Todd Carswell: 0:00

This is the Cluttered Path, a compass for midlife. Do you ever feel like your financial dreams are too far out of reach? What if the secret to achieving them isn't about working harder or sacrificing more? Here's the thing Establishing simple and achievable goals today could be your ticket to a future life you never thought possible. Today, James and I are talking to Chris Wilkins, Vice President and Financial Advisor at RBC Wealth Management.

Chris Wilkens: 0:33

Chris, welcome to the show. Thank you for having me For folks on video.

Todd Carswell: 0:38

You're going to see a brief disclosure here Before we start the interview. Rbc Wealth Management. They don't provide tax or legal advice. Please consult your tax or legal professional. So, chris, let's start with a brief bio. He grew up in Yonkers, new York. He joined the Marine Corps after 9-11. He trained as an infantry officer and then Chris would go on to command 3rd Platoon of Bravo Company, 1st Battalion, 8th Marines, in the Second Battle of Fallujah. After the military, chris trained to become a financial advisor and he's also heavily involved in the veteran community. So, chris, would you want to share some information on the veterans organizations that you're working with?

Chris Wilkens: 1:14

Sure, there's a lot of them, and each one of them focuses on a different area of benefiting veterans. So the ones I am primarily involved with are in the New York City area and within New York City. I'm very involved with my American Legion post, and the reason I mentioned that one is because we are kind of like a resource to a lot of different nonprofits within New York City, and not just nonprofits but also affinity groups, commonly called employee resource groups. So at RBC we do have an employee resource group for veterans very common at other banks and organizations as well and then you also have a significant number of veterans in the five boroughs of New York City that are currently students. So these numbers are ballpark but they're pretty close.

Chris Wilkens: 2:05

Throughout the past 15 years there's been 12,000 veterans in New York City schools within Columbia, fordham, nyu, john Jay Lehman, the City University in New York, the CUNY system, and so you have a lot of veterans that are attracted to New York. And then you have a lot of companies that are looking to hire veterans as well because they do value their unique experience, and so we try and be like the glue that connects the transitioning veterans that are in school with the organizations that are looking to hire veterans, and that being just one example, because I think the area where I'm most involved is helping that transitioning veteran into a career, because it's not one conversation, it's a process over many years, because you don't really know what you're good at. So you have to kind of dip your toes in the water and find out I got an internship for and I'm working in, accounting. You know some people might really like it, some people might not, and then when you do it you kind of fine tune what might be a more appropriate fit for you.

Chris Wilkens: 3:10

So there's a lot of nonprofits that help veterans with that transition from military service into either college and or then a career afterwards. But then there's a lot of other ones that help veterans who might be coming when they end active duty. Maybe they're overseas, somewhere in Japan or Germany and they have a spouse that is not a citizen and now they're going to come back here, and they had kids overseas, now they got to bring them here. So you're moving a family here that needs some help with the documentation and finding a place to live and college and job, and so there's a lot of nonprofits out there doing a lot of good things, but I'd say the ones I primarily focus on would be helping veterans with that transition into the private sector, because it's something I did and also there were other veterans that helped me with my transition out of the Marine Corps.

Todd Carswell: 3:58

16 years ago. Thanks for doing that, man, because veterans need that help. Man. I remember a lot of times I saw a lot of guys that couldn't get out. They wanted to get out but they couldn't because they didn't have anything on the outside waiting or no one to help them. So I mean not that they were in prison or anything, but you know how it goes.

Chris Wilkens: 4:16

Well, it's whatever you're going to do in life, whatever the endeavor is going to be, if you could talk to someone who was in your position a couple of years prior to kind of help you get started or give a little guidance, that's really what most people need. So I think you had said when you were in college was it a former SEAL or a former Navy guy like, saw you a Marine, just kind of pulled you aside and that kind of helped you, kind of lead your. You ended up where you are today because of it.

Todd Carswell: 4:41

So yeah, Name is Bill Wiseman. He was a SEAL team commander and went to grad school at NC State. Dude hooked me up, man Just pointed me in the right direction. I was like, oh okay, that's how I met James. And here we are. So yeah, but side note, we just took vacation in New York City.

Todd Carswell: 5:01

I've been to New York City a lot. I've never driven there. So we drove up though, went through the Lincoln tunnel, stayed in Midtown East. I've never driven to New York. Oh, I'm cruising around. It wasn't bad, but I'm cruising and everybody's honking, you know. So that's a, it's new to me and I'm like cool, everyone's honking.

Todd Carswell: 5:18

So there was this dude. Literally the light turns green and this dude Jays in front of us, he runs across and flip-flops and he looks like the dude Dominic West, his character in the movie 300. He was the evil senator, anyways. He comes flip-flopping across the street and everybody's honking, and so I was like I just laid on the horn, I just it was a bit much. And the guy looks over at me and he starts, starts yelling all these obscenities and stuff, but then he sees my face and I'm just like you know anyway. So he was like he probably saw the plates and we're like this guy's from North Carolina freaking bumpkin. Anyways, that was my foray into driving in New York, but we'll go and get started in the questions here. In a previous episode, james and I talked about the retirement crisis in America. Now we've got way too many people hitting the retirement age without sufficient funds to quit working. So what recommendations do you have for people in that situation?

