It Challenges the Traditional View That Investors Always Act Rationally. We Know That’s Not True. Instead, It Recognizes That Emotions, Biases, and Cognitive Limitations Can Significantly Influence Our Choices.
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Announcer 00:00
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, 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 streams refer only to 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.
Steve 00:39
Welcome in, everybody. This is On the Money with Secure Money and Brian Quaranta. My name’s Steve Sedall. You know, behavioral finance is pretty fascinating, and it combines psychology and economics to try to understand how people make financial decisions. And it challenges the traditional view that investors always act rationally. We know that’s not true. Instead, it recognizes that emotions, biases and cognitive limitations can significantly influence our choices. Brian, it sounds like we’re going to get meaty today. How are you?
Brian Quaranta 01:08
Meaty it is. Yeah, because human emotions do drive decisions, fear, greed, overconfidence, these types of things lead us to act impulsively, especially during market swings, and we don’t want to be doing that with our retirement dollars. So, we’re going to talk a lot about behavioral finance and more when we come right back with On the Money with Secure Money,
Announcer 01:32
And now, On the Money.
Brian Quaranta 01:34
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 01:53
And now On the Money with Secure Money.
Steve 01:59
Hey, we’re back On the Money with Secure Money. With Secure Money. And Brian Quaranta is here. My name’s Steve Sedall. Brian, of course, has been helping folks for better than 20 years. He is president and CEO of Secure Money Advisors, and he’s an author. The book is called Right Track Your Retirement, and it’s yours free for the asking. That’s all you got to do, is just write to Brian. Just go to the website RightTrackYourRetirement.com fill out a little information, and Brian will send you that book in a really cool, gold embossed envelope, no cost. He even pays for the shipping. That’s what is so important about that book, Brian.
Brian Quaranta 02:31
Haha, that’s right, is that we pay for the shipping. What more can you ask for?
Steve 02:36
Nothing.
Brian Quaranta 02:37
Nothing. It’s like, you know… and it comes in a gold envelope. It’s like winning the Willy Wonka golden ticket. So, yeah, you know, because we’re talking about behavioral finance. You know, when you get the book, you’ll be very excited.
Steve 02:54
Oh yeah, because it’s a great little book. And so behavioral finance, Brian, this is something that both you and I have talked about before. I’m kind of fascinated by the topic myself, and I think that there’s so much to learn from this, and there’s so much we can learn about ourselves as we barely break down, you know, I mean, it is all based on emotion in many cases.
Brian Quaranta 03:14
Yeah, yeah. I mean, look, I mean this the, you know, behavioral finance is something that, you know, we study in academia, and you know, it looks at how emotions, biases and psychological factors influence financial decisions. It’s about understanding why we don’t always act rationally when it comes to money. I mean, human emotions do drive decisions, fear, greed, overconfidence often lead us to act impulsively, especially during market swings. And there’s things called loss aversion, you know, which is the fear of losses, you know, motivates you more than the desire for gain or confirmation bias, right? This is when we’re seeking only information that supports our belief. And you know, this is, this is a great one, because, you know, obviously, I’m a big believer in annuities. I believe annuities play a really big role in retirement planning, because they do something that no other financial product can do, and that’s guarantee and protect a portion of your income, not only for yourself, but if you were to die, it’s also guaranteed and protected for your spouse’s life. There’s no other financial product that can do that. And I don’t even call it an investment, because it’s really not. It’s unfair to call it an investment. It’s actually an insurance product designed to create your own pension, right? You think about Social Security, it’s an annuity. You know, a pension is an annuity, but you got 90% of people out there not receiving pensions, so you have to create your own. How do you do that? You do that through an annuity, which is basically a private pension. But confirmation bias is when we seek information. If somebody says, Well, I hate annuities, and you should too, when you go and start doing your homework, you’re probably gonna find things online that start to support your belief, kind of like this. If you were to say, Mother Teresa is a horrible person, I’m sure that you can find a lot of people online that would support that belief. Now, I don’t know about you, Steve, but I don’t believe that Mother Teresa is a horrible person.
Steve 05:19
No, nor I.
