Episode 136 – Ways to Give Your Retirement Accounts a Financial Workout

On this week’s episode of On the Money with Secure Money, Brian Quaranta discusses lifestyle expenses, withdrawal strategies, and other important considerations to ensure that you are on the right track to retirement.

To see a full schedule of our radio airtimes, please click here.

Radio Show Transcript

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. As 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.

Brian Quaranta 00:39

On today’s show, we’re going to outline some ways to give your retirement accounts a financial workout, when we come right back with On the Money with Secure Money.

Announcer 00:49

And now On the Money.

Brian Quaranta 00:52

Any good retirement plan starts with the foundation.

Announcer 00:56

Asset protection, tax reduction, holistic planning,

Brian Quaranta 00:59

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

Announcer 01:02

Retirement doesn’t have to be complicated.

Brian Quaranta 01:06

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

Announcer 01:09

And now On the Money with Secure Money.

Steve 01:17

Hey, everybody, welcome in. This is On the Money with Secure Money. Brian Quaranta is here Brian, of course President CEO of secure money advisors. He’s a fiduciary. He’s an independent, he’s been helping folks for more than 20 years getting to and through retirement. So hey, Brian, how are you? Happy New Year.

Brian Quaranta 01:32

Happy New Year to you, Steve. I’m doing great. Back in the saddle. Right. Everybody’s first week back always a tough week to get started. But it’s a good time. It’s a good time to get refocused on important things like retirement stuff.

Steve 01:45

Retirement. Exactly. Finances. Well, you talk about a financial workout. I mean, we all that’s funny. Remember, this is a little bit of work, I’m gonna exercise. And no, you don’t, but

Brian Quaranta 01:56

At least it will last for you know, 20 or 30 days, maybe

Steve 01:58

Yeah, but I like this segment. I mean, there’s a bunch of things that we’re gonna, cover. And they’re all pretty important and things to just sort of keep in mind as you as you walk, walk through and get closer to retirement.

Brian Quaranta 02:11

Well, you know what, we’ve got 10 of them. So, let’s see if we can get through it. First, and most importantly, is understanding your lifestyle expenses. So, you want to track your spending for a few years prior to retirement to know what it really takes to financially fund your lifestyle. Now, one of the things I like to do is, I use one credit card to pay for everything. So, it’s very easy for me to add up all the transactions for each month and divide by 12. And that gives me a good average of what you spend on a monthly basis. Now, it’s important to you know, and if you’re responsible, and you can put everything on one credit card. What’s nice about that is it picks up all the miscellaneous stuff like the wedding that you had to go to, and you had to buy a gift or the day you were on your way home from work and stop to meet a friend for a cocktail or some dinner. And it picks up all that little stuff. So, it gives you a good accurate idea of what your average monthly expenses would be. Number two is be aware of financial costs that will change in retirements. So, in retirement, you’re going to have some costs that decrease, like health insurance, you know, for those over the age of 65 vehicle expenses, since you may no longer be making a daily commute, so you might not have to pay as much for gas or parking or whatever. And so, but there’s also expenses that could increase like travel expenses, and what I call fun money expenses.

Steve 03:34

Well, that’s what I want. I want the fun money.

Brian Quaranta 03:35

Yeah, cuz remember, your paychecks gonna stop. But, you know, bills, taxes, and all the things you want to do on the bucket list are not going to stop. So, you have to have a paycheck. But you also have to have a playcheck. Now and understanding how taxes are going to impact your money. This is a big one. I talk about this all the time, during our educational events, on the radio on the TV show. This is big, and I don’t think people pay attention to this part of the financial planning process too much. But the reason why taxes is a big deal, you got to ask yourself this. Do you think taxes are going up or down in the future? While they’re going up? Yeah, most people that you would ask would tell you that they’re going up. Now, if that’s the case, and we have taxes that are going up, keep in mind, for most people out there that are listening, you probably have some type of traditional retirement account like an IRA or a 401 K. And when you pull money out of those accounts, you’re going to have to pay taxes on it. So, let’s say you need $1,000 A month from your retirement account. And you’re in a 20% tax bracket. Well, you’re going to have to take out more than $1,000 to net out 1000 You might have to take 12 or 1300 hours to net out 1000. So, getting your tax situation right prior to retirement important. You can do a lot of conversion strategies where we’re going from taxable money to tax free money. That’s a big one.

Steve 04:56

That isn’t a big one. Well, tax planning and retirement is such a critical part of the plan. And that is something that you really excel at is understanding the taxes and how you can you know, mitigate taxes you pay what you owe, but not have to pay any more than what you owe.

