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Video Transcript
Rebecca Powers 00:00
Brian, welcome to this week’s edition of On the Money with Secure Money with Brian Quaranta, of course, it is all about securing your hard-earned money. We have a great show for you this week. Thank you so much for being with us. I’m Rebecca Powers, a long-time news anchor and retired investigative reporter, and now I get to be with you every week. Thank you for having me.
Brian Quaranta 00:43
I know, I know we’re so blessed, so grateful.
Rebecca Powers 00:45
You always thank me, but I want to thank you.
Brian Quaranta 00:49
You’re welcome. You make my life easy.
Rebecca Powers 00:50
Thank you, I’ve learned so much from you. Now this is one of those things to think about. The paycheck disappears, but the bills don’t. That’s the retirement storm that most people aren’t ready for. Do you find that of new people that come into your office? Yes? They’re confused, worried, not sure where to go.
Brian Quaranta 01:10
Yeah. And people aren’t really even sure how to figure out how much income they need in retirement. Yeah, you know, a lot of people look at like, well, I make this much at work. You know, this is how much I need. But that’s not the reality, because let’s say you make $90,000 a year. That’s not really what’s hitting your bank account. You have money. You have money going in your 401(k)s. You got money going out, paying your health care cost, right? And money going out in taxes each payroll. So, the question is, what’s hitting your bank account, and then how much of that check is left over each month? Is there money left over? Is there not money left over? Right? So, the best place to start is there how much money hits your bank account. And so, we want to simplify the idea of- so the easiest way is just to look at the net amount that’s been deposited into your bank account over a 6-to-12-month period. Add it all up, average it out, and that’s roughly about what you’re going to need to maintain your lifestyle. And what we want to do is get you 100% of that or more, because look, in retirement, every day is Saturday and Sunday, right? And when you think about your working years, every Saturday and Sunday is when you go do all the things you want to do, spend the money. So, you spend the money. You go to Home Depot, Lowe’s, you buy the flowers, you buy whatever, whatever, right? You’re going to do your home project. You know, you might go golfing, whatever, but that’s where you’re spending your money. But now you’ve got every day that Saturday and Sunday, and you’re going to be wanting to do these things. And one thing I really want to encourage people, and this is not part of the show, but I think it’s important, because I’ve talked to some clients recently that, you know, held very high positions in corporations in Pittsburgh. And, you know, when I saw them last, you know, two of them were not doing well. And what I mean by that is they were physically okay, but mentally not, because men tend to identify with their work. Yeah, and so if you go into retirement without a plan of what you’re going to do and what you’re going to do at your time. You know that to do list only lasts for so long you get bored. I hear that so much you get bored. You get bored. And unfortunately, over my 25 years of doing this, I’ve seen a lot of people retire and pass not too long after retirement solely for the fact that they just didn’t have purpose anymore, exactly. And what I’ve realized is that purpose is what keeps you alive, yes. And so, you know, we don’t talk about that much in retirement planning. We don’t talk about mental health, but it’s a big problem, you know. And then there’s a lot of executive coaches out there today that you know, specialize in working with executives that are retiring to help them find their new purpose, but it has to be part of your plan, unless you’re just someone that’s always been part of volunteering or doing something, but you’ve got to wake up. You’ve got to have a schedule, otherwise you wake up and the days just go by and you’re in your pajamas. Yeah. Yeah. You know my joke when I do my educational events, you know, is, you know, I always ask, you know, how many of you are- been retired in here for more than five years? And those that raise their hand, I said, do you folks even know what day it is? You know, they don’t know if it’s Tuesday, Wednesday, Friday. Don’t know what day it is, so, but, yeah, it’s an important part to think about.
Rebecca Powers 04:42
It really is, you mentioned mental health, and that’s really perfect, because the first question is from Susan in Cranberry. Last week we did a Take Questions From You show, and everybody loved it, so we’re going to do that again. I hope you don’t mind. All right, Susan in cranberry, she wants to know I am 65 years old, retired, and every time. The market dips, it makes me panic. How can I stop worrying about my retirement money, that it will still be there till the end?
