You Know, the Multitude of Choices, Financial Advice, You Can, You Know, Feel Overwhelmed, Obviously, and to Simplify That Process, Let’s Explore Some Crucial Retirement Guidelines From Experts Like Brian That Can Help Us Navigate Through and To and Through Retirement.
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Announcer 00:00
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Steve 00:39
Hey, welcome in, everyone. This is On the Money with Secure Money. I’m Steve, Brian Quaranta’s here. And you know, with all of the we certainly all understand the importance of saving for retirement. You know, the multitude of choices, financial advice, you can, you know, feel overwhelmed, obviously, and to simplify that process, let’s explore some crucial retirement guidelines from experts like Brian that can help us navigate through and to and through retirement. Hey, Brian, what’s happening?
Brian Quaranta 01:05
Steve, how are you good to see you as always, a yes, it’s simple, but not easy. It’s one way to describe planning for retirement, and we’ve outlined some important steps you don’t want to miss, so we’re going to dig in and get you to retirement with confidence and security and by the way, and don’t forget, go to righttrackyourretirement.com. We’ll be right back with On the Money with Secure Money.
Announcer: 01:32
And now on the money.
Brian Quaranta 01:35
Any good retirement plan starts with the foundation,
Announcer: 01:38
Asset protection, tax reduction, holistic planning.
Brian Quaranta 01:42
These are the things that start to move you towards having a retirement plan.
Announcer: 01:46
Retirement doesn’t have to be complicated.
Brian Quaranta 01:49
You think that’s the difficult part? That’s just getting started!
Announcer: 01:54
And now On the Money with Secure Money.
Steve 01:59
Hey, welcome back. Welcome in. This is On the Money with Secure Money. Brian Quaranta here, Brian, of course, President, CEO of Secure Money Advisors. He’s an author with a book that’s really getting some play here. It’s called Right Track Your Retirement: A Simple Planning Strategy to Help You Reduce Risk, Build Income and Provide Peace of Mind. Visit righttrackyourretirement.com. Get your free copy today. Brian, you know, hey, always a pleasure to be here.
Brian Quaranta 02:23
Yes, yes, you know. And I want to dive right into these, because we’ve got a lot that I want to outline on these important steps. And the first one, I think, you know when, when I was really thinking about this, I think we tend to be very hard on ourselves in regards to the amount of money we have accumulated, people tend to always feel like they’re behind, and one piece of advice I want to give is when it comes to these simple steps that will get you to retirement planning First, be kind to yourself. Acknowledge that the financial planning process can be very complex, and you change phases, and it’s okay to make mistakes and learn along the way. Obviously, you don’t want to make too many mistakes. But, you know, everybody’s bought an investment that probably didn’t go well, right? And you feel like that might have put you behind. But don’t beat yourself up if you haven’t started saving, or haven’t started saving as much as you’ve liked I have seen in my 25 years of practice, I have seen people that have hit their peak earning years at the age of 50, 55, and accumulate a massive amount of wealth over a five to 10 year period. So, the most important thing, though, is you start now, and you keep going.
Steve 03:37
And again, one of the other things, too, one of the other thing, pieces on this list, pay your future self-first, and Brian, that’s something that you’ve said, I think, since the very first show we ever did together.
Brian Quaranta 03:47
Yeah, you got to prioritize your saving for retirement and make it a habit. Set aside a portion of your income for retirement before you pay for other expenses. And this is why you know something as simple as just signing up for your company, 401, K plan, or whatever your company retirement plan is, and just have it automatically deducted from your paycheck before you even get your paycheck. This is the easiest way. I mean, I do it with everything. I mean, I’ve got money being deducted that goes into my retirement accounts. Money being deducted that goes into my cryptocurrency; money being deducted that goes into my emergency cash reserves. So, before I get my paycheck from Secure Money Advisors, all that money has already been distributed to the proper plans, and I’ve automated that, that savings plan. And that is the key, though, is automating it. And I would say also start saving early and be consistent. Now, if you haven’t started saving early again, just like I said very beginning of the show, don’t beat yourself up, but the more time your money has to grow through compound interest, even small consistent contributions can add up significantly over time. Let me give. Example, when I started buying cryptocurrency. And by the way, I am not telling anybody to go out there and buy cryptocurrency. I’m just telling you a very small portion of my portfolio has cryptocurrency in it. I set up a deduction of $50 a week. That’s it. Boy, I’ll tell you what you look in that account. You know, you don’t even pay attention. You open up the account balance. You go, my gosh, I’ve saved that much, but now there’s also been a lot of growth too. But the point is $50 a week, right? $25 a week. You’d be surprised at how big of a difference that makes. So be consistent.