Brian Quaranta 05:10

That’s right. And, you know, the reason why taxes are important is because taxes along with inflation’s are the biggest rotors have your wealth. And you know, if we can control how your wealth is eroded over time, the better position you’re going to be. And it’s very, it’s really that simple. So how about the other one creating- this ties into what I was just talking about earlier, too,- is creating your retirement paycheck. Remember, when you retire, your paycheck will stop from your employer, but you’re going to need to replace that paycheck. That was a lot easier to do 3040 years ago, because a lot of people had a, what we call a defined benefit plan, also known as a pension. Now in the way of the dinosaur, yeah, on the way the dinosaur, we don’t see it anymore. We have defined contribution plans, also known as 401 K plans, where the employer makes a contribution on your behalf along with some contributions you make but generating monthly income, well, that’s on you, you got to figure out how to do that. Or you’re going to be smart and do what a lot of our clients have done, and hire a professional like secure money advisors, that’s been doing this for a long time that understands the basic fundamentals of building an income plan that truly can turbocharge your income in retirement. So, getting your paycheck, right and retirement by utilizing your IRAs, Roth IRAs 401 KS is very, very important.

Steve 06:35

Well, the things that you do, I mean, that you I mean, you understand that because for most of us, you know, maybe we’ve got an IRA, and maybe we’ve got, you know, maybe a 401k, maybe there’s a brokerage account, but what do you do with them? That’s where you come in?

Brian Quaranta 06:48

What monies do you take first, do you do you take from the traditional IRA, do you take from the non-IRAs, do you take from the Roth IRAs? How do you invest that money? You know, according to AARP, the biggest fear that people have is running out of money. And if you ask people, if they’re concerned about there’s a lot of people will tell you, Yes, I am, you know, when people come to our office, the first thing they’ll say is, I don’t even know if we’re on the right track. I don’t know if we’re doing the right things. And as long as the market continues to cooperate, we shouldn’t have any issues. But you gotta remember, the market doesn’t cooperate 100% of the time. And so, if you’re pulling money out of your retirement accounts, and the markets go down, and you take money out, which you’re probably going to do, because you’re going to need that money, like a lot of people do, you’re going to compound those losses, look into those losses. And this is something called frequency risk, where this is a high probability of people now running out of money, because they get the withdrawal strategy wrong. And it’s not as straightforward as what it used to be because we just don’t have the pensions. And this is why, you know, we always offer our right track retirement review here at secure money advisors. And what we’re going to do is for the next 10 callers, who call in right now, we’re going to help you create a one-page financial review that truly is going to indicate whether or not you’re in need of a full-blown financial plan. The Right Track retirement review is designed around five key areas income taxes, investments, health care and legacy planning. And it’s going to take the mystery out of financial planning is going to help you determine whether or not you’re on the right track. We’ll run a free report see how much you’re paying in fees; we can run a tax analysis to see how much you’re maximizing your tax situation. We’ll show you how to build a customized income plan using proven strategies and techniques that could literally turbocharged your income and retirement. In short, the right track retirement system takes the guesswork out of financial planning. So again, the for the next 10 callers it’s a comprehensive financial review, we’re giving away complimentary with no obligation

Steve 08:47

800-656-8616 You’ll get that comprehensive financial review that Brian just described, plus all the extras that go along with it and there’s no cost, no obligation. It’s really a great opportunity. And so, give us a call 800-656-8616 see really you’ve got nothing to lose. 800-656-8616

Brian Quaranta 09:08

When we come back, we’re going to continue to outline some ways to give your retirement accounts and financial workout and you don’t want to miss number six

Announcer 09:21

Do you ever feel like you’re fighting for financial knowledge? Don’t let bad advice be a punch in the gut your retirement and 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 09:58

We are back on the Money was secured money and Brian Quaranta and consumer advocate Steve. And we have, again, we’ve been going through items and going through some things that, you know, will give us a financial workout quite frankly, Brian, I don’t think I’ve broken a sweat yet.

Brian Quaranta 10:13

Well, you’re about to on these?

Steve 10:15

I think so to some of these. But again, we’re covering some really important ground. And I think sometimes we, you know, because I’ve worked with a lot of advisors, you know, that and, you know, you start talking the same thing, and the same language. And it’s easy to just assume everybody knows these things, but they don’t.

