Episode 130 – 6 Mistakes That Can Sabotage Your Retirement

On this week’s episode of On the Money with Secure Money, Brian Quaranta shares 6 common mistakes that can cause big problems in retirement and how to prepare for them.

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Radio Show Transcript

Announcer 00:00

Which Social Security taxes I can’t keep up with all these rules. There are a lot of components to your retirement planning, and it can seem overwhelming. It’s time to establish a partnership with a professional who can provide you with a written plan the proper strategies and then be there with you along the way call Brian Q 800-656-8616, or text Brian Q to 800-656-8616. Call or text Brian Q to 800-656-8616.

Announcer 00:37

Investment Advisory services are offered through foundation investment advisors, LLC, an SEC registered investment advisor Brian Quaranta and his guests provide general information not individually targeted, personalized advice and are not liable for the usage of information discussed. Exposure to ideas and financial vehicles should not be considered investment advice or recommendation to buy or sell any of these financial vehicles. This information should also not be considered tax or legal advice. As performance is not a guarantee of future results, investments will fluctuate and when were deemed to be worth more or less than when originally invested. Any comments regarding safe and secure investments and guaranteed income stream for only two fixed insurance products. They do not refer in any way to securities or investment advisory products, fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company.

Brian Quaranta 01:16

When we come back, little things that can cause big problems in retirement, we come back right here with On the Money with Secure Money.

Announcer 01:24

And now On the Money.

Brian Quaranta 01:27

Any good retirement plans starts with the foundation.

Announcer 01:32

Asset protection, tax reduction, holistic planning.

Brian Quaranta 01:35

These are the things that start to move you towards having a retirement plan.

Announcer 01:39

Retirement doesn’t have to be complicated.

Brian Quaranta 01:43

You think that’s the difficult part? That’s just getting started!

Announcer 01:46

And now On the Money with Secure Money.

Steve 01:53

Hey, we are back on the on the money with secure money Brian Quaranta, of course is here. Brian President CEO of Secure Money Advisors. I’m consumer advocate Steve and this is gonna be a fun show. They’re always fun, Brian. Hi, how are you? By the way?

Brian Quaranta 02:06

I’m doing great. Yes. Getting ready for the holidays. Can you believe that?

Steve 02:11

Yeah, they’re pretty much here.

Brian Quaranta 02:14

You know, I do have I do have to admit, our Christmas tree went up already?

Steve 02:21

Well, I think there was a lot of that going on the same way.

Brian Quaranta 02:26

Yeah, I know. You know, I actually was walking you know, Kate and I walk around the neighborhood every week. And every morning actually. And I’m over in Bradford Woods, in kind of the Wexford area. And so, Kate and I are walking around. And of course, over the weekend, I saw all kinds of Christmas lights going up Christmas decorations. And I think we just see right through Thanksgiving, you know, just forget about Thanksgiving. It’s just, you know, let’s go right towards Christmas. But I actually kind of like it. I mean, I’ve always liked the coziness, that the Christmas decorations and the music create, you know that environment at that time of year. But let’s talk about what can be your worst enemy sometimes when it comes to retirement planning. So, I’m gonna break down six things.

Steve 03:09

All right, let’s break them down.