Chris Wilkens: 6:15

Yeah, that's an accurate statement. Even according to the Federal Reserve, in 2022, half of American households had no savings in their retirement accounts, and the unfortunate reality is that, if you do not have the funds to retire in the lifestyle you want, you really only have two options, and that is adjust your lifestyle or keep working. That's an unfortunate position to be in when you're at an age where you'd really like to stop working. I think some of the things we're going to talk about today I'm going to come back to it is what we do is retirement planning, and a lot of the things we're going to discuss today are going to go back to that. And ideally, if you are within I'd say, within 10 years of retirement, a retirement plan is an excellent tool. It's a tool, but it's also like an exercise to go through, because basically what it does is you say here are the current asset levels that I have If I continue to save at this level, given this rate of return, and I retire at this age with this retirement lifestyle, like a dollar amount, just say, 10 grand a month after tax, and then you have to take into account taxes and inflation, because 15 years later, say you want to retire this year and you're like I want to live, my wife and I are going to live off 10 grand a month after tax. That covers our bills. Well, 10 years from now that's going to need $12,500 a month. That's 10 years of 2.5% inflation. It's actually more than that compounded. So someone wants to retire at 60, and they're like okay, I have the assets to retire now and I can live this lifestyle. Well, in 10, 15, 20 years, everything's going to cost more and you're going to need more money and you're retiring on a portfolio at the same size. So that's why the retirement plan is good, so you can kind of forecast if you can afford to live that lifestyle.

Chris Wilkens: 8:12

So, to bring it back to what I said earlier, if you can do that about 10 years before you hang up the cleats, as they say, you know, say you're 50 years old and you want to retire at 60, it's a good thing to do, because then you could say, oh well, I don't have those assets to live that lifestyle that I want.

Chris Wilkens: 8:27

If I saved an extra five grand a month for the next several years and then, a couple of years, an extra 10 grand a month, could I actually live the lifestyle I wanted. So going back to, if you do the retirement plan, maybe 10 years before you retire, you have time to make adjustments so that when you get to retirement it's not a surprise where you and your spouse or whoever you are planning to live a lifestyle and then the day you retire if you haven't planned for it, then you find out you can't live that lifestyle. I mean, it's hard for anyone to take a step back in your standard of living, especially the older you get and now I'm in my mid-40s and it's hard for me to take a step back in your standard of living, especially the older you get. And now I'm in my mid-40s and it's hard for me to take a step back in my retirement lifestyle. So yeah, I hope that answers your question.

Todd Carswell: 9:15

Yeah, I mean, I'm a proponent of radical lifestyle change. When you're young, Don't get into that expensive lifestyle and just keep saving money. But when you get older, you're right, changing lifestyle. That's a hard thing. I saw a video where this lady she was 60 years old and she sat there talking about how she can't afford anything. She's living in someone else's house, she's renting a room in someone's house, and then she's talking about all this stuff and then she finally goes yeah, and so my horse she's got a horse and I'm like what? Those things are expensive. What are you doing? You got to get rid of your horse. Radical lifestyle change. But you know I have a pet so it's hard to get rid of. But, yeah, radical lifestyle change and then reducing expenses however you can man. That's my, that's what I would say. So you know.

Chris Wilkens: 10:03

I will just add a point to that being in wealth management. I will say my clients. Generally they have the finances to retire in the lifestyle they want. I don't have any celebrities that live, you know, extravagant lifestyles. But what? Even they tell me the ones that have been retired for a while now they're like, even if you have the assets to retire, spending is different when you're retired because that money's not being replaced, so any big purchase, it's more. You think about spending a lot more when you're retired, even if you have the assets.

James Robinson: 10:40

Yes, that kind of leads. My question would be so what are the common mistakes you see people making when they're doing their planning for retirement?

Chris Wilkens: 10:47

Say a couple things. I guess it's just not being realistic about their spending or about their savings. As we all know, money is easy to spend. It is easy to find things to spend on. So when one of the more important questions I asked my so the retirement planning, it's a questionnaire and it's quite long, but there's one incredibly important question on there that kind of determines everything else and that is what what is your desired retirement lifestyle in today's after-tax dollars? And that takes a while to answer that question and normally it's a married couple. You know that.

Chris Wilkens: 11:25

I've discussed that with my spouse, because when people retire and again I'm basing this off the age 60, because that's kind of a ballpark year when people start to retire and a lot of things change for a lot of people around that time. The kids can be going off to college and you have some few years of big expenditures or their kids are about to get off the payroll. Sometimes you're going to downsize because the kids are off the payroll and you have a big house and now you want to do that. Sometimes the mortgage is paid off, sometimes you upgrade a few years ago to a much bigger house and you really have to keep the income going, and it's not uncommon for people to do some type of part-time work, gradually go into retirement that as well.

Chris Wilkens: 12:08

So back to what you said. What are common mistakes? If I ask someone what's their desired retirement lifestyle and they respond back with a quick answer, it kind of implies that they haven't really thought about that question. And the reason being is people are scared sometimes. I mean, when you're in your mid to late 50s, especially if you have a job that's physically demanding and you're like man, it's just my back is starting to hurt getting up early and I'm on my feet all day and you're like I just don't want to work anymore. And then you just start looking and you're not being honest with yourself. I would say yeah, that's good.