Brian Quaranta 05:08
Well, she should panic. Yeah, she should panic because there’s too many variables there and too much uncertainty built in, right? And this- the fear that she’s referring to is what we call sequencing risk. This is where the rate of return that you get, especially in your first few years of retirement when you’re withdrawing money, if you’re withdrawing money from a risk portfolio, matters. I mean, you can have two people, person one, person two, the exact same money, and you could show that person one had positive returns in their first two years of retirement, person two had negative returns in their first two years of retirement, and person two runs out of money. And person one doesn’t run out of money because of strategy, just because of strategy, yeah. And here’s the thing, you can’t control what your investments are going to do. So, you know, we’re trying to be as perfect as fiduciaries. We’re trying to be as perfect as we can in an imperfect world, right? We work in an imperfect environment, the markets, right? Sure, and this is why I’ve been on a pedestal for 25 years talking about the use of annuities. But you can get online today, and you can find many articles that talk about the importance of utilizing annuities as portion of your portfolio. You know, some people like to call them the current day bond replacement. Rather than using bonds, use the guarantees from the annuities, your yields will be much higher right on the last segment, we talked about a couple that needed $30,000 a year, and they had about $550,000 right? Well, if they were using the traditional Wall Street strategy, the 4% rule, they would need all $550,000 to generate that $30,000 but they’d have to pull out more than 4% whereas a strategy where we’re using guarantees, like the income annuity, you can carve off as little as $300,000 get your $30,000 a year, and still have 250 left in the market. So, you get the best of both worlds there. But it also gives you the peace of mind that like Susan here, when the market drops with a strategy like I’m sharing with you where you’ve got these two buckets, she’s not going to panic, because she can still pay the bills. She can still pay the bills. Plus she knows that the money that’s in the market is long-term money, and it’s not going to have an impact on her. Ever running out of money in retirement, it won’t happen. Yeah, you know, your probability of success goes up drastically. It goes up drastically.
Rebecca Powers 07:41
Every (indistinct) has a different tool, yeah, an assignment, what to do.
Brian Quaranta 07:45
I wrote, you know, in the book I write about, you know, a client by the name of, he wasn’t a client, but, you know, when I was working at the big box firm, yes, when I was young, I took a call from a gentleman. He was 75 years old, okay, and his name was Jim, and Jim had called in, and it was my first couple weeks on the job, and I answered the call because that’s what they told me to do, right? Kid, you’re just gonna answer the calls. Well, this is like 200,0 2001 you want to talk about the worst time, they answer the phones at a stock firm, right? They made you do it. Yeah, that’s why they made me do it. And, you know, I’m taking calls from people that are very upset. They want to talk to their advisors. And I remember taking a call from Jim, and he says, I need to talk to my advisor right now. He says, I need to get out of the stock market today. Cannot afford to lose another penny. So, I didn’t know what to say. So, I said, Jim, give me a second. Let me go talk to your advisor. So, I went and talked to his advisor, and I said, Look, you got a client online. He’s upset he’s lost money. You know, are you okay if I place the trades and get them out and liquidate them? And the guy looks at me and he says, Brian, I know you’re new here but let me share something with you. We don’t sell; we’re long-term investors. What I need you to do is get back on the phone with Jim, and I need you to be a beacon of light to him, and I need you to let him know that everything is going to be fine and that all he needs to do is hang in there, hold on for the long term, and everything will be fine and it will come back. And so like a good employee, I go back to the phones and I say, you know, Jim, I just talked to your advisor. He said, everything’s going to be fine. Don’t worry about anything. It’s just a paper loss. Hang in there. You’re in it for the long haul. And what Jim said to me next is why I do what I do today. It’s why I wrote the book. It’s why I help the families the way that I do. He said, Brian, I’m 75 years old. “How much damn long haul does this guy think I’ve got left?” It’s a shame. And that hit me in the heart, because growing up, I saw my parents go through so many financial struggles. My dad had a Montgomery Ward store. Lost that Montgomery Ward store. My dad worked two, three jobs to keep food on the table pay for health insurance for us kids, right? And I know what that financial stress does to a family, right? You don’t need to put yourself through that, but it’s really easy to tell somebody else to risk their money, especially if you get paid a fee to do it, especially if you get paid a fee, whether the market goes up or down, right? That’s the other crazy part about it.