Brian Quaranta 03:11

Let’s break down. So, I want to break down six things. By the way, all right could be possibly sabotaging your retirement. And you may not even know that you’re really actually doing this. But the number one most importantly, is you don’t have a budget. Now, I wanted to find this for a moment, because I think budgets a dirty word, you know, who wants to go into retirement, you know, watching every penny that they spend, because well, that’s really not financial freedom is it I mean for you to retire. And finally get your time back and not be able to have the cash flow to do what you want to do. But when it comes to building a retirement plan, when you’re seeking out, working with a financial planning firm, you really want to focus on the five key areas that we talk about all the time, here at secure money advisors. And that’s number one, and most importantly, is your income. We’re also considered your monthly cash flow. So, in order to understand cash flow, you have to have a budget. Everyone needs a budget at all stages of life, and particularly as you’re near retirement, because the budget is going to tell you where the money goes, what’s coming in, and what’s going out, right? Because really, if you think about life and what you need to live, there’s inflows and outflows. So, we need to know what the inflows and outflows are. And it helps determine if you’re living within your means of spending money that you should be saving for the future. But in retirement, it also helps us determine what the withdrawal rate needs to be from the portfolio. You see, because there’s three withdrawal rates that you want to focus on when you’re building out a plan to see where you fall. And you’ll actually get three different interest rates when you do this. The first one is what we call the spin down interest rate. Now this is let’s suppose that you really have no desire to leave any money to family or to your children or to charities and you want to make sure that their last check your rights to the undertaker? Well, we can figure out exactly how much money can come out of the portfolio. And what’s the bare minimum rate of return, we would need to have the account, let’s say spend down to zero by the age of 95, or 100. The second interest rate we look for is what we call the preservation rate. This is what most people want to do, right? My grandfather told me very early on in my life, he said, Brian, you’re going to work hard for your money, make sure you protect the principal and live off the interest. And the preservation rate does exactly that. So, what is your preservation rate of return? While the preservation rates going to be different for everybody, because it’s going to be determined, based on how much money you’re going to need to withdrawal from your retirement savings. Because for most people, Steve, they’re not just getting, they’re not getting enough money between social security checks, and most people aren’t getting a pension. So, they’re probably going to have to withdraw money from their savings. And of course, the third rate is what we call the legacy rate. Or if we want to take a certain money out of money out of our portfolio every single month, how do we still grow that portfolio and what rate of return is that going to be, but one of the easiest ways you can put together your budget is just take your statements, bank statements, or credit card statements. And if you use a credit card, I’m completely okay with that, as long as you’re paying it off, at the end of the month. And that’s a great way to actually use a credit card, because you get a lot of reward points and everything else. But you can take all 12 of those statements, add up all of your transactions divided by 12. And you’re going to get a nice average for your monthly expenses. And then don’t forget to add in things like taxes, and any other miscellaneous things.

Steve 06:38

I think too, is where, it’s those expenses that aren’t every month that maybe are quarterly that maybe are semiannually. Those are the ones that you have to include as well.

Brian Quaranta 06:46

You do, to get an accurate- So let’s say you pay your taxes once a year, divided out by 12 and add it to the monthly expense. Now you’re getting a true picture of what your monthly expenses really are. So, the other thing is, maybe you’re supporting others at your own expense. You know, they say about two in five Americans have provided financial support to family members during the past year, according to the Family Obligations Across Generations Survey.

Steve 07:18

Wow, somebody’s got to do it.

Brian Quaranta 07:20

Let’s say that one again, Americans Obligations Across Generations. By the way, who did this survey? I guess the Family Obligations Across Generations Survey, I wonder how many people they even surveyed. Why it’s natural, keep in mind, it’s we all want to help our loved ones. But it can be a tough balancing act, especially if you’re doing so may jeopardize your own retirement. So, take a hard look at that. According to AARP, by the way, family caregivers aged 50 and older who leave the workforce to care for parents and on average, nearly $304,000 in wages and benefits over their lifetimes. These are estimate ranges from 283,000 for men 324,000 for women. The evidence suggests that assuming the role of a caregiver for an aging parent in midlife may substantially increase women’s risk of living in a poverty and old age because of the spin down of their assets. But anyway, these are just some basic things. Again, this is why it’s secure money visors, I created the right track Retirement System created around the five key areas retirement planning, that’s income taxes, investments, health care and legacy planning. For the next 10 callers, we’ll give you a complimentary retirement analysis, where we’ll actually take a look at what you’re doing, where you are right now and where you need to go. It truly does take the mystery out of financial planning. You know, what if you could improve your situation by potentially getting better returns while at the same time potentially reducing risk? Or what if we could reduce taxation in retirement because if you think taxes are going up, it’s probably going to be a problem. So again, for the next 10 callers as a complimentary right track retirement plan. Hey, that