Steve 05:32
Yeah, consistent. That continuity is really key to make that. And it’s very empowering, too. Brian, when you when you start to go and you start to save, and it comes out, and you don’t really feel it, and then you look and you realize, holy cow, I’ve accumulated some stuff here. It’s called money.
Brian Quaranta 05:46
That’s right, and that’s the key. You are in the accumulation phase. So, you want to do exactly what Steve said, and you want to accumulate, right? We’ve got to build that nest egg up into the biggest pile of money we possibly can. Because when you get close to retirement, about five years from retirement, into retirement, we shift from what we call the accumulation phase right into the distribution phase. And I’ll talk more about that on the next segment. But the other thing is, don’t try to time the market. We see too many people do this. Steve, here’s something very interesting. There was a study done by an Arizona State professor. And you can look this up. His last name is Birkenhinder, I believe. But he did a study, and he looked at the 29,000 stocks that are available in United States today. And he looked at the rate of return of these stocks from, 1927 I think 1924 somewhere around there until present day. Out of those 29,000 stocks, 60% of those stocks, Steve, had an average rate of return of minus 8%. 60% of the stocks. That means there’s only 40% of those 29,000 stocks that have actually made money. So, what does this mean? You know, Charlie Munger was quoted one time saying that Warren Buffett and him, if you look at their portfolio over the course of Berkshire Hathaway’s existence. Out of the hundreds of stocks that they bought, the wealth that they’ve accumulated, the billions of dollars that they’ve accumulated, only about 10 of those stocks, he said, can contribute to the wealth that they accumulated. So, you know, we cannot time the market, and the easiest thing to do is just to buy the S&P500 index, the DOW Jones, the NASDAQ, and this way you’re owning all of those companies and this, and you just let time do the job. If you’re trying to buy and sell stocks, trading stocks, can you hit a home run? Sure, you could, but you can also, you can also go the other way. Well, I’m going to talk more about these simple retirement planning tips when we come back Steve, but I want to remind folks to go to righttrackyourretirement.com. And get a copy of my book, right track your retirement. It is a simple guide that will help give you a road map to build a plan that will give you the peace of mind and security we all want going into retirement. This is something you don’t want to procrastinate. Folks. Look, even if you’re working with an advisor, have you ever had the question, you know, am I doing the right things? Am I on the right track? What am I going to do once I reach the phase where I’m going to need to start taking money out of my retirement accounts? How am I going to go from this savings mode to this distribution or income mode, and that’s what I wrote about in right track your retirement. So go to righttrackyourretirement.com, get a copy of the book, and while you’re there, schedule time to come in and sit down with the team and go over your situation. And let us help you build a customized plan that can get you on the right track. And by the way, if you are on the right track. There’s nothing better than we love to tell you that you’re doing the right things. Keep doing what you’re doing. So again, righttrackyourretirement.com. Sounds great, Brian. 800-656-8616 if you’d like to call us directly.
Steve 09:10
You know it is advice looks like that that he’s just talking about it really points out how important it is to meet with a financial coach, somebody who understands the ins and outs of the financial world. Like Brian, he’s been doing it for 25 years, almost right? Yeah. Anyway, take advantage of this opportunity today by calling us 800-656-8616 make sure you are on the right track. That track is based on your risk preferences, your budget, your goals, and so much more. It’s 800-656-8616 Brian Quaranta and On the Money with Secure Money, we’ll be right back.
Brian Quaranta 09:44
When we come back, we’re going to continue to talk about these simple planning steps for retirement that we’ve outlined, and we’re going to dig into more, and we come right back with On the Money with Secure Money.
Announcer 10:01
And now On the Money with Secure Money.