Brian Quaranta 05:20
But you could probably find people that have that belief. So, there’s jerks everywhere. There’s jerks everywhere. And the other dangerous one when it comes to this behavioral finance stuff, is something called herd behavior, right? We often Yes, yeah. We follow the crowd buying in a market below GameStop. There you go. That is a great example. Gamestop is an excellent example. You know that- the recent, you know, rise of Bitcoin, even, right? Bitcoin, it’s got a lot of traction right now, because it’s going up very quickly. You know, Donald Trump has said he’s going to be the Bitcoin president, which is great. But, yeah, this is following the crowd. And matter of fact, Warren Buffet some of his greatest advice is, when people are buying, you should be selling, and when people are selling, you should be buying. So, Warren Buffett understands that you should do opposite of the herd behavior. But yeah, this is all behavioral finance that we’re talking about, folks. And if you haven’t gotten a copy of my book, please go to RightTrackYourRetirement.com get a copy of the book. And while you’re there, you can also schedule a time to sit down and talk with the team, where we can look at your current situation and see if you’re on the right track. And if you’re not, give you some advice on how to get on the right track.
Steve 06:35
And you can start by calling us right now 800-656-8616, that’s 800-656-8616. So, Brian, how does, how does behavioral finance? In other words, as we start to put our plan together, we’re, we’re going with your book Right Track Your Retirement, we’re following the steps. How does that begin to influence us as we begin to put the plan together? And I think for a lot of us, it’s the fear of running out of money.
Brian Quaranta 07:00
Oh, yeah, for sure, and it is. And the thing is, is that behavioral finance comes into play more at the time of retirement than any other time, because emotions are so high. And a lot of times, you know, people will be so scared to make a decision that they won’t make a decision on anything or anything at all, and that’s the worst thing you can do. So, for example, what I mean by that is the thinking or the investments that got you to retirement are not the same investments that are going to get you through retirement. So, you’ve got to change strategy. Well, that may feel a little bit uncomfortable, because you’re not going with the herd anymore, meaning everyone out there is investing in, you know, IRAs, or you have their 401(k)s, their IRAs, they’re investing in a diversified portfolio of stocks, bonds and mutual funds, and that’s all great and everything. And you can still do that with some of your money, but you first have to solve the number one problem, and that is, you are no longer going to be getting a paycheck. So, tell me how you are going to replace that paycheck? And if your answer is, well, I’m just going to start pulling money out of my stock accounts, well, that’s great, and it might work until it doesn’t work, meaning it’s only going to work unless, unless the market’s cooperating. But if the market’s not cooperating, and you’re pulling money out every time the market’s going down, you’re pulling money out on top of it, you’re compounding those losses. And these are the things that you’ve got to be aware of going into building your retirement plan to make sure that you’re not getting caught up with this behavioral finance stuff. And that’s why I wrote Right Track Your Retirement, because you need a plan. You need a track to run on. You need a plan, but you also need a strategy. And that’s what we help you do at Secure Money Advisors, we help you build all of that out.
Steve 08:38
And again, Brian, you could just wrap it up. Let’s- we’re all really up against the clock here.
Brian Quaranta 08:43
Yeah, folks, I would tell you this, if you’re like most of the folks out there, the biggest threat to your retirement is uncertainty, and what we all want is certainty. That’s why I wrote the book Right Track Your Retirement. It’s a powerful guide to help you reduce risk, build income, and, most importantly, provide you with peace of mind. If you’re like most of the people we talk to, they say they can’t afford the risk with their money, because they don’t have the time to recover if they lose a lot of money. They’re unsure of things like when a collector’s Social Security or if they’re getting a pension, what option to choose. They’re not sure how taxes are going to impact them. And of course, just as Steve and I’ve been talking about, their biggest fear is running out of money. So, it’s about security, clarity, confidence and control. And with Right Track Your Retirement, you’re gonna learn to take that control. So go to RightTrackPittsburgh.com, claim a copy of the book, and Steve will give you the phone number. My team is standing by to take your call and get you scheduled to come in.
Steve 09:37
800-656-8616, that is the number, 800-656-8616, 800-656-8616, lots more to talk about here On the Money with Secure Money and Brian Quaranta.
Brian Quaranta 09:46
Today, we’re talking about behavioral finance, and we’re going to continue with that when we come back with On the Money with Secure Money.
Announcer 10:01
And now On the Money with Secure Money.
Steve 10:08
We are back On the Money with Secure Money, and Brian Quaranta’s here. My name is Steve Sedall, behavioral finance is the topic we’re discovering or digging into. And I know I just read a story today or this week that financial basics are finally being taught in places like high school and college.