Steve 08:55

sounds fantastic. Folks, take advantage of what Brian’s offering here it is a chance to get your own financial roadmap, get you on the right track to retirement, taking things that are pretty complicated, breaking it down, making it clear and easy to understand. It’s your chance for a practical financial review. So, if you’re listening then give us a call 800-656-8616 You’ll get that comprehensive financial review that Brian just described. And then when you walk out you will have your own roadmap your own right track to retirement, we’re showing you where you need to be and how you can get there. You got nothing to lose, give us a call 800-656-8616 again 800-656-8616

Brian Quaranta 09:34

The Social Security cola is 5.9% for 2022 That is not the only change to Social Security next year on today’s show. We’re gonna highlight some of the biggest changes and how they could affect you when we come right back with on the money would secure money

Announcer 09:54

Do you ever feel like you’re fighting for financial knowledge? Don’t let that advice be a punch that gut your retirement to take advantage of a complimentary no cost no obligation consultation with a local trusted financial coach. Call Brian Quaranta host of retirement you radio 800-656-8616 or text Brian Q to 800-656-8616. We’ve made it easy for you to take advantage of this fantastic offer. All you have to do is call or text Brian Q to 800-656-8616.

Steve 10:31

And we are back on the money with secure money. Brian Quaranta here, of course Brian is President CEO of secure money advisors has a great team of folks. And in fact, secure money. advisors.com is the website, I encourage you to visit that website, lots of great information, and you can meet the whole team so to speak. And so, Brian, this is, you know, a Social Security. Yeah. 5.9%. I mean, that’s pretty good news. I mean, you can’t deny that.

Brian Quaranta 10:57

I can’t deny it. But, you know, I’ve we’ve successfully retired over 1400 households and my 22-year career. Have you really well, that’s quite an accomplishment. It is an accomplishment. Yeah. And you know, we’ve got a 98% client retention rate and that amazing, that’s really, you work hard to do that? I don’t know, you know, I don’t know, but it’s something that I’m very proud of. To. Yeah, because, you know, and I think that, you know, a lot of people say, Well, you know, what’s different with your company, it’s, it’s the culture, you know, it’s, it’s the client experience, it’s the attention we pay to the clients, it’s the investment we make, in continuing to be out in the public. I mean, think about all my clients get to hear me on the radio every week, they get to watch the TV shows every week. And there’s not many people out there, where they’re seeing their advisors, on radio and TV every single week. And they’re continuing to be educated by their adviser, the guy that’s got their money, that makes a big difference in people’s minds. You know, a lot of times when I talk to people, they’ll say, you know, we haven’t talked to this guy, and a year, I’m gonna talk to this lady in two years, and you know, we’re really not getting any advice on what to do, and somebody needs to play quarterback for you in retirement. And that’s what we do best. People just don’t know what they don’t know. And they’re not really sure what they should be looking at. For us here at secure money advisors, we created the right track system around the five key areas of financial planning, which is income, taxes, investments, health care, and legacy planning. But with that, also, comes the financial planning checklist every year that we utilize to make sure that we’re dotting all the I’s and crossing all the T’s. And because there’s a lot of variables in retirement, and you can’t handle those all-in-one meeting, and sometimes you have to take, you know, advantage of accomplishing strategies over a year or two years, or even three years strategies, some things like Roth conversions and things along those lines. So, so yeah, we’re very blessed by it. And, by the way, if you want to come out to one of our live events, go to WWE secure money advisors.com, you can go to our events tab and see where we’re going to be at. But let’s get back to 5.9% and Social Security, you know, the all the people that I’ve retired, and even when I do my educational events, and for those of you that are listening to this that are already collecting Social Security, probably going to know the answer to this. But Steve, do you know what happens every time they give you a cost-of-living adjustment? What else goes?

