purchases, education,
funding their business opportunities today when they can witness the
impact that it has. Approach this approach can allow families
to gradually educate years and managing money responsibly. Yeah, it's
a way to see you can find tune near estate
plan and we give some money now and let's see
(17:04):
if you spend it or if you waste it?
Speaker 1 (17:07):
And so are you're testing them to see on the hands.
Speaker 2 (17:10):
Yeah, so yeah, so okay, I'm gonna put the trust.
Then do you get this money when I pass or
do you get it at thirty some at thirty five,
some at forty five, some at fifty five and sixty five,
you know, for example, So you can spread that out
then so to see if there's a spend thrift or not.
So one one major misconception also we talked about taxes
(17:33):
a little bit earlier, is that it's only about taxes.
And for many affluent families today, taxes are no longer
the primary issue because the current exemption levels under existing law. Instead,
family dynamics, asset protection and efficient administration often matter more,
and avoiding probate delays and reducing family conflict, you know,
it can be a lot more valuable than squeezing out
(17:55):
one more extra percentage point of tax savings. Good planning
is about control and clarity, and we say don't let
the tax tail wag the dog.
Speaker 1 (18:04):
You know, you.
Speaker 2 (18:06):
Can't let all of your decisions be around to be
around taxes. And so that's you know, that's charitable charitable planning.
I got a lot, you know, a lot here, but
you know, family business creation can help come can create
some of the most complex wealth transfer situations we've got. Yeah,
(18:27):
we got charitable planning. Second marriages, incapacity planning. So there's
a lot transfer wealth. It's not just about money, you know,
and may families knowledge and decision making ability matter even
more than assets themselves.
Speaker 1 (18:42):
Second marriage could be a third marriage in the In
the US, I mean, there's so many blended families and
you've got step children involved, and you might have to
change beneficiaries. Maybe it's the fourth marriage, or maybe God forbid,
there's a tragic death in the family and you need
to make changes there. I just got one, no more
than thirty seconds to spend on this. Did you watch
(19:02):
Yellowstone the series?
Speaker 2 (19:04):
Yes?
Speaker 1 (19:05):
So the I mean I don't want to give away
any spoiler alerts. I think it's so well done. Now
the new one, the Dutton ranch is coming out the
spin off, right, so without giving away endings or spoiler
alerts Aaron, it was, you know, the great transfer of wealth,
Who's getting the ranch? All of this stuff? And uh,
you saw the one bad black sheep in the family.
I think his name was Jamie, the scumming attorney son right,
(19:29):
uh uh huh uh, and he was at odds with
the father. Then there's Beth, the wild daughter, and she
marries Rip and does Rip get the money? Well, that's
why spoiler I said, does Rip get the money? I
didn't say so without giving away the ending.
Speaker 2 (19:42):
There's there are you know, for those that don't know,
Yellowstone is a gigantic ranch in Montana and massive they
have to they have to you know, it's a cattle ranch,
and so they have to deal with uh with taxes
on inheritance and and all the stuff in real estate
and and so that becomes an issue on the show
(20:07):
that they have to address. And it's kind of cool
as a financial planner and be like, oh, they're actually
aware of this stuff because you know, in Hollywood they
get it wrong. That may not fit the ner. Taxes
may not fit the narrative.
Speaker 1 (20:23):
What you also hear about the reading of the wheel,
and it's dramatized, but they actually talk about the trust
in Yellowstone and a lot of it was albeit these
people are mega millionaires. It was a TV show, but yeah,
it's you can boil that down to a basic American family.
It's the same thing, right, there's siblings that quarrel. The
(20:43):
Jamie guy did not get along with Beth very well,
did he?
Speaker 2 (20:46):
He just I would say that's an underthat.
Speaker 1 (20:49):
I love that show. If you haven't watched Yellowstone, I
mean there's my advice watch it. And then the next
one is Dunton Ranch that's coming up I think soon.
Speaker 2 (20:58):
So, uh, you need to like the eighteen eighty three also,
that was very good.
Speaker 1 (21:02):
You know we never saw that, so you recommend that.