Todd Carswell: 12:46

I've got family members who delved into retirement like putting money into a 401k without knowing much about compound interest and stuff like that, and so they just put money into a 401k not that much money and then the market would have a downturn and they would get scared and just pull it all out, pay the penalties and all that stuff and it was like, hmm, okay, that's one of the mistakes I see a lot is people don't understand how compound interest over time works and they'll go, ah, the market's going down, and pull everything out and they're like I don't want my money in there, the stock market is risky. And you have politicians come out, oh, the stock market is risky. And it's like, yeah, there is risk, but it's a manageable risk. Anyways, that's just my input. But moving away from the retirement crisis, what is your investment philosophy? Let's see.

Chris Wilkens: 13:39

Investment philosophy is that the things that matter the most are the client's goals and their risk tolerance, and so I don't think any particular investment is bad or good, it's more of whether it's appropriate. So, just as an example, if you have a couple, say, in their mid-60s and they're well to do and they're well off and they're retired and they're relying on their portfolio for income, their portfolio that's required for retirement is not going to have a lot of risk to it because they're interested in cow preservation and income. But then if they have a grandchild and they want to invest some money in a college fund for that grandchild, that money is not going to be spent for at least 18 years. So it would be more appropriate to have an aggressive portfolio for that money, right? So the goals of what the money is for and the client's risk tolerance is that's going to determine whether an investment is appropriate or not.

Chris Wilkens: 14:40

And there's an aspect of this where some people just don't like certain types of investments because of something they heard and like you I just kind of alluded to. There's risk with everything. So even if you don't want to invest your money and you want to sit in cash, if you do that over a long time, the value of your cash will drop due to inflation. So even if you take no risk, there's a risk in that as well.

Todd Carswell: 15:07

Oh, that's yeah, that's right. If you don't do anything, you're just hoarding cash. It loses value. Wow, yeah, Good point man.

James Robinson: 15:14

So would you say, would you recommend like stock ownership for everyone?

Chris Wilkens: 15:19

Stocks, yes, but let me elaborate. So, when you're looking at the two kind of most common types of investment that people are familiar with is there's stocks and there's bonds, and so stocks are relatively simple to understand. Stock is equity, it means ownership. So say, a company has a million shares outstanding and if you own one share of that company, you are one millionth owner of that company. And if there's higher demand for that stock, you are one millionth owner of that company. And if there's higher demand for that stock, the value of the stock is going to go up. And if there's lower demand, or more people selling than buying, the value of the stock goes down. So over time, generally, the longer you hold a stock, the less risky it becomes, and the longer you own a bond, the more risky it becomes. That's not my thoughts, that's Warren Buffett's and I think he's accurate. And then, when it comes to a bond, the unofficial comparison is that's an IOU, it's you're loaning someone money for a certain period of time and there's a set interest rate and you will receive that interest in payments as long as that money is lent out and whatever the term of the bond whether it's a two-year bond, a five-year bond or a 10-year bond. When that matures, you get that money back. So if you are a young person and in the example you just gave, which was a 401k, so a 401k is a type of retirement plan that you cannot pull the money out of until you're 59 and a half without taking a penalty in addition to paying the taxes. So if you are a younger person and you're investing in a 401k or some type of retirement account, those assets have a 30-year time horizon and there will absolutely be some downturn in the market and whenever I'm talking to clients that may have not invested in stocks before, you do have to manage that expectation. The market does have some very good years. It also has some very bad years.

Chris Wilkens: 17:19

However, I think a good strategy for investing in the equity markets and a lot of people do this in their 401k plan is a strategy called dollar cost averaging. So let's just say, hypothetically, you wanted to say, put $12,000 a year into your 401k plan and you put in $1,000 a month for each month of the year, as the stock market over the long term has generally gone up. It's going to go up, but it's going to be volatile along the way. So if you're putting in the same amount every month when the market's down, you're buying more shares when they're less expensive. And if the market continues to go up, but you're putting in the same amount, you're buying less shares when they're more expensive. So it's the time horizon and the goals. And if someone is investing knowing that the market might go down, as long as they're kind of prepared for that and they better understand it, that over the long term they will significantly benefit. But yeah, there is certainly a psychological component to investing.

Chris Wilkens: 18:20

So to say what, I recommend? Stock ownership for everyone. That's a bit of an absolute statement. I would say there is certainly long-term benefit. If you are a long-term investor and I'll say more than 10 years, then yes, I think stock ownership could certainly benefit you. But I also do know other people that frankly just don't trust stocks. They're very familiar with real estate. It's a business they've been in and they feel more comfortable investing their assets in that. And I know people who own a number of properties and that rental income is their source of income in retirement. So there is ways of doing it without investing in stocks. But when we were talking about risk earlier, there's a lot of risk with owning real estate and they're also not liquid. So that is something about generally stocks and bonds. For the most part, you can buy and sell them and get out of them pretty quickly if you need to.

Todd Carswell: 19:13

Yeah, and for the listeners? What does liquid mean for an asset?

Chris Wilkens: 19:16

Oh, you can turn it into cash, you can sell it.

Todd Carswell: 19:18

Right Now there are also funds that you can invest in, like REIT investments or something like that, that get you into real estate if maybe you don't have money to buy a house or a rental property.