Rebecca Powers 10:17
Yeah. What other businesses you know, come fix my toilet. Well, I couldn’t fix it, but you still owe me the money, Or, you know,
Brian Quaranta 10:24
It’s insanity, and so I have- Look, I don’t think profit’s a dirty word. Sure. I think everybody has to feed their family. Everybody has feed their family. Everybody should be paid for their services, right? But you should be asking yourself, What am I getting for? What I’m paying for, right? Right? It’s like, for example, income annuities, you know, some of them have a little bit of a fee on them, under 1% but you say, okay, is that worth paying the fee? Well, You’re darn right. It is, because if the balance ever goes to zero, I still get my money. I’ll pay that all day long, right? If I pay a fee in a stock portfolio and that balance goes to zero, that’s it. Game over. There’s I can’t do anything. I can’t sue them. I can’t do anything. They said, you assume the risk, right? And I promise you, they’re not going to call you and say I’m sorry, and we’ll take care of your mortgage and your bills and everything else. You’re on your own. But folks, this is why I wrote the book Right Track Your Retirement. It really is a simple planning guide to help you build income and provide the peace of mind that we all want going into retirement. Look, there’s five key areas you must absolutely cover in retirement. It’s your income, it’s your investment strategy, your tax strategy, your health care strategy and your estate planning strategy. I built Secure Money Advisors so you could handle all five of those areas right there at our office. Why is that important? Because so many of you are working with an accountant, an estate planning attorney, a Medicare agent, and nobody knows what the right hand is doing, right and so you want somebody working for you where everybody understands your plan working directly for you, so that there are no holes, there are no cracks, everything is plugged up and optimized. Go to OntheMoneyOffer.com right now. Get a copy of my book. Do not procrastinate on this. This is urgent information that you and your family absolutely need to have in your hands right now, OntheMoneyOffer.com or just call 1-888-382-1298, my team’s standing by to take your call. You can schedule a complimentary session to come in and sit down with the team.
Rebecca Powers 12:35
Do that during this quick break, and we come back. More questions from you. Pittsburgh. Stay with us.
Speaker 1 12:47
The work never seems to end until the day it finally does. After nearly a lifetime on the job, you should be rewarded for all the time you spent working, whether that’s crossing off items on your bucket list, learning a new passion or rekindling the love of an old one. After all, life isn’t over when you stop working. It’s the start of an all-new chapter, the one where you’re the writer and you get to choose how your story will go. A way to achieve that is by having a clear financial plan to sustain your golden years. The biggest fear most retirees have is if they’ll have enough money to maintain the lifestyle they’ve always enjoyed having a plan to help protect you against the curveballs life often throws, will help to maintain your lifestyle call today to get your free written financial plan so you may live every day to the fullest and enjoy the retirement of your dreams.
Rebecca Powers 13:39
So, this is interesting, the number one most Googled question about retirement is, how do I know when I have enough to retire? And that reminds us so much of that big box model, right? Cookie Cutter. You’re A, B, C or D. Nice to know you. That’s why we say it’s about a personal relationship. It’s about education, it’s about trust. So, we have a question from Wexford, thank you, Dave, for watching the show. We appreciate that so much. Dave asked Brian, “I’ve worked hard to build up my 401(k), it’s close to $900,000 now. It sounds like a lot, but how do I know if it’ll be enough to last?” That is such a great question. I think that’s what most people are wondering.
Brian Quaranta 14:19
Yeah, look, do you remember there was a commercial a long time ago of people walking with a number over their head, and it said, what’s your number? Oh, yeah, with a little bubble like, what’s your number, and people are walking, they got all different numbers.
Rebecca Powers 14:30
I thought that was my cholesterol.
Brian Quaranta 14:33
But there was an investment commercial about what’s your number, right? How much should you have, right? Right? And there’s this million-dollar illusion that if you make it to a million dollars, you’ve made it right, that that pile of money is going to be everything that you need. But it’s not about the pile of money. It’s about how much income that pile of money can produce for you in the most tax efficient way. Right? That’s the most important thing to understand here. You know, I talked about my dad losing the Montgomery Ward store, right? And you know what I learned from that is an investment plan grows your money. A retirement plan is something that you live off of for the rest of your life, right? It provides the family with peace of mind. We have to understand there is a true fundamental change that needs to take place when you shift from your working and your accumulation years to going into your distribution years. And that’s what I’m trying to educate people on, because so many people will retire, roll over their 401(k) and keep doing everything they were already doing in their 401(k), they’re just now doing it with a financial advisor that helped them roll over their money. But they’re not doing anything to plug up all these holes in the five key areas of income, investments, taxes, health care and estate planning.
Rebecca Powers 15:58
All right. Next question. This is from Carol in Monroeville. She asks: “my husband and I don’t have a pension, same boat as most of us. Everyone keeps telling us annuities are either the best thing or the worst thing.” She goes on to say, “who should really consider them?” You know, I love my fixed, indexed annuity, like seriously? Well, all of my money.