Steve 10:08
We’re back On the Money with Secure Money. Brian Quaranta here, I’m Steve, we are talking about simple steps that you can take to help expedite, if you will, or at least get us on that right track, like you talk about, Brian, right track your retirement. The book, of course, is what we’re mentioning there. But we’re going through this list of things, and we really hit on I like that first one we talked about, be kind to yourself. Don’t beat yourself up. Smart Investing beats saving on your own. It’s always good to work with an advisor. Don’t time the market. All right. Don’t turn down free money. Well, that seems like a no brainer.
Brian Quaranta 10:40
Yeah, right. I mean this, this, don’t turn down free money. Is taking advantage of your employer matching contributions right to your retirement plan. So, if your employer is offering a match, the worst thing you could do to yourself and your future plan is not to take advantage of contributing to your company plan, especially when you’ve got an employer matching it. It’s free money. Don’t give it up. Get enrolled in it right away. The other thing is, you, you want to, you got to really understand your expenses going into retirement. And there was a lady that wrote a great little article opinion piece in The Wall Street Journal, and it was called test drive your retirement. And I remember that, yeah, did you see that? It was a great article. But basically, what she talked about, I thought it was great advice is, let’s suppose that you’re about a year out from retirement, and you’re going to plan on living off of a certain amount of money. And basically, what she said is, figure out how much income your retirement accounts are going to generate, and figure out what your expenses are going to be in retirement and stick with that plan. And essentially, what you’re doing is you’re test driving it. Why you’re still working right? To make sure that you’re testing the plan, to make sure that it’s working okay. And I thought that was helpful advice, because you know, what better place could you be, I guess, emotionally, mentally, going into retirement than a place of confidence, right? Because if you’ve test driven the plan based on how much income your portfolio is going to generate, and then minusing out the expenses that you’re going to need, and you see that maybe this isn’t going to be enough income. Well, better to figure that out while you’re still working. And if that meant you had to put another year’s worth of work in or adjust the plan. You could do that before you give in your two-week notice letting your folks know that you’re going to be retiring. So, you know, Steve, I write so much about all of this stuff in the book, right track your retirement, and I always tell folks, planning for retirement should not be stressful, and our job at Secure Money Advisors is to help you create a clear, personalized roadmap to secure your financial future. And if you find yourself, you know, not feeling motivated or excited about retirement, and you’re and you’re feeling anxious about it, it’s probably because you have not created a clear picture of what it’s going to look like. And one of the things that we’ve really done well at Secure Money Advisors is when we sit down with you, we’re not just sitting there with a yellow legal pad. We’ve got these big, 85-inch screens in our office, and we have these really wonderful Excel worksheets that we work from so we can test drive what the retirement would look like. We look at how much income is coming in, how much you’re going to have to pay in expenses, how much you’re going to have to pay in taxes. Then what we do is we look at what if scenarios, what happens if your spouse dies? What happens if your spouse dies the first year of retirement, five years in retirement, 10 years in retirement, what’s that drop in income going to look like because we do know that when your spouse dies, on average, according to AARP, the drop in income is about 40% so you got to be prepared for that 40% loss of income when your spouse dies. But here’s the other thing that you have to account for, your taxes are going to go up because you’re going to go from a joint filer to a single filer. The next thing you want to look at is what happens if you have a health event. One of the biggest overlooked expenses in retirement is health care cost. So, what happens if you have a health event, and you’ve got to pull money from your retirement accounts to help pay for that cost of care? A lot of people are walking around out there without any plan if a health event were to arise, you know, Medicare is going to pay for some things, but there’s other things that Medicare is not going to pay for, and so you got to put that pressure on the plan. And we’re rolling up our sleeves, sitting right side by side with you, going through these. And the great thing about our planning process at Secure Money Advisors is we’re just showing you the data. We’re just showing you the math. So, we’re not giving you our opinion that this is what you should do. We’re showing you why you should do what you do, because this is the way things are going to look based on these certain scenarios taking place. So again, get a copy of my book. Please get up from your chair, put down your cup of coffee, don’t procrastinate. The book is free, folks, it’s absolutely free, and you’ll get a free retirement consultation from our team, and you’ll get expert advice and will help tailor these plans to your goals and what you want to accomplish in retirement. So again, go to righttrackpittsburgh.com you can get a copy of the book and also schedule a time to meet with the team, 800-656-8616
Steve 15:26
is the number, folks, and one of the things on this list as well, Brian is avoiding relying solely on your home for retirement. Now, I know a lot of folks, you know, they’ve paid off that mortgage. They think that’s, you know, that is, that is the biggest asset. And that’s often the case. You gotta work that strategically, don’t you?