Chris Wilkens: 19:29

Correct, they're pooled real estate investments, got it. And a REIT. It's a real estate investment trust REIT. Okay, so when you said stock ownership, you can buy an individual stock, but that is a bit of a concentrated risk.

Chris Wilkens: 19:44

So If you want to buy a more diversified portfolio without buying all the individual stocks yourself, there's ETFs exchange-traded funds and they're passively managed. They're low-cost Vanguard, they're not endorsing me, they're just very well-known and they have low-cost ETFs and they just track and index. And then you have mutual funds, which are also. They have anywhere from 50 to 100 holdings in that mutual fund and they are going to actively manage that portfolio and a portfolio manager is doing that and there's some fees associated with that. So you could buy an individual stock or stocks yourself, but that's going to be very concentrated, or you could do it with an ETF that's going to be more concentrated, or you could do it with an ETF that's going to be more diversified among more stock positions. And then there's more of a mutual fund where you have a portfolio manager actively managing, buying and selling those stocks for you.

Todd Carswell: 20:43

So related question do you typically recommend that investors try to pick individual stocks?

Chris Wilkens: 20:48

that investors try to pick individual stocks. No, I have asset managers that do that For what I do. To use a baseball analogy, so the client say they're the owner of the baseball team, they would hire me as the manager of the baseball team and the asset managers are the players on the field. So I'll have bonds managed by this manager. I'll have maybe this portion of stocks by this manager, this portion by this. I'll have these couple private equity investments and I'm managing the managers and I'm making sure they're fulfilling their particular slice of the portfolio, as they should be, and diversifying the risk across those asset classes.

Todd Carswell: 21:28

Got it. Yeah, true story. When I was down at 1-6 at Camp Lejeune every morning, my gunny I was in 81 Splatoon, so our platoon sergeant was a gunny he would come in every morning. He'd pull out the newspaper and he would look at penny stocks and he would get on the phone and call a stockbroker and buy penny stocks and sell them when they doubled. That took time, though, and you had no idea that was guesswork. He was kind of like okay, you can't research these companies back in the day because we didn't have the internet, but he would just kind of look at the stock ticker and go, hmm, okay, it's like wetting your finger and putting it in the air and going, yeah, I'm going to invest in this stock, but he was making money over time For me. I'm just like I don't have time to pick stocks. When I try to pick stocks, I usually don't pick.

Chris Wilkens: 22:12

Well, yeah, I think what I do is investing. I think that's more gambling in the stock market. But it's not uncommon though, because, frankly, trading stocks and buying things is enjoyable and fun. So it's not uncommon for a client where I'm managing a significant portion of their portfolio. But they may have a portion of it, often in a self-directed account, and they're like you know, I wear a lot of Under Armour clothes all the time. I'm not endorsing it. This isn't a recommendation, just saying it's a conversation I have with someone, and they just wanted to buy shares of Under Armour because they're always wearing Under Armour clothes. So they kind of felt like they're buying into it, Like they're benefiting from them purchasing the clothes, even though they're probably not. You know there's an emotional aspect of investing it is your money and you want to kind of believe in it. So it is fun to do, but no, I wouldn't consider that investing.

James Robinson: 23:11

So why is it important to start saving and investing now, even if we're behind?

Chris Wilkens: 23:18

Todd had mentioned earlier, just compound interest over time and a quick little calculation, like a back of the envelope calculation, to help you plan how long it takes you to double your money. So if you divide into the number 72, that's how long it takes you to double your money with the rate of return. So if you get an annualized rate of return of 7.2%, you'll double your money in 10 years. If you annualized rate of 10%, you double your money in 7.2 years.

Todd Carswell: 23:52

What I like to do is calculations and go what if, and then over time I can see how much money I put in versus how much compound interest over that time period has earned. For me it's free money I'm not having to do anything to get that, so I love that.

Chris Wilkens: 24:07

It's funny you said what if? Because, for all the listeners, I had to get these questions approved by my compliance department and one of the things they had mentioned was focus on our retirement plan, which I use quite often. It's a very helpful tool, not just for me, but for my clients as well. But one of the functions of the retirement plan is they have the what-if worksheet and you could put in all these different factors and change the rates of return. And again you're talking to someone who has a client, maybe has a couple of girls and they're like 10 and 12 years old, and he's like, yeah, plan $50,000 in 2040 and $50,000 in 2042 for weddings. He's like, okay, what if? Make it $100,000 for each wedding. It's kind of some fun things you can play with. So, yeah, there is a what-if worksheet in our retirement plan that are all kind of because there's a lot of factors that go into it. So that is one thing we do to help people plan.

Todd Carswell: 25:09

Yeah, you guys have a lot of cool tools. My stuff is just rudimentary stuff that I find online Investorgov. They've got a compound interest calculator, but yeah, you guys have a lot of tools to plan for those unexpected or even expected expenses. So that's cool.

Chris Wilkens: 25:23

I like that. I think we should have a more personal conversation about this when this podcast is over.

Todd Carswell: 25:27

about your personal finances I love it, man Moving on, yeah, so let's go into wealth strategies Now. How do you advise people on protecting their assets from unexpected events such as job loss or illness, or even market crashes?