Steve 13:23

Well, Medicare Part B, it?

Brian Quaranta 13:27

So, my question is, did they increase Medicare Part B?

Steve 13:30

Well, those numbers, everybody was sort of anxiously awaiting and was late last week when they finally came out. So, Medicare Part B for 2021 was 148 50 per month. That is going up to 170 10. Oh, that’s a 14 and a half percent increase for the year now. I mean, there’s a caveat here, but they’re concerned about how much Medicare is going to pay for the treatment of Alzheimer’s. There’s a drug that’s just been approved by the FDA. It’s called add do Haim. And it’s pricey, and they’re going to have to pay for it. I was trying to figure out how much it’s going to cost. But I mean, that’s kind of a double-edged sword. If you ask me.

Brian Quaranta 14:14

Well, that’s why I’ve told you, I mean, that’s, that’s where they get you. They just, you know, every time they give us increased, they also increase something else. So, so there we go. It holds true that they’re very consistent.

Steve 14:26

So, the good news is that can’t be it can’t be higher than the actual bump in Social Security. All right.

Brian Quaranta 14:32

No, I mean, look, I mean, you’re if you’re getting $2,000 a month in Social Security, I mean, you’re, you know, you’re What are you getting, you know, 6% on $2,000, so 120 bucks, and then, you know, maybe your premium for Medicare goes up $22 So you’re still netting out sure that they’re in an increase so but, so we are going to see across the board benefit increases provides an immediate benefit increase for all benefits. beneficiaries of $30 a month representing a 2% benefit increase for the average retiree effective in 2022 to 2026. For all beneficiaries. You know, the you know, one thing we got to think about is some of these things. And by the way, what I’m talking about this new, sacred trust bill. And these are just some things that have been added to it. So, index is cost of living adjustments to the CPI E. Under the bill, annual Social Security Colas would be based on a consumer price index for the elderly, which measures the cost of increases experience specifically by seniors, the CPI E is projected on average to be higher than the CPI w by point two percentage points each year. So effective for Colas in December 2022 through December 2026. Okay, well, that’s good. Yeah. So, you’ll see raises rates gonna raise the income thresholds above which social security benefits are taxed, which is kind of a nice one. So Social Security benefits are taxed when beneficiaries have other income, in addition to their benefits. And this hasn’t changed in a long time this one, but if there are income exceed certain thresholds. And I always say people, you know, depending on what your income is, you can have up to 50% of your Social Security tax all the way up to 85% of attacks. But the thresholds are currently $25,000 for individuals and $32,000. For couples, this provision raises the threshold from 35,000 to 50,000, respectively. And those will be affected for taxable years 2022 and 22 through 2026, which is pretty nice. That’s

Steve 16:36

pretty good news.

Brian Quaranta 16:38

Yeah. So, you know, there’s a bunch more here. I don’t know if we really have time to go through them, Steve, but you know, this is, this is why here at secure money advisors, we’ve worked very hard to provide the right track retirement, most people just don’t know if they’re on the right track. My question is, if you weren’t on the right track, when would you want to know that? You know, you can know that by coming in sitting down with secure money advisors, scheduling a complimentary financial analysis with us. We’ll walk you through the five key areas. And we can see ultimately, if you can improve on what you’re doing, there’s absolutely no obligation to do that. But you’ve got to do your part, you got to pick up the phone, you got to call us today, and schedule that appointment. So again, that’s a complimentary right track retirement review for the next 10 callers who call in right now.

Steve 17:20

Hey, make that call while you’re thinking of it, folks. Don’t procrastinate. 800-656-8616 It’s a chance to get a practical financial review. And it’s yours with that phone call 800-656-8616. You heard Brian 10 callers right now get that comprehensive financial review, plus all the extras that he was just talking about, you will then find that you’ve got a roadmap that can help get you to where you need to be when it comes to retirement call right now. 800-656-8616. That’s 800-656-8616 a quick break for us. We are going to come right back and continue our conversation right here on the money with secure money and Brian Quaranta.