Brian Quaranta 15:45
Well, you know, there’s, there was another great article in the Wall Street Journal about the home actually being left out as part of the retirement planning strategy. See, people don’t realize that the home actually is an asset that can be turned into a stream of income. And now, are you going to go do this right out of the gates in retirement? No. But if cost of living goes up so much and you’ve worked your life paying off your mortgage, and you don’t plan on moving, you plan on dying at home. There’s so much money in the brick and mortar in that of that home, right? It’s all sitting in the walls and the roof and everything, and you can extract that and actually get yourself an income stream from your home and turn your home into your own private pension. And we it is very overlooked as a as a safety net strategy in retirement, but it definitely can work for those that might run into trouble 15 or 20 years into retirement, that can be an asset that can really, really pay off for you. The other thing I want to mention before we go to break is, and I talked about this a little bit, is just factoring in taxes early so understanding the tax implications of retirement savings and withdrawals. And here’s the thing, there are things in retirement that are out of our control, and there are things in retirement that are in our control. One of the things that’s out of control is what your tax rate is going to be. We know it if someone’s retiring right now, I know what it’s going to be for next couple of years, but then things are going to change. So, keep in mind, when you’re pulling money out of retirement accounts and you’re paying taxes on the money that you’re pulling out your retirement account, if taxes go up, you’re getting less money when you withdraw from your retirement account, because more money has to go to the IRS. So again, folks, righttrackyourretirement.com. Go there right now. Get a copy of my book. And Steve, when we come back, we’re going to talk more, and I want to talk about preparing for market volatility when we come back.
Steve 17:28
Sounds good, Brian and again, give us a call right now. It’s 800-656-8616 get yourself a financial roadmap put together. Brian and his team are there for you, taking that complex financial world and really turning it into something that just makes sense. It’s a true practical Financial Review. Take advantage of this. No cost, no obligation. 800-656-8616, 800-656-8616, 10 callers. Right now, you heard Brian will get that comprehensive financial review checking out if you are on the right track to retirement, Brian can help get you there by calling us 800-656-8616 that’s how you start 800-656-8616 and we are going to continue On the Money with Secure Money and Brian Quaranta right after this.
Brian Quaranta 18:12
When we come back, we’re going to be talking about how to prepare for market volatility. The market will fluctuate. The question is, how much it going to fluctuate when you’re retired? And I’m going to teach you how to teach you how to protect yourself from that when we come right back with On the Money with Secure Money.
Announcer 18:31
and now On the Money with Secure Money.
Steve 18:38
And we’re back On the Money with Secure Money. Brian Quaranta here, I’m Steve, we are going through some steps, just important steps to get us into retirement. And Brian, these are the kinds of things that you highlight so well in the book. Right Track your retirement. And that really is why we’re doing this. And we’re just going to continue through that list, because they’re all things you talked about. Market volatility. Okay, hello. Welcome to another week of market volatility.