Chris Wilkens: 25:45

Having a rainy day fund or some cash that you can quickly access for those types of things. That is, I'd say, is absolutely necessary to have before investing in the stock market. I'd say six months of cash is probably a good baseline to have before investing assets into true investments, because with an investment you don't want to be day trading it, you don't want to. If this is money you need for a down payment on a house in six months, that's not something you're going to want to invest in the stock market, because there's a lot of people in the world they're getting paid a lot of money to figure out how the S&P 500 is going to open tomorrow morning and not one of them has an idea. Right, because there's so many factors outside of your control.

Chris Wilkens: 26:34

Well, the stock market I think what's great about it is that the stock market is. It's where all these decentralized sensors are that show you what's going on on the ground, whether it's the price of oil, whether it's an interest rate, whether it's the value of a company. And my point is there's so many things changing it would be impossible to factor, because once one of them changes, it starts to change everything else. It's kind of a chain reaction of things that are always happening. So yeah, if you were to say I need this whatever amount of money for a down payment in six months, you certainly don't want to put that in the stock market because you're going to be looking at it every day. I think maybe a high yield savings account under the FDIC limits might be a better option for you. From a risk reward standpoint, that would be a better option.

Todd Carswell: 27:21

Yeah, I mean for my family members that are concerned about putting money into 401ks or whatever for retirement. They're worried that it's going to crash. And I always point out that the S&P 500 index, that's the benchmark for the market performance. It's the top 500 companies and correct me on this, chris but it's the top 500 companies in the market today, right? Is that the S&P 500?

Chris Wilkens: 27:43

Yeah, the top 500 publicly traded companies, largest by market capitalization, which means value of the shares and how many shares they have outstanding.

Todd Carswell: 27:53

Yeah. So I like to point out that that index started in 1928. Since 1928, that index has generated an annual return of 8.6% over time. Now we can't say it's going to continue doing that, but it has generated that interest rate over time. And that includes the Great Depression. It includes these big crashes that we've had, like in the 1980s what was it? Black Monday 1987 or something like that.

Todd Carswell: 28:20

But you can look back on these graphs and you can see years it's up, years it's down. And I look at it and I go, okay, the most it's ever gone down in a bad year was like 30% or something like that. That's a lot of money. But if you just leave your money in the market over time it's going to come back up. And if you're in an ETF or whatever for the S&P 500, if a company goes out of business, they're no longer in the S&P 500. Your money gets reinvested into the next one that comes in. I like that. But there were years when the market dropped 30%. But overall they've seen 8.6% per year returns and you're doubling your money in less than 10 years with that markup.

Chris Wilkens: 29:02

Well, an individual company can certainly go to zero, so that is something to be mindful of, which is why you don't want to have all your proverbial eggs in one basket, whereas if you are more diversified in an index fund, an index, an ETF or a mutual fund, the probability of all those companies in that fund going to zero is pretty unlikely.

Todd Carswell: 29:28

Yeah, dude, this is a sad tale. I knew this guy. He was in his 50s at the time and he put all of his 401k into the company stock the company that we worked for. Every penny of it into that company we worked for it went to a penny stock. The dude lost everything and I'm just like, oh, he's in his 70s now and he's still working. I'm like, oh, don't put everything in one Don't do that.

Chris Wilkens: 29:56

Unfortunately, I'm familiar with similar stories and talk about when it comes to managing risk as well. If you have a significant portion of your assets in the stock of the company that you work at, well, if something happens in the company, you lose your money and you lose your job, oh yeah, so that just seems kind of like a double whammy that you don't want to experience Right, don't put it all in one spot.

Todd Carswell: 30:19

And I don't trust myself to pick stocks. I'm not doing that.

James Robinson: 30:23

Yeah, so would you mind educating us just a little bit regarding IRAs? So what's the biggest difference between the 401k and the Roth IRA?

Chris Wilkens: 30:34

So an IRA, whether traditional or Roth, a 401k, a 403b, and for government employees they have the TSP Thrift Savings Plan. Those are all forms of retirement accounts and where the Roth IRA is different is that in that one the contributions you make to the Roth IRA are after tax and then they can grow tax-free. And then when you pull the money out of the Roth IRA when you're retired, you don't pay taxes on it. Then when a 401k, generally that's pre pre-tax money and you get the tax deduction immediately. So say, you make $100,000 a year, you put $10,000 in your 401k, you get taxed on 90, and that $10,000 can grow tax deferred. So the younger you are, that money that you didn't pay taxes on is now invested and again, compound interest really works over time. So if you work at a company, you have a 401k nonprofits and teachers tend to have like 403bs.

Chris Wilkens: 31:38

The benefit of them is that you're getting the benefit of not paying taxes on those assets that you're contributing to a retirement plan.

Chris Wilkens: 31:45

You get that right away and then those assets grow tax deferred and the rationale behind it is that when you're working you're believed to be in your higher tax bracket. And I'm up here in the Northeast, so New York, new Jersey, generally the higher tax places and then when you retire you move to someone with a lower tax state generally Florida or Texas or Arizona and then when you're pulling the money out you're at a lower tax bracket and a lower tax state generally Florida or Texas or Arizona and then when you're pulling the money out you're at a lower tax bracket and a lower tax state. So for most people contributing to the 401k while you're working, it benefits you then and then it benefits you also while you're retired. So the Roth there are income limits on the Roth IRA and the benefit of that one is do you pay the taxes up front, but do you have enough time for it to grow compounded to where you benefit on that tax-free growth and then take out more assets when you're retired and not have a tax then?