Speaker 2 (21:06):
Very much. Yeah, nineteen twenty three little, yeah, but uh,
eighteen eighty three was fantastic. Tim mcraw isn't it And
he is a.
Speaker 1 (21:16):
Wonderful that's right. And Costner was the original Yellowstone one, right, Yes, boy,
the acting is good in there here. It's confusing. I
don't know where to watch this stuff. I go to
google how to stream you know the Dunton Ranch US
It's on Paramount Plus yep, and I get it. Some
people are like I've just given up on streaming because
I don't know where this stuff is. Just go to
(21:37):
Google how to stream and then type it in. You'll
figure it out. Highly recommend it. And before we break
and wrap this one up, the great wealth transfer this
topic that on, It's going on the right now in
front of us.
Speaker 2 (21:52):
It is, it is, And so I just have one
more point about this. You know, the great wealth transfers
it's will and is reshaping investment, philanthropy, business ownership, and
real estate markets. And it's going to over the next
twenty years. Younger generations may allocate money differently than the
parents did. Advisors, attorneys, and families all need to adapt,
and this is why we all have them in house
(22:13):
in one place. They all need to adapt changing priorities
and expectations, and families that prepare proactively a lot of
our families will likely preserve both wealth and relationships more effectively.
And the ones that avoid the conversation may discover too
late that wealth alone does not create harmony.
Speaker 1 (22:32):
Oh that, and don't wait. If you can do it now,
do it, get that, get it done, Get your affairs
in order, as they say, and you can reach out
to create a plan because you guys do all of
that now. Arin, As you said, it's kind of under
everything under one roof, right, Yeah, absolutely, two six two
it is five to two to two forty forty. For
(22:53):
our listeners that say, Paul, say the number again, I
will do this. I'm not being sarcastic. I took the advice.
I'm actually using our listener's advice. Two six two five
two two forty forty one phone number for all locations
for creative planning around town. Easy to meet and talk
to an advisor. You can make the phone call. I think, Aaron,
(23:16):
you're open to anything. It could be on a speaker
phone with your siblings around. It could be on a
zoom meeting. If you're out of study. It doesn't matter, right,
as long as you meet and get it done.
Speaker 2 (23:29):
One hundred percent Yes, absolutely so.
Speaker 1 (23:31):
Creative Planning dot com, the Retirement Clinic dot com, and
two six two five two two forty forty. There is
a topic coming up right after the commercial break, your father,
Jeff Cowaal is going to talk about. This fascinates me
because it's a Wall Street Journal article. The thesis, I
guess the main thrust of it is about people that
are going to retire because they don't want to learn AI.
(23:55):
So in other words, they're at that age we're in.
We're around a bubble. I like my job, but now
we've got to start brand new and learn this AI stuff.
So they're just going to retire rather than learn about
artificial intelligence. Before we get to Jeff, doesn't that intrigue you?
Speaker 2 (24:08):
Erin, Yeah, you know, yeah it does. And I give
credits to my dad. He's always been one to embrace
new technology. And we say, okay, this is what we're
using now He's like, all right, show me how to
do it, and I'll do it. And so that, I mean,
it does make sense because it is changing dramatically how
everybody's doing their work and enhancing or unfortunately we're replacing
(24:31):
two in some areas it is.
Speaker 1 (24:33):
It's going to be a good segment coming up next.
Workers that opt to retire rather than learning AI Artificial intelligence.
Aaron Kolewal is your host. This is wy Since Retirement
Clinic every Saturday at ten o'clock, also Monday through Friday,
twice a day, three and five PM news blocks During
the afternoon Dan O'Donnells show with those daily market updates.
(24:54):
You guys have been doing that for decades on on
this show, the show which has been around since two
thousand and one on WISN with Aaron Kohal and Paul
Kronford Station.
Speaker 4 (25:04):
There's so much talk and some fear about AI, artificial
intelligence in the workplace. Well, how does it affect your
thoughts on retirement? This Wall Street Journal addresses that the
title of it is the workers opting to retire instead
of taking on AI. Their career span a personal computing,
(25:26):
Internet and smartphone waves. But some older workers see AI's
arrival as a queue to exit. They give an example
of somebody here, Luke Michael has already lived through two
technology overhauls in his career, first desktop publishing in the
nineteen eighties and online publishing later on.