Brian Quaranta 10:25
Yeah, that’s great. That’s amazing. I mean, it’s about time. Yeah, listen, the financial community talks about this a lot. Why are we not teaching the basics of financial planning in the, you know, the learning institutions, the high schools, the colleges, because it’s important. I mean, kids are coming out of college, they don’t even know what a mutual fund is. They don’t even know, you know, what a dividend paying stock is. And the only ones that do know are probably ones that have had, you know, their mom or dad, that have taught them about it. So, but you know, the masses really don’t understand it at all, until they go to their employer, and the employer says, Here’s your 401(k). And they go, what’s this? Yeah, how’s that work? Well, you’re gonna, you’re gonna put money into this every month, and we’re gonna deduct it from your paycheck, and then we’re gonna put money in. And all you got to do is go in here and choose these options, and they’re looking at these options, and they’re going, I don’t know what this aggressive growth means. I don’t know what this large cap thing means. I don’t know what this index thing is, so yeah, we got to, we got to do a better job as a country, making sure that we teach our kids at a much earlier age.
Steve 11:30
Well, sure. And at Stanford, here’s the thing. Stanford’s intro course covers topics such as value, valuing stock options and the role of venture capital. I mean, yeah, about time. We should all know these things, yeah, at least at a high level.
Brian Quaranta 11:42
Understanding how money works is very important, and a lot of people don’t. And I don’t know, Steve, maybe it’s by design.
Steve 11:51
Well, I mean, you know, it’s the quote here. Two things are infinite, the universe and human stupidity. And I’m not sure about the universe, yes. Albert Einstein,
Brian Quaranta 11:59
Yeah. Leave it to Einstein to say something so profound.
Steve 12:03
So, in order to get through this, we gotta understand what our emotional triggers are, what, what are things that are gonna set us off, if you will, and when it comes to money.
Brian Quaranta 12:11
Yeah, well, I love that so, so first I would say, recognize how fear or excitement impacts your decision making. You know, I would say, create a cooling off period before you make big financial moves.
Steve 12:23
See, that makes sense. Just, I mean, just overnight, right? Right? Yeah. You don’t have to spend that money right this second. It’s okay.
Brian Quaranta 12:28
That’s right
Steve 12:29
Think about it, and chances are you might think about it differently tomorrow.
Brian Quaranta 12:33
Look, we have a rule in our house, and the standard that we set is this, if you want something, no problem, we can probably look at getting it, however, we’re not going to get it today. You’re going to write it down and it’s going to go on My Want to Get List, and we’re going to evaluate that at the end of the month. And if you still feel that that item is necessary, then we can talk about getting it. And usually, if you’ve got 15 things on that list, the time you come to the end of the month you might only need or want half of them.
Steve 13:05
Very true, very, very true. And to me, it becomes down, like you always say this, Brian, but it’s the plan. You’ve got to focus on the plan. And until that becomes something in writing that you can look at, you’re gonna, you’re gonna falter. You’re gonna, you’re gonna wander.
Brian Quaranta 13:21
Yeah, and Steve, not only do you need a plan, but you need a strategy. Okay, so let me explain. The plan is Okay, what do we need to do right now to get you from point A to point B? The strategy is what happens when we’re going from point A to point B and we have a roadblock, such as a market downturn or tax rates change, or some political or economic change, such as how much things are costing, right, the rate of inflation. Strategy is when we’re able to come in and make changes to the plan that are better suited for the current economic conditions.
Steve 14:05
And, you know, we don’t want to have a lot of risk, but we need some risk. How do we walk that path? That’s tricky.