James Robinson: 32:46

So do you recommend one over the other? Is there a blanket recommendation? So do you recommend one over the other? Is there a blanket?

Chris Wilkens: 32:49

recommendation For most people that are employed at companies. If you can afford to, maximizing your 401k contribution every year is a good start and then with the Roth, you'll know if it was a good answer when you passed away, when you're 90, if you had the time, if you have time, to see what the performance was, what the rate of return was and everything. So, because there is an income limit on the Roth IRA, most people don't directly contribute to it. But what some people or clients have said to me is does it make sense to do the Roth conversion? And again, this is going to be a little more complex and not apply to everyone. This is going to apply to your more wealthier listener base.

Chris Wilkens: 33:33

But I recently had a client who she has multiple board seats and she's going to be sitting on this board for quite a while and she's going to be getting income and then she has, like these deferred shares that she's going to get.

Chris Wilkens: 33:46

So when we significantly later on, probably into even her 80s, so we were looking at her retirement plan and looking at what her withdrawals were going to be and due to all the income she was going to be receiving, and then on top of that, at age 73, she has to start taking withdrawals from her IRA.

Chris Wilkens: 34:05

So these forced withdrawals in about 10 or 12 years are now going to be forcing her to pull money out and it's going to be at a very high tax rate. So they were asking me to do the analysis. Does it make sense for us to start paying the taxes now and converting and doing the Roth IRA conversion on these retirement assets? That way, in 15 years I'm not forced to take out more money and I have to pay more in taxes. So that's some of the things I do with the clients to see if the Roth IRA conversion makes sense. Generally speaking. Even if it does make financial sense, most people don't want to do it Because to do a Roth IRA conversion with your retirement assets, you have to pay the taxes right away and you have to write that check today, hoping you benefit from it in 20 years.

Chris Wilkens: 34:54

And a lot of people don't necessarily want to do that Right, but if they want that analysis done, I can do it for them, does that?

Todd Carswell: 35:01

lady need a pool boy. That's what I'm going to do. I'll talk to you after the. We'll talk later. I'm kidding, I'm married, all good, it's just kidding so, but yeah, so just a side note. What I like is that you're not formulaic in this. You're not saying cause, if you go to YouTube and this is I warn people don't go to YouTube to get financial advice, because you're going to get randos out there who really don't know what they're talking about. They're just doing internet searches and they're going to come out and say you must convert your 401k to Roth and all this stuff. Talk to a professional, don't go to the YouTubes to get your financial advice, all right. So next question For those who you mentioned wealth plan, as when you're talking about helping people getting their finances in place, but for people with a wealth plan, how do they determine if they're on track to meet retirement or other, whatever their long-term financial goals are?

Chris Wilkens: 36:02

When we do a plan, we do update it every year. So let's just use the example, like I said someone who is 50 years old and want to retire at 60. It let's just use the example, like I said someone who is 50 years old and want to retire at 60. It's going to forecast, say, you're going to save whatever $50,000 a year after tax, and you were going to invest in this and, based off your risk tolerance, you're going to have a moderately aggressive portfolio. So we're going to plan on a six or half percent return annualized. So by the time you're 60, you should have this amount Right, something along those lines. Well, each year we're going to go through that and says you know, you said you were going to save 50,000 this year. You didn't. Or we were planning for a 6% return. The market actually returned 20. Or you saved more and the market did have a. The market had a bad year, so you had this amount of money. Now you have less.

Chris Wilkens: 36:50

So the future is always kind of this dark path and when you do the retirement plan, it does kind of light the way a little bit. And as we're getting closer to retirement, so say, right now it's 2025 and you're going to retire in 2035. What the plan says about the year 2035 is a bunch of guesswork and assumptions, and then, as we get closer to 2035, it becomes more accurate. So we really just kind of maintain it and it's the basis for what the investments are, how they're doing. Do we need to make changes? Is there something we should add? Retirement plan is the foundation and the house is the investments. Perfect.

James Robinson: 37:28

So I'm curious, given that, what are the common misconceptions you've heard from folks about income sources in retirement? Okay, how do you educate folks about that?

Chris Wilkens: 37:38

So similar to having a diversified stock portfolio. When it comes to retirement, you want to have your retirement income come from diversified sources as well. You won't want to buy, like, just one or two bonds and just collect the interest from them. You don't just want to buy a dividend paying stock and rely on just the dividends from them. So it is diversifying the sources of income that you are getting in retirement. And one thing to that there's also understanding the risks associated with each type of investment. So, Todd, you had mentioned how, when you may go to YouTube and someone says you should do this because you'll get this guaranteed rate of return, Sometimes there's a product that can give you a guaranteed rate of return but you kind of give up your access to the money and you give it to an insurance company, Whereas you'll get that consistent income until the day you pass.

Chris Wilkens: 38:35

But if you get into, have a tragedy happen in a year from now, that money's gone In some cases, right, there's annuities and there's insurance and there's stipulations with each contract. But also, if you own, maybe, a certain private equity investment that's paying this enhanced return, then maybe that's paying more than the traditional bond market might pay, but you might not have access to it. It might not be liquid. So for some people they inherited some money from their parents who had passed and then they inherited all these stocks and then it was a volatile year in the market. He's like I can't handle the volatility, I want something guaranteed.