Brian Quaranta 19:04
Yeah, and market volatility is not going anywhere. So, the question, yeah, how are you going to handle market volatility in retirement? So again, you’ve heard me talk about it. If you listen to the show before you hear me talk about it all the time, the one biggest thing that’s going to put your retirement at risk of not working is the performance of the stock market when you retire. So, if you plan on retiring, and you plan on taking money out of your stock portfolio to live off of, if the market stops cooperating with you, that’s when you’re going to run into big trouble. And I write about this in my book. It’s a section called sequence risk. And basically, what the studies have shown is that your retirement and whether or not it will have a high probability of working or a low probability of working is going to be determined on what the first five years of stock market returns look like. So, if you come out of the gates of retirement and you’re withdrawing money from your retirement account, and the market does not cooperate. And you get negative returns on top of taking money out. This is called an unfavorable sequence of returns. You can look this up, Google it, but that unfavorable sequence of returns is going to cause you to potentially run out of money early in my book, I write about Jill and Bill. And Jill and Bill are two scenarios that they have the exact identical portfolio. One does well, one doesn’t do well. So, one of the easiest ways you can protect yourself from market volatility is not to take money out of your retirement account when to live off of, so you go, Oh my gosh. Well, if I, if I can’t take money out of that, then, then how do I retire? Well, this is the dilemma that nobody’s talking about, and this is why I believe in a two-bucket asset allocation process where we’re utilizing income annuities to generate the income that you need to live off of, and then the second bucket is ultimately the money that you’re going to leave in the market. Any advice you’ve ever gotten on the stock market, it was always you got to be in it for the long haul. And that’s true, you got to leave it alone. So how are you going to leave it alone again? It comes down to having two buckets of money, one that’s generating income, one that’s long-term money in the market, and you leave it alone. When I say, leave it alone, it’s got to be for 10 years or longer. So, if you look at any 10-year period on a stock market chart, by using the S&P500, any 10-year period, you can see, has always made money. There was one period called the lost decade that didn’t, and that was from like 2000 to 2009, but the point is, in order to protect yourself from market volatility, you got to build a strategy like this. And this is what I talk about in the book. And we don’t want to rely too much on Social Security. While Social Security can provide a portion of your retirement income, it’s unlikely it’ll be enough to cover all of your expenses. So again, this comes down to supplementing your Social Security income with the money that you’ve saved in your retirement accounts. And don’t overestimate your ability to keep working either. While working longer can increase your savings, don’t assume you’ll be able to work indefinitely, health issues, job loss, can disrupt your plans. I’ve seen this happen over and over in my 25 years. One thing I will tell you is this, when you have a plan put together, even if you’re not going to retire for the next 10 years, when you have a plan put together, if a health event shows up or a job loss shows up, when you have that plan put together, I can’t tell you how many times, Steve, I’ve retired people three years earlier, five years earlier, six years earlier, because all of a sudden I got a call and they said, You know, I know I was planning on working till 70, but I just found out that we’re being sold and I’m going to be losing my job, and I really don’t want to have to even think about going out there and finding another position. And so, we sit down, we look at the numbers. And the great thing is, when you have a plan, you make those adjustments very quickly. The math recalculates, and then the math tells you whether you get the thumbs up or thumbs down on that, on being able to retire early, and that, I tell you, folks, really gives you a true peace of mind.
Steve 22:57
Again, it’s all about having that plan in place. So, the earlier you put that plan in place, the easier it is to adjust. And that is something else that we have to do throughout, really getting to retirement, but also in retirement, we have to adjust.
Brian Quaranta 23:09
Yeah, and look, you got to regularly update your plan. Your financial situations and goals can change over time, but also markets change over time. And one of the things that we do for our clients is, when you become a client of Secure Money Advisors, I can tell you, if you follow our advice, I can tell you with a high level of accuracy what date you’re going to be able to retire. Because if you follow my advice and you use an income annuity as a portion of your strategy, I know that on any given day if you retire, if we start collecting your Social Security and we turn the income on from the annuity, I know exactly how much income you’re going to get. I know exactly how much your income you’re going to get. This is why people were able to have retirement parties 30, 40, years ago, because they knew how much money they were going to get, because they got their pension and their Social Security, and they said, hey, at 62 I’m out of here because this is what I’m going to be getting from my retirement accounts, and this is what I’m going to be able to live off of. The great thing about using the income annuity is essentially, you’re just getting yourself your own private pension. And what you have to understand is that the pension is what allowed people to retire, and in order for you to retire, you have to give yourself a pension. How do you do that? Through an insurance company. Annuities are insurance for your income. Look, we insure everything in our life. We ensure our health, our homes, our cars. Why wouldn’t you ensure the most important thing we’re going to need, and that is monthly income in retirement.
Steve 24:31
I like the sound of that, Brian, retire. I mean income for your insurance for your income that. I mean that just makes sense.