Brian Quaranta 14:10
Well, you got to spread investments across different asset classes to lower risk, and diversification helps mitigate the fear of losing everything in a downturn. But let me, let me further get the audience to understand diversification, Steve, because I think where we get it wrong in retirement is, again, you’re going to always hear me say, you can’t keep doing the things that you were doing while you were accumulating your money when you go into retirement, because that’s at the time that you’re distributing your money, meaning most people are going to need to live off of that money. So, with that being said, diversification looks a lot different in retirement. What do I mean? Well, in your accumulation years, you’re going to diversify amongst risk investments. Okay? And 100% of your money is probably going to be in risk investments during your accumulation years, because you have something very important on your side, and that’s time. As you start to get close to retirement, into retirement, you start to lose the amount of time you have to recover from market volatility, right? So, for example, if a market loses 50% and you’re 25, much different than if you’re 65. So, diversification in retirement comes down to how much of my money is diversified in risk assets, and how much is diversified in safe assets. And this is why what I wrote about in Right Track Your Retirement is essentially a two-bucket strategy to where we’re protecting a portion of the money to replace the paycheck. But not only are we replacing the paycheck, Steve, we’re guaranteeing additional stream of income so that even if you have a health event or there’s a death or you just want to start doing more things, there’s additional money there for you to access without having to worry about what the market’s doing at that any given point in time. Why does our strategy and plan work better than the traditional Wall Street plan, because we know that the money that we’re protecting in the guaranteed and safe accounts, we can never run out of it. There’s a contractual guarantee to guarantee us that stream of income for the rest of our lives. Whereas, if you don’t take that step in carving off some money and putting it into that type of bucket, okay, that means that you are at the mercy of the stock market, of interest rates, of the political environment, and as you take money out, whether it’s every single month or just a few times a year or every other year, you risk running out of money because you have no control over the variables, market volatility, interest rates, what rate of return you’re getting, so on and so forth. So go to RightTrackYourRetirement.com get a copy of my book right now. Don’t procrastinate on this. This is something that can change your life. And I’m not saying that Secure Money Advisors is even going to be a great fit for you, and one of the things that I am very proud of with my team is that there is nothing more that we would love to tell you than that you are on the right track. Keep doing what you’re doing, but when you come in, let me tell you a little bit of what you can expect. First off, this is not a sales pitch. It’s an opportunity for you to sit down with a trusted advisor who’s going to help you organize all your financial documents with your pile of stuff. You’re going to be like most people and bring in what I call the POS that’s your pile of statements, right? And we’re going to roll up our sleeves, and we’re going to identify any potential problems in your plan. We’re not going to criticize you about what you’ve done or haven’t done. We’re going to show you solutions to fix those problems if we identify but if we don’t identify problems, we’re going to let you know that right because you don’t need us, then keep doing what you’re doing. So, we’re going to show you how to build a plan and get you security, clarity, confidence and control, and with Right Track Your Retirement, you will learn how to take control of your financial future and reduce any unnecessary risk. So, it’s your job to go to RightTrackPittsburgh.com or call 800-656-8616 and you can schedule a meeting with the team, our team standing by right now to take your call and get you scheduled to come in.
Steve 18:01
Call right away. 800-656-8616, like Brian said, don’t procrastinate. 800-656-8616 quick break back with more On the Money with Secure Money in Brian Quaranta right after this.
Brian Quaranta 18:08
Coming up, we’re gonna learn a few things from the military about managing risk, and that includes financial ones, the five principles of combat patrols and how they can help your retirement plan stay Army Strong. 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
We are back On the Money with Secure Money. Brian Quaranta’s here. My name is Steve Sedall. Brian, of course, been helping folks for a couple of decades. Better than that, and he has created- written a book called Right Track Your Retirement. I would encourage you to get that book. It’s yours, absolutely free. All you got to do is visit RightTrackYourRetirement.com, and you can get your copy right now. I like this. We’re going into the military. It goes back to my youth, when I was in the army.
Brian Quaranta 19:02
Yes, yes. And you learned this, is that correct?
Steve 19:06
Oh sure, Well, yeah. But I mean, hey, Brian, truth be told, I was a broadcaster, yeah, in the army, right? So, I, you know, I covered soldiers doing these things.
Brian Quaranta 19:15
Like Robin Williams in Good Morning Vietnam, right?
Steve 19:23
Oh, yeah. More or less. But again, what we’re talking about is just, you know, he talks about the- this is a guy here who actually was what they call 11 Bravo. He was a ground pounder. This is his inspiration, by the way. His name’s Bruce, and he did a great job here. Anyway.
Brian Quaranta 19:36
Yeah, so-
Steve 19:37
Bruce knows of what he speaks.
Brian Quaranta 19:39
He knows of what he speaks, so, well, let’s talk about risk here. So, but who actually has to face the most risk? Who has to make plans that account for chronic, high-risk scenarios? It’s soldiers, no other profession in the world deals with risks like them, so especially when they go out and put. Control, and that’s why our army has five specific principles for patrolling. The big question is, can these principles also help you mitigate risk when it comes to protecting your money? I would say absolutely
Steve 20:15
Yes, they can. Well, and again, we can start at the top, and what’s the first thing that any good soldier does, makes a plan.