Chris Wilkens: 39:13

And in this particular case he wanted the annuity. He wanted that guaranteed income and he was happy to let the insurance company have it. So in that instance he was happy with it. So I would say, just understanding the risks associated with different income sources and the fact that it's not necessarily a liquid investment isn't necessarily bad. Like a home is a good investment, but a home's not a liquid. You can't sell it like right now and get cash for it. You know it's a process. So sometimes these other strategies that certain investment managers might do, it's just really understanding the risk associated with each investment and having diversified income sources.

Todd Carswell: 39:55

Now, what about? Have you seen any dangerous retirement planning fads out there that people need to be aware of?

Chris Wilkens: 40:04

It's not necessarily a fad, but there's a lot of people in my industry and when it comes to an advisor, it has to be someone you trust, like any type of trusted advisor, whether it's an attorney, an accountant or your doctor. It does need to be someone you trust. I wouldn't say a fad, it's really any investment. They're not good or bad, it's more whether they're appropriate. Really any investment. They're not good or bad, it's more whether they're appropriate. And if you're going to interview a financial advisor, you should be asking a lot of questions and the answers should be, in my opinion, based on your client's situation and what they're saying, the things that are important to them, the goals that they want to accomplish and also sometimes being very honest with them, because sometimes they may have unrealistic expectations. They want a high return but they're not willing to accept any risk Something along those lines.

Todd Carswell: 40:59

Right, yeah, if you're talking to a financial advisor and they're just saying, hey, here's what you need to do, blah, blah, blah, they're giving you formulas and all this stuff and they're not talking to you about your situation, that's where, to me, that's a red flag. But yeah, I like that you say that you got to meet with the person and see what their situation is and then you create the plan. So pay attention to that folks. So what non-financial factors play into your approach to financial planning? I mean things like lifestyle goals, mental health, personal fulfillment, things like that.

Chris Wilkens: 41:35

So how do you incorporate that into financial planning? It happens over the course of a lot of conversations, because all my clients who retire are wealthy enough to retire and live the lifestyle they want. So the money's not a factor and retirement is. For a lot of people it's just this abstract thing. You know, we talk about it and it's at some point in the future, and then that's it. And then you get to a point where it just hits you and it's like, oh wow, I'm not going to make any money anymore. The hell, am I going to do, you know? And then it finally does kind of hit them.

Chris Wilkens: 42:10

And then I start asking the question, like what's your desired retirement lifestyle? Into days after tax dollars, and they're like I don't know. Is my kid going to med school? Am I selling the house? Am I going to work part time? Like what am I going to do? Are we going to buy a beach house? You know there's all these things that do kind of come rushing. And I would say a good piece of guidance to anyone that is retiring retirement is easier if you have something to retire to as opposed to being you're retiring from something.

Chris Wilkens: 42:39

Like if you just hate your job and I understand there's plenty of people that don't like their job. But if you just want to stop going to work because you hate your job, I understand that. But you do have to stop going to work because you hate your job, I understand that. But you do have to have something to look forward to and I feel like you spoke about this on other episodes of your podcast. But it is a bit of a sense of purpose and meaning and something that does interest you, because as much as people, especially guys, they'll say like I want to retire and I'm just going to live on the golf course, I think that that's good for maybe a month or two, and I love golfing too.

Chris Wilkens: 43:15

I'm not knocking the sport at all. You spent 40 years in a career and you established relationships with them. Maybe you went into an office or you're interactive members of a team and you just can't. You can't just end that one day and you know I'm going to tour wineries and live on a golf course, like you've had this life that you've built over over decades and it's not just going to change when you retire. Now I'm not saying don't have fun plans or don't be afraid to move somewhere or go on more trips or do those things.

Chris Wilkens: 43:47

But my clients are fortunately in a position where they're able to continue working in a manner that fulfills them. And I understand you don't want to get fulfillment from your job. But if you've been there for 40 years and then you could still do it kind of part-time afterwards and there's younger people who maybe appreciate your experience, so you're still valued, you still feel relevant in your industry, you're still solving problems or people are coming to you with advice or you get to mentor the new people, those clients who do retire and still kind of have that. They still have something to do and it could also just be spending time with grandkids. I mean that gives a lot of people purpose too. So back to I'll wrap it up with what I said earlier like having something to retire to as opposed to retiring from something, that's a good path to head towards.

Todd Carswell: 44:44

Yeah, I saw a video. It was a cardiologist. He said I'm dealing with people that living living into their 80s and 90s. He said the people that are the most healthy, with the best mental health, are the people that continue doing some sort of work after they've officially retired from their careers. Maybe they're working a job, just something to keep their minds going. Because I mean, if you just stop working and you think you're just going to live on the beach and just live a life of leisure, that's going to be dead in a few years.

Chris Wilkens: 45:19

I'll give them. I'll give the example of my father. We had a tragedy in our family a bunch of years ago. We had a couple members killed by a drunk driver and shortly after that my father had retired. And now my family's not wealthy like my clients are, but still, like the whole, like I'm not going to work anymore, I'm going to retire, what am I going to do? And so I got him this book that I do give to my clients when they retire. It's called Don't Retire Rewire. And I know the authors it's Jerry Sedler and Rick Miners wonderful people.