Speaker 1 (25:46):
But AI.
Speaker 4 (25:47):
He's had enough, so as an employer made an early
retirement offer to some staff last year to sixty eight
year old content content strate just decided to speed up
his exit before he had expected to work a couple
more years. The time and energy you have to devote
to learning a whole new vocabulary and the whole new
skill set, it wasn't worth it. He goes on to
(26:10):
say that isn't that he's shunning artificial intelligence. He's embracing
it in other areas of his life. But at this
point he's less eager to endure all the ways that
technology promises to upend his work. He goes on to say,
after rising for decades, and he's I want to use
(26:31):
my own purposes. I want to use it for my
own purposes and not for somebody else's. After rising for
decades and then hovering around forty percent and the twenty tens,
the share of Americans over fifty five years old in
the workforce has slipped the thirty seven point two percent.
Speaker 1 (26:48):
Let me repeat that.
Speaker 4 (26:51):
Around the twenty tens till now, it's been about forty
percent of people in the workforce are fifty five and older.
Now it's thirty seven point two percent, the lowest level
in twenty years, and so gives some reasons for it too.
Financial cushion of rising home equity and stock market returns
is driving some of the decline, but for some older professionals,
(27:15):
money is only part of the equation. They say they
don't want to spend the last years of their career
going through a two molt of AI adoption. Many people
retire when key elements of their work lives are disrupted
at once. Maybe their autonomy is being challenged or changed,
their friends are leaving the workplace. I think that's a
big part of it too, or they disagree with the
(27:36):
company's direction. When two or three of these things show up,
that's when people start to opt out.
Speaker 2 (27:41):
And AI is a big one.
Speaker 4 (27:43):
So Michael, the president they were referring to here, he
just had to learn new skills during his career, and
he was always eager to do that. He always embraced
new technology, but just didn't want to go along with
this one. Your battery doesn't hold the charge as long
as it used to. I thought that was an interesting comment.
AARP survey last summer of five thousand people over fifty
(28:07):
twenty five percent of those who plan to retire sooner
than I expect to counter work stress and burnout as factors.
About half of those retired said they left work at
least partly because they had the financial security to do so.
About AI. Research shows that about thirty percent people from
(28:28):
ages thirty to forty nine said they used chat GPT
on the job. That's thirty percent from thirty to forty
nine thirty to forty nine, nearly double the share of
those fifty and older. Baby boomers and Gen X also
experienced a sharp decline and confidence in using AI technology. Okay,
(28:50):
having said that that baby boomers and Gen X don't
have confidence. Being a baby boomer myself, I love the
artificial intelligence applications in our business, whether it's no taking
or scanning tax returns. But I'm also surrounded by younger
people who really embrace it and can support me with it,
(29:11):
and that I think makes a huge difference. They understand
that they get it, they embrace it, and they can
help me along with it. Just a couple more things
from the article. This is a Wall Street Journal article.
When I came to write reports and reviews, colleagues would
suggest that this woman used chat GPT. She says, I
have no idea how to use it, and I have
(29:31):
no interest in using AI write anything for me. It
would have been more prudent to work until she was
closer to medicare. She retired at age sixty, but by
waiting until her chill a out of college and some
of her stock grants had vested, the math still worked
out for her.
Speaker 1 (29:48):
And she was able to retire.
Speaker 4 (29:51):
I think that last part was it was pretty important,
and I'm going to use that as a wrap up
in a minute. But employers already are under pressure to
cut work, such as the tech industry, may welcome some
of the retirements. That's according to a chief economists at
Burning Glass Institute, which studies labor market data. Again, employers
under pressure to cut workers say if somebody retires, they
(30:13):
don't have to fire somebody, so that's good. There's no
right or wrong answer to how people approach AI and
retirement planning again is the key. If you do the planning,
actually look at the numbers for retirement, including potential pitfalls
like long term care, nursing, home drops in the market,
(30:35):
things like that, they plan for that and it still
works out financially. Then guess what, It's your choice as
to whether or not your retire. I like having control.