Announcer 18:05

He’s letting the clock run out on his social security at age 70 for maximum benefits. And here comes the Roth conversion. He’s got some outstanding coaching with that lifetime income plan. He’s created his own pension as well. And it looks like he’s going to go All! The! Way!

Play your best retirement game call Brian Q 800-656-8616. Or text Brian Q to 800-656-8616. Call or text Brian Q to 800-656-8616.

Steve 18:40

We are back on Retirement You Radio, increasing your financial IQ with Brian Q, Brian Quaranta of course. I just like saying Brian Q.

Brian Quaranta 18:49

It’s a lot easier, you know that name has been butchered all my life.

Steve 18:53

Well, you know, well, let me know. It’s like a bond term. Mr. Q. Right.

Brian Quaranta 18:56

Yeah, that’s right. That’s right.

Steve 18:59


Brian Quaranta 19:00

You know, I was doing an interview, I was doing an interview with Jon Delano on KDK last week, and he had a hard time saying, I said, well, you can just call me Brian Q because it’s a heck of a lot easier, you know? He finally he finally was able to get it with the phonetic spelling that I gave him. Ellis Cannon, there’s a guy by the name Ellis Cannon that I’d do a lot of interviews with here in Pittsburgh. He has a pretty good job. But for any of you, those of you that have seen our TV show, which if you haven’t seen our TV show yet, just go to our website and you can see the listings of the channels that we’re on but I’ve also have uploaded all the TV shows to the to the website so that you can watch them but Cynthia my host, gosh, we’ve probably done 100+ shows together and she still can’t say my last name, Steve.

Steve 19:52

Oh yeah, people huh? Go figure. Let’s see. Alright, so we’re gonna dig into some questions here, Brian. This is Important part of it, I think a lot of folks are wondering. And so, Maddie is first she says, My company offers a 401 K and a Roth 401. K, I currently contribute 6% to my 401k 8% of my Roth. Is this a good long term strategy? I want to contribute all to my Roth 401 K beginning in 2022? Is that a better strategy? Also, can I take out my principal if needed from my Roth 401 K, since it’s after-tax dollars? Interesting?

Brian Quaranta 20:32

Yeah. So first off, any time that you can put more money into a Roth component versus a non-Roth component is going to be get better. Again, why? Because all the money in the future when you start to take it as income is going to be tax free. So, use the example that I use in the earlier segment, right? You want $1,000 A month from your retirement plan when you retire, and you don’t do any Roth planning. And all that money is taxable, and you’re in a 20% tax bracket. After you pay the taxes, you’re only getting $800, tax rates go to 30%, you’re only getting $700 a month. So, taxes erode your well. So, we can eliminate the IRS as our partner right now, by just paying the taxes and then putting it into the Roth and getting that tax free benefit in the future. What’s better? To me, it’s very simple. If I take $1,000 out, and I don’t have to pay taxes on it, that’s a heck of a lot better tax rate than if I took $1,000 out and had to pay taxes on it. So I would tell you long term, unless you need the tax deduction for some reason, which I don’t, you know, run across many people that need the tax deduction, because it’s just a matter of are you willing to deal with the pain now or the pain later, because you’re going to deal with it one way or the other? Right? It’s like kicking the can down the road. I don’t know, this individuals age, I don’t know their entire situation. And as a fiduciary, I’m generalizing here. Ultimately, what I would do if I had was making contributions to a 401k. There’s a lot that goes into it, income levels, ages, whether you’re married, you have kids, so on and so forth.

Steve 22:03

All right, great. Way to go Maddie. 800-656-8616. Sounds like you’re walking down the right path there. Let’s go to Stuart says I’ve got a little over $50,000 to invest. I’m 62 I want to retire in three years, investing in a CD used to be a good idea. Now I’m not so sure. Are there any low-risk things I can put the money into and at least make something more than the bank rate? I don’t need the money anytime soon.