Chris Wilkens: 45:52

Rick actually served in the army. He was a tanker back in the day and he went through the book and there's exercises and he said what he realized was that he wanted to do something, but he didn't want to get paid. And yeah, my parents and other people have a ton of money, but my dad's, like I, don't want to get paid because that means they can tell me what to do. So he ended up doing a lot of work with mad mothers against drunk driving, as well as initiatives in my hometown, right, and that kind of gave him his sense of purpose. But but no one could force him to be anywhere at at any time or force him to go to a meeting. It was just on his terms and it's something he really enjoys. I mean, he's been doing it. He's been doing it for over a decade now.

Chris Wilkens: 46:32

So yeah, so it's not like a lot of non-financial factors do play a part in do you enjoy retirement? Is life fulfilling? But I will say that the finances do help. There's this comedian, Anthony Cumia, and he said it on Joe Rogan's podcast, where he said money doesn't buy happiness, but it pays for a lot of sadness to go away. And that is one of the most true statements I've ever heard.

Todd Carswell: 47:02

Love it, you got to have money. It costs money to live. So, yeah, it's not a bad thing to have money either. So, chris, do you have any takeaways you'd like to leave with our listeners?

Chris Wilkens: 47:12

I'm thinking of a lot of things based off the questions you asked. I guess for your listeners who are considering talking to a financial advisor, feel free to interview a bunch of them. And if you don't feel comfortable with them because for financial advisors we all run our own book of business under the umbrella of a larger financial firm. So the financial advisor in the office next to me, I don't know who his clients are, I don't know his investment philosophy, I don't know what they do and they don't really know mine, and you have to trust the person.

Chris Wilkens: 47:42

There's a bit of a personality fit and every advisor is going to have a familiarity with certain types of investments or processes. So, just as an example, I have a lot of clients who have investment restrictions, right, Whether it's attorneys who do merger and acquisition work, whether it's financial people. So if they work at another bank but they want to have their assets with me, there's a certain process with that. Or you deal with the big four accounting firm partners like EY, Deloitte, KPMG and Price Waterhouse. They have restrictions based off the audit work they do. So I have kind of a specialization in client reporting with outside firms just to simplify their compliance reporting, because that could be a headache for those types of professionals, like I said, in law, finance or accounting. So that's just something I've picked up on because I've been doing this for 15 years.

Chris Wilkens: 48:34

But for anyone who is interested in speaking with an advisor, interview as many as you can until you feel comfortable. If you don't feel comfortable, no need to invest. So where can people get in touch with you? I'm pretty easy to find. My name is Chris Wilkins. Last name is spelled W-I-L-K-E-N-S and it's RBC Wealth Management. There's an RBC page for me and then there is a LinkedIn as well.

Todd Carswell: 49:02

Yeah, I'll go ahead and put links in the description. But yeah, we'll get that out. I appreciate your time, brother.

Chris Wilkens: 49:07

All right, well, I appreciate being invited back. It's not like I go on a lot of podcasts. I'm not in high demand as much as I expected I would be.

Todd Carswell: 49:16

We get a lot of people financial advisors asking us to be on the podcast. We're like, no, not, every episode is going to be about money, so you know. And yeah, you know, we don't know them.

James Robinson: 49:25

So it's like, oh, yeah, no, we just appreciate your time and your advice and wisdom and sharing that with us and our listeners. And yeah, we'll be sure and add the link. We'll link that book as well.

Todd Carswell: 49:42

And it'll be our Amazon affiliate link. Oh great, yeah, affiliate link. You don't pay any extra price. We do get a small commission if you buy through that, so it's a don't retire rewire. I'll put a link for that. And also, if you're looking for a financial advisor, trust is a big thing. So I will say that I heard of Chris before I met him in person, and I'm friends with a Marine that served in his platoon during the Battle of Fallujah, and his troops spoke very highly of him, so he's trustworthy. So that's from a lot of different people. So give Chris a shout. He's a good dude. But here's my takeaways.

Todd Carswell: 50:18

Whatever your stage of life, now is a great time to start saving and investing. You can achieve financial success, and the starting point it's got to be getting a handle on the spending, what's going out the door. And then you need to make a plan. You need to plan to set aside a percentage of your income. I would recommend getting with a financial advisor to make a plan for that income that you're setting aside and don't try to live like other people because, honestly, if you're seeing people that have a lot of cool toys and stuff, they're probably broke, except for that lady that I'm going to be her pool boy. But all that aside, final advice let compound interest and time do the work for you.

Todd Carswell: 50:57

Even if you're in your 50s, you may have to work a little bit later in life, but you also may have to significantly change your lifestyle. And that's not necessarily a bad thing, because my mom she lived on just her social security. She just downgraded her lifestyle and she got to a place where she can live on $2,000 a month. She was very happy doing that. She was very socially connected and she's very happy. It doesn't take money to create that sense of fulfillment, but you do have to have money to pay the bills. So make a plan, change your lifestyle, set aside money, get with a financial advisor to help you put things together for retirement so anything else, james.

James Robinson: 51:37

I strongly encourage you to talk to a financial advisor.

Todd Carswell: 51:40

Yeah, thanks again, chris, and we will sign off there. Thanks guys, take care Chris.