Brian Quaranta 24:37
And that’s exactly what it is. And don’t make it any more difficult than that. So many people are like, Well, I heard annuities aren’t good. Well, there are some annuities out there that aren’t great, but annuities are not an investment. They’re an insurance policy. They’re designed to insure your income. Don’t make it any more difficult than that. I buy annuities right now every single year. Why? I’m probably 15, 20, years from retirement, but I know that the money I put into an annuity today, I know exactly how much incomes that’s going to give me 15 to 20 years from now, and so I get to decide when to turn it on and how much I’m going to get. And that gives me and Kate, peace of mind knowing when exactly we’re going to be able to retire, because we know how much income we’re going to be able to get from those investments, right from our social security and our annuity. I don’t know how much I’m going to be able to get from my market money, but I don’t care, because that money is long term anyway, and if I need more money in retirement, I just take money from my retirement, I mean, from my market money, and I move some to a more of an income annuity, and I generate even more income. It’s very simple. Don’t make it any harder than that. Folks, sure, 800-656-8616.
Steve 25:35
Brian, we gotta wrap up this segment as well.
Brian Quaranta 25:37
Yeah, Folks, go to righttrackyourretirement.com. Get a copy my book. Like I said, retirement should not be stressful. It should be something that is give it helping you get yourself a clear picture and a personalized roadmap to secure your retirement. So again, righttrackpittsburgh.com our advisors are here to help you maximize your savings and secure your future. So, call us 800-656-8616 and get a complimentary free folks, I don’t know how to say it anymore. Now, free book and a free meeting with us. And by the way, nobody at my office is ever going to try to sell you anything we want to help you solve a problem. We want to help you maximize and get a clearer picture of what your plan should look like going into retirement and through retirement.
Steve 26:19
Offering solutions. That’s what Brian’s talking about, and it’s a phone call away. 800-656-8616 the goal here at the show helping you make those good decisions. If you’ve got questions about what we’re talking about, how it applies in your situation, how an income annuity might work in your situation, call Brian and find out. 800-656-8616 800-656-8616 quick break. We’re back another segment to go here On the Money with Secure Money and Brian Quaranta.
Brian Quaranta 26:45
When listeners have questions, there’s only one thing to do that’s to answer them, and that’s what we’re gonna do. We come right back with On the Money with Secure Money.
Announcer 27:01
And now On the Money with Secure Money.
Steve 27:08
Hey, we’re back On the Money with Secure Money. Brian Quaranta’s here, I’m Steve, we are already in our fourth segment, and I think, you know, we have gone through so many great tips today, Brian, in terms of just helping folks understand that. You know, there’s a lot of moving parts in retirement, and your book, right track your retirement certainly helps that.
Brian Quaranta 27:27
Yeah, look, I want to help you take the guesswork out of your retirement planning right and at Secure Money Advisors, that’s exactly what we do. If you get a copy of the book right track your retirement, you’re going to see that it very clearly. Gives you a road map to help you understand how to piece together all the complexities of what retirement planning is, and it’s actually a lot simpler than you think. It’s complex because you just don’t know what you don’t know. And my goal is to help highlight and illuminate the basic fundamentals of building a plan. So again, visit righttrackyourretirement.com. Get a copy of the book and also claim your free consultation today. Right? It’s absolutely free, folks, and it’s going to be an opportunity to sit down with us and go through your plan to give you clarity, peace of mind and the expert advice. So, I encourage you righttrackyourretirement.com. All right, 800-656-8616
Steve 28:26
All right. We’ve got some questions here. Folks are wondering, and we’re going to put Brian on the spot Shirley’s up first. She’s wondering, I’m considering cutting back to part time work. I’m 63, years old. My husband passed away a few years ago. Would it be possible to receive his social security benefits and still work part time.
Brian Quaranta 28:43
Yeah, I mean, you would be collecting widows’ benefits, which are reduced for claims placed before your own full retirement age. So, there are limits on how much you may earn while collecting widow benefits prior to your full retirement age, and that limit is adjusted each year, so, but, but after, after which your benefits will reduce, you know, $1 for every two hours. That’s just a fancy way of saying we’re going to penalize you 50% however, that money is not lost. It’s just going to be withheld, and it’s going to be paid to you in the future. So, if you want to know more about this, you can go to ssa.gov, and search survivors benefit guide and that can give you more information on your situation. But again, every widow’s situation is very unique, and working with someone that understands Social Security like Secure Money Advisors can be very helpful in a situation like
Steve 29:35
this. Nice thought that we’ve got someplace like you that that can answer some of those, some of those kinds of questions, 800-656-8616 surely give us a call. Vince says, Why would a person choose an ETF: an exchange traded fund, over an individual stock?