Brian Quaranta 20:22
They make a plan. You got it, and a thorough plan. You know, flexible patrol plan includes clear objectives, route details, rally points and backup options. And if you make a comparison to the- to retirement planning, you know, that’s about crafting a comprehensive financial roadmap with clear goals, like a target retirement age or a nest egg. So, think about me for a moment, right? So, I always work my plan backwards, and this is what I teach people. You know, people are looking for How much should I have saved? Do I have enough saved? Well, I don’t know. I mean, that number is different for everybody, because it depends on what it could be your sources of income. You might be somebody that has real estate income, dividend income, you might have a pension, you might have Social Security, your investments might not need to provide you with income at all. But the first thing you got to figure out is you got to work backwards. So, we use a simple strategy where we basically take the amount of income we think we’re going to need, and we divide it by 4% and actually tells us how much we need to have in savings. And that really that’s working backwards. So now I know once I hit the age of 65 if I went $30,000 a month or $40,000 a month, I divide that amount by 4% it’ll give me the total amount that I need to have saved in the make to make that work.
Steve 21:40
Sure. All right. Well, you make it sound simple, Brian.
Brian Quaranta 21:45
Because it is simple. It
Steve 21:47
It is, you know, but it’s always great to work with an advisor, you know, we want to have somebody with us that that understands and can help us down that path. Then we got to do some recon.
Brian Quaranta 21:57
Yes, yes, gather intel on the terrain, enemy presence and civilian factors before and during the patrol. So, what’s the retirement planning parallel to that? Well, perform ongoing research into market conditions now, certainly this is why a lot of people hire us, right? They don’t want to be doing all that research. So, we got to be looking at interest rates financial products. This is another thing. Look, you know how when interest rates went up, a lot of the income annuities that we were using prior to interest rates going up, we were actually able to take clients out of the old income annuities and repurchase new ones, giving them a higher amount of annual income. See, so people think that once you buy an annuity that you’re stuck in it, you’re never gonna be able to replace it. No, no, we’re constantly looking to replace it. Because if I can go from Company A to Company B, and they’re both big, strong, safe companies, and I can get the client a couple thousand or more in a year in income. That’s a great thing, but you got to rely on a good team of people to be doing that for you. And that’s exactly what we do at Secure Money Advisors.
Steve 23:11
800-656-8616, that’s the number 800-656-8616 give Brian a call. Come on in. So, we’re talking about the five ways the military kind of develops a routine or a patrol, if you will, yes, and so we’ve got to, we got planning recon now we get into some security issues.
Brian Quaranta 23:29
Yeah, I love this. Maintain 360-degree coverage so no one is caught off guard by a surprise threat. Yeah? Now, the minute I hear that, I think guaranteed income, yeah, because you don’t know when you’re going to get caught off guard, and the last thing you want is to be caught off guard and surprised in retirement. Because let me tell you what that leads to if you get this wrong, retirement is not a dress rehearsal. We do not get a second chance at this. We’ve got to get it right, right out of the gates. And so if you don’t have the five key areas planned for in retirement, which is your income, your investments, your taxes, your healthcare strategy, your estate planning strategy, the last thing you want is to get something wrong and have to find out 10 years into retirement, your advisor saying to you, Hey, Bob, you know that plan we put together? Well, it seems like the investments we bought didn’t work out too well, and so a couple things I’m gonna either have to have you stop taking money from your accounts, or if you don’t stop, I have to tell you that, based on our calculations, you’re gonna have to go back to work in two years. I meet people like this, Steve, that took too much money out, and they kept taking money out when the markets were going down, but they didn’t have any guaranteed income at all. They didn’t insure any of their income, which is so foolish of people to do, because we insure everything in our life, we insure our houses, we insure our cars, we ensure our health. Why would you not insure a portion of your income? Come and you’ll hear people say, Well, Brian, look, I’ve saved a lot of money. I don’t really even need my life insurance. Or why would I need an annuity? I got enough money. Let me tell you, the more money you have, the more sense it makes for you to actually buy all of the guarantees that you possibly can, annuities, life insurance, everything, because you can, because you can. So again, folks, I want to recommend that you go to RightTrackYourRetirement.com get a copy of my book. It truly will help give you security, clarity and peace of mind. And here’s the truth, what we’re all searching for in retirement is certainty, and we’re the biggest threat to retirement is the uncertainty of all of the variables. What? What are tax rates going to be doing? What’s the market- the market going to be doing? What’s the cost of living going to be so right track of retirement is, is a guide. It’s going to help you, give you a road map to help you reduce risk, build income. And many people that come in to share the same concerns, they say, Look, I can’t afford to take the risk. I don’t have time to recover. I’m not sure when to take my Social Security. Should I take it at 62 should I take it at 65 what are my taxes going to look like? I don’t even have a plan. Brian, my advisor, says I’m fine, you know, but I don’t know. I’ve never seen it on paper. Folks, you need to have a written plan that you can touch, feel, look at. You need to know that every dollar you take out what your end of your balance is going to look like, and that is what we can help you give clarity around at Secure Money Advisors. So again, go to RightTrackPittsburgh.com and claim a copy of your book and schedule a time to come in. My team is standing by to take your call. Steve will give you the number to call in, so you can do that.