Brian Quaranta 10:32

They don’t. Right. Yeah, they don’t, I think it’s the biggest challenge that the financial planning industry has, you know, when you talk to most people, they’re very confused about what retirement planning should really look like. Because the industry seems to talk in its own lingo. And a lot of times people are more confused, walking out of the advisors office than having clarity. And that’s why we created the right track retirement system, because what we found is that retirement planning does not need to be hard, it can be simplified. And when you really break it down to what having a good retirement plan entails, it’s the five key areas income, taxes, investments, healthcare strategy, and estate planning. And all if you have all of those five key areas of each eye data in it, each T crossed, you’ve got a really thorough plan. And part of that is considering the first part of those five key areas is the income part. And that includes deciding when to take Social Security

Steve 11:36

Big decision. Brian, you say before, that’s probably the biggest decision, you’ll make.

Brian Quaranta 11:40

A big decision, right? Do you take it at 62? Do you delay it? Do you? You know, do you take it at your full retirement age? Do you take it at age 70, you know, what’s going to be the best for you is not going to be the best for somebody else, everybody’s situation is different. And this is why consulting with a fiduciary, like secure money advisors that follows a system, and a process is going to help you determine what is going to be best for your situation. And when we’re talking about income, we also have to talk about the impact of number six here, which is considering your spouse’s retirement income after your death.

Steve 12:18

Boy, that’s a difficult subject to think about. But we have to think about it.

Brian Quaranta 12:22

I always say let’s make bad things happen on paper, oh, let’s have bad things happen on paper so we can make informed decisions. You know, these are important planning strategies, because none of us are getting out of here alive. We all know that the question is, when are you going to die? And when you do die, what you have to realize is that you if you are a married couple that your spouse is going to have a drop in income. Now according to AARP, the average drop in income for a married couple is about 40%. That’s a lot of income to lose a lot of income. Yeah, exactly. Yeah. 40%. I mean, you know, and if that happened early on in retirement, that’s a problem. So, considering, you know, what your income is going to look like after your spouse dies is important. And one of the things that we do here at secure money advisors is when we build out an income plan for you, we want to look at it all on paper, right? We really want to give you a real written physical, tangible plan, where we can look at these scenarios and see what impacts are going to have. Because if we do have a spouse that dies, and there’s a drop of 40% income, how are we going to replace that income? Are we going to have to take more withdrawals from the retirement accounts? Well, if we do, as a retirement account is going to be able to sustain those, those bigger withdrawals? What rate of return are we going to need the account to do in order to get those withdrawals out? Are we going to have to buy some life insurance to make sure that your spouse is protected? These are all things to look at. But when you start to look at things from a factual standpoint, black and white math, now you start being able to make informed decisions, without any opinions in place. And that’s the way you want to look at retirement planning. We have built the right track retirement system, because it gives you the black and white mathematical facts that you need to make an informed decision. It doesn’t interject opinion; we’re simply looking at the numbers. And when you look at the numbers, it’s easy to make the right decision of what to do. Number seven, understanding how your investments support your income needs, right stock and bond markets go up and down, which needs to be taken into consideration when you determine how much you’re going to need from your investments. So again, this goes back to you know, if you’re going to be withdrawing money, what rate of return does your portfolio need to do on average? And what would market volatility do to that portfolio? Because remember, market volatility is not a big deal if you’re not taking money out of your accounts, but if you’re taking money out of your accounts to live off of for income, and you have market volatility, now you can run into some serious problems and this happens to people, you know, I will get calls from people that have been taking money out for the last 10 or 15 years. They’re not clients of ours, but they tell us, you know, I’m scared. And when we look at their portfolio, it doesn’t look promising, you know, they’re 510 years out from running out of money. And I’ll tell you the worst day of retirements, not the day you run out of money, Steve, the worst day of retirements the day you figure out, you’re gonna run out of money. And there’s nothing you can do to stop it.

Steve 15:23

Right. That’s, I mean, that’s got to be a scary thought. And obviously, we want to avoid that. And that, again, is what you, at Secure Money Advisors do is help us get to and through retirement,