It's your choice, not the company's choice. If you want
to embrace AI, that's great. If you don't, you can
see that you have enough money to retire and avoid
all the potential pitfalls. Call us and set up a
(30:57):
time to meet with us. An appointment at two six
two five to two two six two five to two
four zero four zero our go online to the Retirement
Clinic dot com.
Speaker 1 (31:12):
We are back w I said, Wisconsin's most listened to
radio station in case you were wondering. And it's thanks
to guys like this guy, Aaron Kowal all my weekend
shows Saturday mornings, We are back by the way with
Aaron and the Retirement Clinic with Creative Planning formally the
Coal Investment Group. They join forces. And in this segment,
(31:32):
you're going to talk about concentrated stock. I guess first
start by defining that and then take it from there.
Speaker 2 (31:40):
So yeah, So concentrated stock is generally defined as some
you know, if you have ten percent or more of
your net worth tied up in a single company stock
and so like Formwaukee Milwaukee area executives, you know, Northwest
at Northwestern Mutual, Rockwell, Johnson Controls, Harley Davidson, Cole's, or
any of the other major employers in the area. This
(32:03):
is an extremely common situation, typically builds up over a
career through stock options, restricted stock units, employee stock purchase
plans for one k's that sort of thing. The position
often represents enormous embedded gains, which is exactly why so
many people delayed dealing with it. The longer you wait,
the bigger the position usually gets, and more painful the
(32:25):
tax bill becomes when you finally act. You know the
risk profile of single stock. Not to get too much
into you know the weeds, you know, but the risk
profile a single stock is fundamentally different from a diverse
fied portfolio. Diverse fied equity portfolio might have a standard deviation,
(32:46):
which is a range of expected returns up or down
and so, but of like fifteen to eighteen percent. An
individual stock typically runs thirty to fifty percent, sometimes much higher.
So you could have a much more volatility in concentrated stock.
(33:06):
So that's why we need to look at diversifying. About
half the risk of an individual stock is company specific
and doesn't get compensated by the market, meaning you're taking
a risk you don't get paid for. Several high profile Yeah,
several high profile examples like Enron, Layman Brothers, bear Stearns,
General Electric have shown that even seemingly bulletproof companies can
(33:28):
lose eighty to one hundred percent of their value in
a matter of months. Loyalty to an employer is admirable,
but shouldn't determine your retirement security. So there's several strategies
to deal with this. I've only got a few minutes,
so I can't get too deep into all of these,
but strategy one is very doable, is A, and I
(33:49):
can get you the rest if you'd like. Strategy one
is a discipline multi year selling plan that spreads the
tax hit across calendar years. This is the simplest approach
and often the most under selling proportionally across several tax heres.
Lets you fill specific capital gains brackets without spilling into
the higher twenty percent rate or triggering the three point
(34:10):
eight percent net investment income tax. It also keeps you
under IRMA thresholds for Medicare premium, so if you hit
certain incomes you know income levels, you're paint more in
Medicare premiums and avoid stacking gains on top of business
sale proceeds or large roth conversions. The discipline matters more
(34:31):
than the cleverness. If people want to get cute and so,
but the discipline is what matters most, and most people
say they'll diversify next year but never actually do.
Speaker 1 (34:41):
By the way, Irma is not a woman's name, right
in this case, it's another acronym, income related monthly adjustment amount.
Are you impressed that I knew that?
Speaker 2 (34:52):
I'm very oppressed that you knew that fall that I
have a top of your.
Speaker 1 (34:54):
Head that I have Google right now here.
Speaker 2 (34:57):
I couldn't hear your keyboard tapping at all.
Speaker 1 (35:00):
It's it's pretty easy for me to look it up,
but I wanted to make sure because there's so many
acronyms income related monthly adjustment amount. That's what IERMA means.
All right, go ahead, sorry, yes.