Steve 26:38
800-656-8616 make that call while you’re thinking of it. It’s 800-656-8616, 800 800-656-8616 back with another segment here On the Money with Secure Money and Brian Quaranta
Brian Quaranta 26:47
Time for questions from listeners and more. 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
We are back on the money with Secure Money. Our final segment together. Boy, this show has gone so quickly today. Brian, quicker than usual. It seems. I know always does, always does. But, you know, again, great stuff today. I like what we’ve been talking about, and now we’re going to sort of listen or check in with the listeners, see what they’re thinking about today. We’ve got, here’s a one, a federal worker who is 60 years old, 400,000 in a TSP. They want to convert a portion of that to a Roth IRA to reduce RMDs. Now they’re considering converting $50,000 each year. How can they minimize taxes while maximizing the benefits of tax-free growth? I like the question.
Brian Quaranta 27:46
Yeah. Well, look, I mean, first off, I like the idea of converting money. And what we’re talking about here is taking money from a taxable account and converting it to an account that will grow tax free. Now the rules are, is, when you do that, you’re going to convert to a Roth IRA. Keep in mind that when you do a conversion, there’s something called the five-year rule. So that money has to stay in that account for five years before you can touch it, but all the interest- so, let’s just say, in this example here, they want to convert $50,000 each year. So, let’s say we were to convert $50,000 this year. Well, we have to account for taxes, right? So, we’re gonna have to pay taxes when we convert that 50,000 depending on what your income tax bracket is, that will vary. You mean, it could be anywhere from five to $10,000 in taxes that you might have to pay. So, the recommendation is, when you’re converting, you want to try to pay for taxes from another source of monies. You certainly don’t want to have to also pay taxes on the tax dollars, meaning, because you’re going to want to convert 50, so when that $50,000 goes into the Roth IRA, you don’t want it to be $40,000 meaning you don’t want to have to take the taxes out of that. You want to have another way to pay it this way, you’re actually growing tax free off of 50,000 and not 40,000 so they want to do that every year, so all the interest now, if that 50,000 were to grow to 100,000 all $100,000 is tax free. Now, if you do that conversion every single year, you can see the benefit of that, plus what they’re referring to is not having to take RMDs, because at the age of 73 right now, if you have a qualified retirement account, you’re required to take an RMD, unless it’s a Roth account, you’re not required to take an RMD, which is nice, because if you’re going to be required to take required minimum distributions at age 73 Steve, that’s more income that you’re going to have to take, and you’re forced To take it, whether you want to or not, which can create you potentially having to pay more taxes, more income taxes. Your Medicare premium might go up. Your Social Security tax could go up. So, these are all things that you should be building into your plan and then having a strategy each year to monitor these things.
Steve 29:59
800-656-8616 give us a call. We’d love to hear from you. We’ve got somebody who recently retired. They’re considering selling some appreciated stock to fund their living expenses. They’re worried about capital gains on the sale. What should they consider to minimize the tax impact? What- first, what is an appreciated stock?