Brian Quaranta 16:19
Here’s the thing, what Carol is saying is true and true. Right. There are annuities out there that are the worst thing ever. I mean, I’ve seen horrible annuities out there, yeah, you know. And why agents would even recommend them, I don’t know. I can tell you that, depending on where an agent works will determine what they have access to, and this is why working with a fiduciary, independent agent is critical, because you don’t want to be working with somebody that only has access, you know, to three or five different annuities, you know, now, proprietary, yeah. And you know, the big culprits of this one are the banks. You know, the banks are very trusted by the customer, right? They all now have investment divisions within their locations, and they usually will then, you know, the tellers will see that you’ve got so much money in your bank accounts, and they’ll say, Would you like me to set you up a meeting with one of our financial advisors, and you’ll see a lot of annuities sold from banks that are just absolutely atrocious, high in fees, you know, very little potential to earn interest, very low yields on payouts for lifetime income, right? But again, they’re buying them from the banks because it’s their trusted source. They’ve been banking there for years, right? Why wouldn’t they trust the person that’s, you know, helping them there? So again, I mean, these are things that have tainted the annuity marketplace, right? All the marketing around annuities, and it is a confusing world, because there are good ones and not so good ones. An example like you mentioned, the variable annuity. The variable annuity, I am not a fan of why, because it still invests your money in the stock market. In order to give you any guarantees or benefits, they have to charge you very high fees, because they have no idea what the future account balance will be in that account. So, in order to offset that risk, they’re going to charge 100% or 200% more in fees. For example, a fixed indexed annuity that provides a guarantee of income. That fee could be 1% or less, where a variable annuity up to 4%
Rebecca Powers 18:37
Wow. And like you said, it’s completely in the market, so it still has high risk.
Brian Quaranta 18:41
You’re still taking risk with the money. Now, you do have the guaranteed income benefits on those, but they’re so expensive because, again, the insurance company is trying to determine right, what the portfolio will do within the annuity, right? But at the same time, they got the variable of, well, how long is this person going to live? And do I- do I need to pay out on both lives? Or do I need to pay out on one life? So, the way they all set that risk is by passing on a very high fee to the consumer. For example, we met with a couple that had a variable annuity. That variable annuity was generating roughly about $75,000, $78,000 a year in income to them, okay, when we called the annuity company, two major things that we found out now, we’ve created something at Secure Money Advisors called the variable annuity escape. Oh, I like that, and the reason is because we want to call the annuity company with you, right in front of them on speaker phone. Put them on speaker phone. We get the- we get the customer service person on the phone. And there’s about 15 different questions that we go with them. And one of them is, can you tell me what the current fees are? For the income rider, what the current fees are for the mortality expense, charge the admin, charge the sub account fees. You see this right now, unless you’ve ripped apart variable annuity contracts like I have, and spent hours and hours reading the fine print, you would never know that any of this existed. Okay? Because when we got done with these folks, even though they were getting over $78,000 a year in income. Here’s the two major things. We found out, it was only guaranteed on the husband’s life. Oh, wow. So that means if the husband died, as long as there was money in the account, the wife would continue to get paid, but once the account balance hit zero, she was out of money. The other thing is, their fees were 3.8% a year on a million dollars. That’s $38,000 a year that they’re paying in fees. Now, here’s the thing, it’s not transparent, right? It’s not listed on your statement.
Rebecca Powers 20:59
Oh, they didn’t do that on purpose.
Brian Quaranta 21:03
Of course not, because, because could you imagine, right? And fine print, you know, and on print, it says, you know, here’s your account balance. And, oh, by the way, we took $38,000 on fees. People would, people would go crazy, right? So, it’s buried very deep in there. And when we get off that phone call, the first thing I do is I look at those folks and I say, let me ask you something. Had you known all of this prior to signing the paperwork to open this account and put your money in it? Would you have ever opened this account? And they say, No way. Now, so, what we did was we then took, okay, can we get out of this annuity in order to get out? There’s a surrender charge period. Okay, so we looked at that. It was a little bit of a surge. It was about a 4% surrender charge to get out. So, one time, one time, but we’re taking a little bit of step backwards. But even with the surrender charge, we took them from over $78,000 a year in income to over $90,000 a year in income, brought their fees from $38,000 down to $10,000 and now guaranteed the income for both his life and her life. That’s life changing. Absolutely, that’s life changing by simply just changing the company that we had the money with. And that’s the benefit of working with a fiduciary that’s an independent.