Speaker 2 (35:12):
Second strategy and this is something you know that really
not great for radio, but equity collar hedge hedge a
position without triggering immediate tax events, so you use puts
and calls around the stock to eventually move out of
It's appropriate for executives who still believe in the company
(35:34):
long term. But when protection gets a short term drop
while waiting out a blackout period or a pre i
po lock up, and we can get into that, it's
more of a very specific case by case you know need.
Strategy three is exchange funds. Let you swap into a
diverse filed portfolio without pain capital gains today. So in
exchange fund sometimes called the swap fund, pools concentrated stock
(35:57):
for many investors. To create an instant diverse, fied portfolio,
you contribute your single stock position in exchange for partnership
units in the fund, and that exchange is generally generally
non taxable event and after a seven year holding period,
you can redeem your share and receive a diversified basket
of stocks rather than your original concentrated position. Your cost
basis carries over, so the gain isn't eliminated, it's deferred
(36:19):
and spread across diversified holdings. You know, they do come
with some significant practical constraints, but we can go into
that individual basis. Strategy four is a charitable remainder trust
solves diversification and charitable goals simultaneously. A CRT is an
irrevocable so you can't undo it irrevocable trust into which
(36:42):
you contribute the appreciated stock. The trust sells the stock
without paying any capital gains and that's the magic of
the structure, and reinvests the full proceeds into a diversified portfolio.
You receive an annual income stream from the trust for
life or for a fixed term of up to twenty years.
Whatever remains is the trust, or whatever remains in the
(37:03):
trust at the end, it goes to one of the
more one or more charities you've designated. It also generates
an immediate charitable income tax deduction. And the strategy five
is to donate appreciate chairs directly to a donor advice
fund for outright giving. If you give to charity every
year anyways, giving appreciated stock rather than cash is almost
(37:26):
always more efficient. You avoid the capital gains tax entirely,
you get a deduction for full fair market value, and
the charity sells the stock at zero tax, and so
bunching several years of giving you to a single contribution
to a donor advice fund maximizes the deduction in years
when you have other large income events for someone saying
a bit, selling a business, exercising options, or taking a
(37:47):
large roth conversion. Layering in a donor advice fund contribution
funded with constraight stock is often the most efficient single
tax move available, So give us a call. If you've
got constraint stocks, we can help you mitigate that and
save a lot of money over the long term. Do
nothing path is usually.
Speaker 1 (38:05):
The worst exactly that is always and that set it
and forget it that you hear so often. You just
can't do that with anything. Not a good path to
go down to. Now here's that phone number. I'm gonna
give it out to reach Aeron Kohwal or any of
the fantastic advisors at Creative Planning two six y two
five two two two six two five two two forty forty.
(38:27):
We've got more coming up with Aaron Kowal Wisn's Retirement Clinic.
I'm Paul Cronford. Before we get out of here for
this week. We are back next week on the Retirement
Clinics Saturdays at ten o'clock. Aaron Kohal, good stuff today
with the Great Wealth Transfer. You talked about concentrated stocks.
We heard from Jeff Kowal. If you instead of continuing
(38:48):
to work, some people are just opting for retirement when
it comes time to learning about AI. All of that
compressed into a good hour, Aaron, How do I reach
out to you guys off the air?
Speaker 2 (38:59):
Yeah, reach out to us at two six' two five
two two forty. Forty go To Creative planning dot com
or The Retirement clinic dot com as, well and or
you can email Me aaron dot coall At Creative planning
dot com and we're certainly happy to help.
Speaker 1 (39:17):
All was a jam packed. Hour it seems like we
squeeze so much In, aaron and of Course monday Through,
friday every day three and five pm in the afternoon
During Daniel donalds, show you do the market updates. Report
you and your staff do a great job with. That
we thank everybody for joining. Us we are back again
Next saturday on The Retirement clinic here IN Wysn milwaukee
(39:38):
With Aaron. Kolewall I'm PAUL.
Speaker 3 (39:39):
Cronforcet the preceding program is furnished By Creative planning AT
sec registered investment advisory. Firm Creative, planning along with its
Affiliate United Capital Financial, advisors currently 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 guest are solely their own and
(40:01):
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 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
(40:24):
contained herein has been obtained from sources deemed, reliable but
is not. 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 1 (40:36):
Independently
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