Brian Quaranta 22:29

Well, that’s an important question right there. I don’t need that was good. You know, because you’re always what’s your need for the money? Right? If you don’t need it anytime soon. That opens your options up a little bit more. But boy, Steve, remember when CDs were paying like 10 12%? Oh, gosh, yes. Yeah, exactly. My grandfather had a Kirby vacuum cleaner storage mirror? Kirby do remember Kirby’s? Yes, of course. And I worked servicing the vacuum cleaners, I could, you know, I could fix the vacuum cleaner, no problem. But my grandfather was always teaching me as a young kid that it was important to save your money. And he would always tell me make sure you invest your money and live off the interest? Well, when he was doing it was simple to do, because he would just take it down to the bank and get a 10 12% CD. You know, now you’re lucky if you get 1% or 2%. And then you got to lock it up for a period of time. One of the things that I’ve personally used for myself, and this isn’t for everybody, but one of the things I personally use for myself, is a fixed annuity. And, you know, there’s pros and cons to it, but I’m very comfortable with the pros and cons, I actually think it’s a great alternative to the banks because I can get about a three and a half percent rate of return fixed rate of return in a and a fixed annuity right now. If interest rates go up, the rate in the account will go up. If interest rates go down the account, the interest rate can go down a little bit, but they guarantee me a minimum of 2% Even if interest rates go down, but three and a half percent in a low interest rate environment, you know, think about the probability if interest rates, you know, probability is most likely interest rates are gonna go up, not down. Sure. So that means I can move up on that three and a half percent, I can also take money out of the account, you know, unlike a bank CD, you can’t take any money out when the money’s sitting in there so you don’t have access to any liquidity whereas the fixed annuities allow you to have access to liquidity so you know, I’ve got about $300,000 sitting in a fixed annuity I can pull out 30 grand a year if I needed it and then once my terms up you know, just like a bank CD, you’ve got a term once my terms up I don’t have to buy another one. Whereas a bank CD every time it comes do they want you to lock it up again into another account. So those are some alternatives right now and you know, again, you know, I don’t know his whole situation, but you know, I’m just giving you an idea of what I personally use it as alternative you know, annuities there’s they’re complicated products and there’s a lot to consider when purchasing one but this is why we created the right track retirement system. These are the exact things that we can help with. Take advantage of our right track Retirement System. It truly will help you make good financial decisions. So, I know it can be intimidating process to come to a financial advisor’s office. But we’ve created a very simple and easy process to follow to guide you through and open your eyes up to things that you might not know about when it comes to financial planning. So, call us today, we literally will take the mystery out of financial planning, but you got to do your part. You gotta pick up the phone for the next 10 callers who call in. That’s a complimentary no obligation, right track retirement review, where we’re going to help you go through those five key areas that I talk about all the time, but you got to do your part. Call us today.

Steve 25:31

800-656-8616 get that comprehensive financial review, see where you are today. But more importantly, when you walk out the door, you will have in your hand a roadmap that can help get you to where you need to be when it comes to retirement. 800-656-8616 again, 800-656-8616 Brian is always a pleasure. This show goes by so quickly, but the information is so important.

Brian Quaranta 25:57

Steve, it always goes by quick and folks, thank you very much for listening. Thank you for all the wonderful emails that you sent to us. We truly appreciate keep sending your questions and we’ll see you again right here on retirement you radio

Announcer 26:17

Investment advisory services are offered through foundation investment advisors, LLC, an SEC registered investment advisor Brian Quaranta and his guests provide general information not individually targeted, personalized advice and are not liable for the use of drip information. Discuss exposure to ideas and financial vehicles should not be considered investment advice or recommendations, buy or sell any of these financial vehicles. This information should also not be considered tax or legal advice. Past performance is not a guarantee of future results. investments will fluctuate and when redeemed may be worth more or less than when originally invested. Any comments regarding safe and secure investments and guaranteed income stream for only two fixed insurance products did not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company.

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