Brian Quaranta 15:33

the right track retirement system is going to provide you with peace of mind and clarity. And that’s what everybody wants going into retirement. Our job is to give you peace of mind and clarity so that you can enjoy retirement. So, number eight is budget for your unexpected expenses, right, this could be a health event that pops up an emergency and all of a sudden, you need 25 $30,000. Because an emergency of some sort, you got to prepare for your required minimum distributions, which is number nine, remember required minimum distributions started at age 72. Now, so you’re required to take a certain amount of money out of your IRAs and 401 K starting at 72. Folks, remember, you have to do this, if you don’t, there’s a 50% penalty. So, if you’re required to take $10,000 out and you forget to do it, that’s a $5,000 penalty that the IRS is going to hit you with Ouch. And again, it’s secure money advisors, we help monitor these things for you on an annual basis. Last one is be aware of how expenses change over time. As you work through your retirement plan, consider the likelihood that your expenses will change over time. What we see typically is a lot of people spend more money in the earlier years of retirement, and they tend to decrease expenses later on down the road. So, with that being said, Folks, take advantage of our right track retirement system, our right track retirement review, which we’re offering to the next 10 callers, it truly is going to help take the mystery out of financial planning, it’s going to help you understand where you are where you need to go. We’ll look at how much you’re paying in fees, we’ll run a tax analysis for you. I’ll show you how to build a customized income plan using strategies that literally can turbocharge your retirement. In short, we take all the guesswork out of it. So that’s sort of next 10 callers. That’s a comprehensive financial review, we’re gonna give away complimentary with no obligation, but you got to do your part, you got to pick up the phone, this is not the time to procrastinate, it’s not the time to kick the can down the road. solve these problems for yourself and your family today.

Steve 17:25

800-656-8616. So, you get 10 callers right now will receive that comprehensive financial review, you’ll see where you are today. But more importantly, you’ll find you now have a roadmap that can help get you on the right track to retirement 800-656-8616 800-656-8616.

Brian Quaranta 17:44

Market volatility is just a fact the ups and downs can be an emotional roller coaster, especially if you’re in retirement, when we come back some steps to take to keep calm during market volatility. We come right back here with on the money with secure money.

Announcer 18:06

He’s letting the clock run out on his social security to 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!

Speaker 2 18:23

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 18:41

We are back on the money with secure money and Brian Quaranta and consumer advocate Steve having a great show today prime minute boy fast pace, lots of stuff going on. So, as we read around the corner into the new year and things are people are feeling a bit more optimistic. What kinds of things have you got planned for the new year that there’s going to help that education process that you you care a lot about you care a lot about

Brian Quaranta 19:03

that? We do not I mean, you know, and you know, Steve, not only do we do on the radio show, but you know, we have the TV show that airs which by the way, if you want to see any of the TV show, the schedule of when we’re on is on our website. So, you could go to WW dot secure money advisors.com You can see when we’re going to be on, but we’ve also taken the TV shows and radio shows and we’ve archived them on our website. So, if you want to go in and get educated and you can do that right on the website by watching the TV show or radio show. So, it’s really great. Not only that, but we’re also going to be updating the list of educational events. We’re going to try to do about 60 educational events this year where you can come out at one of the universities like Robert Morris or LaRoche college and sit down with us and go through an educational course on this right track retirement system where we really teach you from start to finish how to build a really good plan and most importantly, keep it very simple and easy to understand. Because I’m telling you when you have a plan that’s simple and easy to understand. And it’s a tangible physical plan, a written plan. This is, this is what people are missing so much, Steve is that they have a pile of investment statements, but they don’t have a real written plan. Folks, I’m telling you, when you get a real written plan in place, and it’s in, it’s easy to understand, and you get it, boy, the confidence for you to retire, stay retired, do the things that you want to do on your bucket list in retirement with a peace of mind security, that you’re not going to run out of money that you’re not going to have to go to work. Boy, that’s a real position of strength that you’re in. And we hear that all the time from our clients. The other big thing that we hear is when clients are coming in to see if they can retire, they’ll say I want to retire in five years. Great. When it’s ready to fire five years. Why don’t we look at two plans? Why don’t we see what retirement two years would look like? And what five years would look like, Oh, I’m not ready to retire in two years? Well, let’s build a plan around two years and five years, okay. So, we do that we build a plan around it, they love it, they wind up going forward with us. And what do we do a year later, we get a call, and they say, you know, I think I’m gonna retire in two years. Okay, great. I mean, what a great position to be in, right? You walk into work one day, somebody ticks you off, you don’t want to be there anymore, right? You’re just fed up with it, you’re burnt out, and you go, you know, I don’t need to do this anymore. I know, I’m going to be fine. I’m putting in my paper for retirement. And that’s the type of leverage we want to give you. That’s the type of clarity we want to give you, and confidence to be able to do what you want to do when you want to do it.

Steve 21:29

Right. Wow, that’s fantastic. 800-656-8616. I love it. When you get all passionate like that it really makes sense. So, let’s see what let’s see what the listeners are saying today, Lillian has checked in, she says, I don’t have a retirement plan through an employer, what’s the best way I can save money and lower my taxes? Well, she’s thinking right.