Rebecca Powers 22:17
Absolutely. All right, we need to take a very, very, very short break, but take this time to go on OntheMoneyOffer.com, you can also just click that bar code, it’ll take you right to our platform. You can not only get this book for free, Brian even mails it to you and pays the postage, but you can also get a complimentary sit-down consultation with the awesome folks at Secure Money Advisors. More questions from you right after this.
Speaker 2 22:40
You’ve got quite an extensive resume. Wow, so many years of management. That was fun. So, this job requires basic knowledge of the social media and video platforms, content creation and SEO. How proficient are you in those areas?
Brian Quaranta 23:01
Going back to work after retiring is not ideal. I’m Brian Quaranta with Secure Money Advisors. If you have amassed a nest egg, it’s time for a financial advisor to help you reach your retirement goals. This is one of the greatest tax windows in history. Now is the time to take advantage of this tax discount while you can. We specialize in retirement planning, tax mitigation, estate planning and more. Plan your retirement right, call now for your complimentary portfolio review and tax analysis.
Rebecca Powers 23:33
All right. This question is coming from Shaler. It’s from Tom and Linda. They say we cannot agree on the 4% rule. Should we stick with it, or should we rethink how much we take out? Great question.
Brian Quaranta 23:43
Well, they’re both right. You know, to be nervous here, because the 4% rule was built decades ago, right by a guy by the name of Bill Bengen, right? You know. And you go back 25, 30 years ago, when he built this, right? And he basically just looked at a bunch of Monte Carlo scenarios, which is a fancy way of saying He ran a ton of different calculations, and he found out that if people had a 60-40, split between stocks and bonds, that they could roughly get about 25 years of retirement income. Okay, okay, well, the problem is, people are living longer. All right. People today need more money than they did. Bond rates were much, much higher at the time that Bill Bengen was running these scenarios, right, they weren’t as low as what they are today. Yeah. So that’s our problem. The 4% rule, based on when it was run, it’s so antiquated, because the rates of returns and the volatility of the stocks have changed so drastically that that 6040, split doesn’t work anymore, okay? And again, in my book, I share with people the story of Bill and Jill and I show two retirees that retire within a year of each other, right? Both with a million dollars. They use the exact same portfolio, but because the first year that Jill retires, she takes is a loss in the market. She runs out of money 15 years into retirement, where Bill has well over $2 million after being in retirement for over 20 years, right? Just by one year, right? And that’s sequence risk, and that’s the hidden risk that nobody truly understands. And by the way, sequence risk only shows up when you start withdrawing money. And remember, this is why we’ve been told, if you’re going to invest your money, invest it. Don’t touch it, don’t look at it, right, and it’ll be fine. You need a long-term time horizon on it. Time is part of the equation of making money, but in retirement, because people need their money, they take that time piece out, and they still think they’re going to be able to do it. And this is where they’re getting in trouble.
Rebecca Powers 25:52
And that 4% rule is so misleading, because everyone is completely different, right? We talk about the big box at every corner of the, you know, American cities, but everyone is completely different. That’s why, in that first meeting, it’s no obligation, no cost. You truly have to get to know someone. Because a million might work for my husband and me and my children, but it might not work for the guy next to me. That’s a big thing for people to understand that everyone is completely different.
Brian Quaranta 26:17
Everyone is- some people want to- some people want to take money out immediately to, you know, remodel their kitchen. Some people have no desire to take a lot of money out. They just want a little bit of money. Some people have a desire to leave a lot of money to their kids, right? So, there’s all kinds of variables that we run into, and that’s why we really call ourselves financial counselors, and financial engineers, because we’re counseling on the emotions, but we’re also engineering plans that are so uniquely different that you’ve got to come at things at different angles. And this is the great thing about working with a team like Secure Money Advisors, is that every Monday, the advisory team has a meeting, and we go over the cases that came in the week before, and we look at what’s going on, and we all put our opinions in as far as how we should approach this, to maximize what we’re doing for these individuals. So, you don’t just have one advisor looking at it, you got multiple people looking at it. Now that is something everybody, in my opinion, should have. And folks, I’m telling you, go to OntheMoneyOffer.com. This information I have for you and your family is so urgent for you to have. It is critical that you get this information in your hands right now. I don’t want to see you make a mistake. Retirement is not a do over, right? It’s not a dress right here, so we don’t get a second chance. OntheMoneyOffer.com. Go there right now, get a copy of the book, or call 1-888-382-1298, the team standing by. Schedule your complimentary session.
Rebecca Powers 27:51
Thanks for being with us. We love you and we’ll see you again next week.