Brian Quaranta 29:50
Yeah, so first off, and you know, ETFs, or exchange traded funds, trade like an individual stock. They have, you know, for. Example, if you buy a mutual fund and you, you know, decide that you want to exit that mutual fund, you got to wait till the end of the day to get that price. So, if that mutual fund starts to decline, you know, after lunchtime, you know, you don’t get the- you don’t get the price until the end of the day in ETF, you can buy and sell like a stock. You get an immediate buy, immediate sell price. But also, there’s a high-level diversification in an ETF like, for example, an exchange traded fund, very low cost, highly diversified. You can buy ETFs in all different types of sectors. To keep it simple, an exchange traded fund like the S&P 500, where you’re buying that index, or the NASDAQ, that’s a very simple approach to go but those are some basic reasons, events of why people would buy the exchange traded fund over individual stocks. You get a, basically a basket of individual stocks within the exchange traded fund at a very, very low cost, all right?
Steve 30:58
And again, those, those ETFs can cover anything that you want. I mean, there’s, there’s so many different kinds featuring different stuff. I mean, different indexes. I mean, you know, everything from, you know… I mean yeah, absolutely.
Brian Quaranta 31:09
I mean, yeah absolutely, that’s right.
Steve 31:12
I mean, yeah, absolutely, all right, 800-656-8616 There you go. Vince, give us a call. Matty says, I’m 56, years old, thinking about my retirement strategy. Now, my company offers a 401 K and a Roth 401 K, currently I contribute 6% to my 401 K, 8% to my Roth 401K. Is this a good long term strategy? Now I want to contribute all to my Roth 401 K, starting in 2025 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, holy cow, let’s questions.
Brian Quaranta 31:45
Yeah. Well, first off, let’s talk about the difference between a traditional 401K and a Roth 401k. So, a traditional 401k, when I make a contribution to it, I am getting a deduction for that contribution off my taxes for the year. So, for example, if you make $100,000 a year and you contribute $10,000 to your 401k plan, your traditional 401 k plan, you’re going to be able to deduct that $10,000 off of your $100,000 of gross income. So now you’re only going to be paying taxes on 90,000 so it helps you save taxes right now, but it causes you to pay more taxes later. And what I mean by that is that $10,000 let’s say, you know, you put that into your retirement account, and that $10,000 goes grows to $20,000 when you withdraw that $20,000 you have to pay taxes on every single dollar, right? So, every single dollar is taxable at whatever your income tax rate is going to be when you retire. Now the Roth 401, K, you’re not going to get that $10,000 deduction off your taxes. So again, if you make $100,000 a year and you contribute $10,000 to your Roth 401, K, you’re still going to pay taxes on $100,000 however, the $10,000 that you put into your Roth 401, k, if that grows to $20,000 now when you withdraw that $20,000 100% of that money is tax free. Let me say that again, 100% of that money is tax free. So, you take, you know, compare side by side, $20,000 coming out of a traditional 401K, you’re gonna owe, let’s say, 20% on that money. So, you’re gonna owe $4,000 in taxes, and so now you’re only gonna get $16,000 net. If I pull that same $20,000 out of my Roth, 401K, I’m going to receive $20,000 that is a big difference, folks. Big, big difference. So that’s why utilizing a raw 401, K is to your advantage. And by the way, we shouldn’t be taking tax deductions in a low tax rate environment. We only take tax deductions when tax rates are super high, and right now they’re the lowest they’ve ever been. So, Maddie, putting your money starting in 2025 on to a Roth, four, 1k, in my opinion, not knowing all of your situation, it seems like it potentially could be a great idea for you.
Steve 34:08
All right. I like it. Matty of 800-656-8616, we got to wrap it up. Brian, this has been a heck of the show.
Brian Quaranta 34:14
That’s right. Steve, so folks, no matter where you are in your retirement journey, just remember it’s never too early or too late to ensure you’re on the right track. Schedule your free consultation with Secure Money Advisors and let our team help you achieve a comfortable stress for retirement. And don’t forget go to righttrackyourretirement.com and get a copy of my book, or call us 800-656-8616 and you’ll get a copy of the book and schedule an appointment to come in. The Appointments absolutely free and will help get you on the right track.
Announcer 34:45
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Outro 35:27
Coach P Radio.