Brian Quaranta 30:17
That’s just a fancy way of saying, I have stocks that I bought for $10,000 and they’re now worth $20,000 okay, right. So, all right, you know, so, so if I buy a stock for $10,000 and it goes to $20,000 the fancy way of having a conversation around this is, well, the $10,000 that you purchase the stock with is known as your cost basis. So, if they’re now worth 20,000 then you have to pay the difference between the 10 and the 20, which would be 10. So, however though, there is different tiers. So, if you, depending on how much income you make, will depend on how much you’ll pay in capital gains tax or on that appreciated stock sale. And I believe, and don’t quote me on this, you can look it up online. But I believe, if you’re under $90,000 and you sell stock, I don’t believe there’s any taxes that are owed on capital gains. So essentially, you could sell that $10,000 of appreciation and not have to pay any taxes at all. But everybody’s situation is different. So, consult with your tax accountant, or consult with your advisor, financial advisor, and they can help you build a plan around that. And that’s important to know all of these little tricks, because these are ways that you can create a lot of tax efficiency when you’re looking to get your money and start using it all right. Well, on that note, let’s wrap it up. Brian, one more time. Yeah, folks, if you haven’t done it yet, please go to RightTrackYourRetirement.com and get a copy of my book. You know what we’re all looking for in retirement is certainty and peace of mind. And if you’re feeling uneasy about your financial future, my book Right Track Your Retirement can truly help you. And if you’re like most of the people that we meet and talk to, and they tell us that they can’t afford to take the risk they were once taking with their money because they feel that they don’t have the time to recover if something bad happens. A lot of people aren’t sure when to take their social security and how they can maximize their benefits. They don’t know how taxes are going to impact them, and they really feel like they don’t really- don’t have a plan. When they get together with their advisors, the advisors will always say, oh, yeah, you’ll be fine. Don’t worry about it. Just retire and we’ll start taking money out. But they don’t see a plan. They don’t see anything in front of them that gives them that peace of mind in security, and that’s what we want you to have when you come to have when you come to Secure Money Advisors, you’re going to see that we’re very different. We believe in five key areas, and that is most importantly, your income strategy, your tax strategy, your investment strategy, your health care strategy and your estate planning strategy. So go to RightTrackYourRetirement.com get a copy of my book and my team standing by. If you call 800-656-8616 they’ll schedule you to come in and meet with the team. And there’s not a sales pitch at my office. It’s an opportunity for you to sit down with a trusted advisor who will help you organize all of your financial documents. Roll up, roll up our sleeves with you and work together to solve the problems.
Steve 33:13
800-656-8616, It is that simple to get started. Brian, as always, a pleasure to be here and to have these shows. It goes by so quick, and certainly a fun, fun way to spend a few hours
Brian Quaranta 33:21
Absolutely, Steve, and we’ll see you again next week, folks, with another episode of On the Money with Secure Money.
Announcer 33:32
Investment advisory services are offered through Foundation Investment Advisors, LLC, an SEC registered investment advisor. The content provided is intended for information on educational purposes only. The views, statements, and opinions expressed herein are those of the individual speakers and are not necessarily those of foundations and its affiliates. The information contained herein does not constitute an offer to sell any securities or represent an express or implied opinion or endorsement of any specific investment opportunity offering or issuer. Any discussion of performance or returns is not indicative of future results. Any discussions of specific strategies are for informational purposes only, and have been provided to help determine whether they may be appropriate for your specific situation. If applicable. The primary goal in converting retirement assets into a Roth IRA is to reduce the future tax liability on the distributions you take in retirement or on the distributions of your beneficiaries. Each individual investor situation is different, and any ideas provided may not be appropriate for your particular circumstances. Comments regarding a particular client’s experience may or may not be the same as another client’s experience and is not an indication that any client or prospective client will experience the same or a higher level of future success or performance. Foundations only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. Registration as an investment advisor is not an endorsement of the firm by securities regulators and does not mean the advisor has achieved a specific level of skill or ability. Nothing here in constitutes a recommendation that any security portfolio of securities or investment strategy is suitable for any specific person, no legal or tax advice is provided. Please review your retirement tax and legacy planning strategies with a legal or tax professional before transacting or implementing any strategy discussed herein. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products. They do not refer in any way to investment advisory products, rates and. Guarantees provided by insurance products and annuities are subject to the financial strength of the issuing company, not guaranteed by any bank or the FDIC. This is not endorsed or affiliated with the Social Security Administration any federal Medicare program, nor any US government agency. If applicable, we do not offer every plan in your area, and contacting us at the phone numbers provided herein will direct you to a licensed insurance agent. Any information we provide is limited to those plans we do offer in your area, please contact medicare.gov or one 800 Medicare to get information on all of your options. All rights reserved.
Outro 35:27
Coach P Radio.