Brian Quaranta 21:50

She’s thinking, right, yeah, but she’s thinking, right, because obviously, if your employer is not giving you a plan, there’s a few things you could do. If you could, you could open up a traditional IRA account. And you can make contributions to that, which would also give you a tax deduction. But keep in mind with that tax deduction, you’re now going to have an account an IRA, that’s tax deferred. So, when you need that money later on in life, you are going to have to pay the taxes. And if taxes go up in the future, that could be a problem. So, you know, you may want to consider a Roth IRA. Now, that may not help with lowering your taxes, but it certainly would help with lowering your taxes in the future. And I’d rather you have you have no taxes to pay in the future, versus paying a little bit of taxes right now.

Steve 22:34

I like that to Lillian, if you’d like to know some more 800-656-8616. Steve has checked in. And he says I’m 65. And I’ll be retiring early next year, I’ve got about 150,000 in my Roth IRA, about 450,000 in my 401 K, now, doesn’t matter which one I start taking money from first, or should I just take a little from each? Well, if we were just talking about that? Yeah,

Brian Quaranta 22:58

well, look, you know, if you believe like we do, that taxes are going up in the future versus down, then your order of withdrawal would be the IRA money first, right? And this way, when that IRA money is drawn down, right, that the money that you had to pay the tax on, you have this big pot of tax-free money still growing, boy $150,000 in his Roth IRA, if that’s invested correctly, he could wind up having four or $500,000 in the next 10 years, which would be all tax free. Right? So, some advisors might say, well, let’s take the Roth money first, because you don’t have to pay any taxes. I disagree with that. Because if you’re healthy, and we believe taxes are gonna go up in the future, what pot of money? Would you rather have a lot of 10 years from now, I would rather have a lot of tax-free money of 10 years from now versus taxable money. So, the order of withdrawal here would be take the 401 K money, right? And pay the taxes on it, and then maybe, maybe defer the Roth now again, I don’t know Steve’s exact situation. So that might not be the best thing for him. But speaking theoretically, that could potentially be the best way to do it.

Steve 24:04

Right? Well, again, you know, you make sense when you talk that way. And Steve, again, I would suggest you give Brian a call. 800-656-8616. That’s it. We’ve got time for another one here. Let’s go to Kate. Kate says I’m a 64-year-old single woman trying to get rid of some of my debt. I want to take $125,000 out of my IRA to pay off my mortgage. And everyone tells me not to. What do you think?

Brian Quaranta 24:29

Well, again, this is a tough one as a fiduciary, because, you know, I don’t know the rest of her situation, right. You know, I don’t know how much is in her total 401k or her IRA? Have we’ve done that strategy before? Sure, we have. This is exactly why we offer the right track retirement review. This is what the system is all about. This is why we’ve built it because these are the questions we hear every single week at our office. We see 25 to 30 people a week at our office, and everybody’s got similar situations, but everybody’s situation is different. For the next 10 callers who call in take advantage of our right track retirement review. We truly are going to take the mystery out of financial planning help you map out where you are where you need to go. We will run a free report for you it will run a tax analysis we’ll show you how to build income, utilizing proven strategies that can literally help turbocharge your income in retirement. Most importantly, we take the guesswork out of financial planning make it simple, clear and easy for you to understand, which gives you a peace of mind and security go into retirement. Do your part though. This is not the time to procrastinate. start the new year off right call us today. For the next 10 callers it’s a comprehensive financial review. We’re giving away complimentary with no obligation

Steve 25:42

800-656-8616 You’ll receive that comprehensive financial review you’ll see where you are today. But more importantly, you’ll find you have a roadmap that can help get you to where you need to be when it comes to retirement call right away. 800-656-8616 10 callers right now 800-656-8616 As always, we appreciate you listening and we’re gonna come back again next week with new topics and questions and more all right here On the Money with Secure Money.

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.

find us here:

Sunday: 12:00
Mondays 6:00 pm
Saturdays 12:30 pm
Sundays 12:30 pm
Sundays 2:00 pm
Mondays 9:00 am
Fridays 9:00 am
Saturdays 9:00am
Sundays 10:30 pm
94.5 3WS
Mondays 7:35 am
Saturdays 7:00am
The answer
Sundays 1:00 pm
Mondays 6:00 pm
Saturdays 12:30 pm
Sundays 12:30 pm
Sundays 2:00 pm
Saturdays 7:00am