On this week’s episode of On the Money with Secure Money, Brian Quaranta shares strategies on how to protect your retirement assets from a potential market correction.
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. 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 cleanest paying ability of the issuing company.
Brian Quaranta 00:39
It goes up, it goes down. When we come back. We’re gonna be talking about more on how to navigate this market. We come back right here with on the money, with secure money, and now on the money.
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 01:03
Retirement doesn’t have to be complicated.
Brian Quaranta 01:07
You think that’s the difficult part? That’s just getting started!
Announcer 01:10
And now on the money with secure money.
Steve 01:17
Hey, welcome in, everybody. On the money with secure money. That’s the show. Brian Quaranta is here. Of course. Brian is president, CEO of secure money advisors, and he’s a fiduciary and independent and so much more. Hi, Brian. How are you?
Brian Quaranta 01:31
Steve, how are you, and how about this market? Hon, do you think a correction is coming or what?
Steve 01:35
I don’t know. How do you know?
Brian Quaranta 01:36
You don’t, you never do.
Steve 01:38
No, I know. People, I mean, but it’s fair to say it’s not if it’s when.
Brian Quaranta 01:45
Yeah, it’s true. And this is why good fundamentals are important. I mean, we talk about the fundamentals of planning all the time, and you know, as a matter of fact, if you are worried about a market correction, then you probably should be evaluating your strategy, because with a good retirement strategy, if a market correction were to come, it should not be causing you to have to delay retirement or come out of retirement. You should be able to weather that storm. And you know, I think the fundamental challenge that people deal with when it comes to their investments is that people are taking way more risk than what they need to rather than protecting what they have. And the key has always been about protecting your savings from a cat crash, because how badly your retirement savings will be hit if the market crashes depends largely on the asset allocation of the portfolio, so making sure that the investments are divided up correctly. And on this show, we talk about buckets all the time. Steve, right, we talk about the three-bucket approach. We got a blue bucket, a green bucket, a red bucket. We’ve got now, money, soon, money and later money. And at secure money advisors, we believe that helping you get on the right track is also helping you understand how to divide that money up into those buckets, because the number one problem people are dealing with moving into retirement is they don’t have a pension. And since post people do not have a pension, they’re going to have to create one with the money that they’ve accumulated. But if the market’s not cooperating in the years that they retire, that can cause them to run out of money before they die, which is a big fear of most people. And you can’t get this one wrong. It’s not a dress rehearsal. We don’t get a second chance at it.
Steve 03:29
Right. And that’s so that’s why it’s important to one understand your plan. And I guess that’s the I mean, sort of navigating around that whole potential for a market crash one of the and when you were talking about buckets, I mean, one of the buckets is going to be safe money, the money that we need right now, and there’s going to be money at risk, no matter what the market does. And that’s okay, because we don’t need that money right now.
Brian Quaranta 03:53
Right, Because the way of doing things have really changed quite a bit. I mean, go back, you know, 25-30 years ago, when you go down to the local bank and you could buy a CD paying 10 to 15% that was your safe money. Or how about when you could put money in a money market at three to 4% now, in a checking savings or money market at the bank, you’re getting less than point one 0% it’s comical to get your bank statement on a monthly basis and see how much interest you’ve earned over a quarter or even over the course of a year, 30 cents. So, yeah, exactly, exactly. So, it, you know, the fundamentals of planning have changed solely because the financial instruments and tools that we were using for a long time, have changed the interest in which you get on your bank accounts. Have Changed the interest rates that you’ve got on your in your bank CDs. Have Changed the interest rates that you’re getting on your bonds. Have changed. I mean, in order for you to get a reasonable rate on a bond, right now, you got to go towards junk bonds. You can’t even use a rated or B rated bonds. You got to go towards junk bonds, plus. You wind up having interest rate risk, meaning, if you buy a bond in a low interest rate environment, and interest rates go up, your price of your bond goes down, which mean you lose money. And typically, people are buying bonds because they want to protect your portfolio. And that’s just not how it works. It’s got the inverse relationship. So, it’s important that we do understand a bucketing approach, and we understand that the allocation of the money, part of it does need to go into a safe account that does have some opportunity for growth. And there’s financial products in the marketplace today to help you do that, to keep you on the right track. But this is why we always offer the right track retirement review at our office, because most people just don’t know if they have their money in the right buckets. And our system is truly designed to help you determine how you need to be allocated based on your age and based on your income needs. So, for the next 10 callers who call in right now, we’re going to give away a complimentary Financial Review. That’s a right track retirement review. We go over five key areas with you. We go over your income, we go over your tax plan, we go over investments, a healthcare strategy and a legacy plan. We literally are going to help you take the mystery out of financial planning. We’re going to make it simple and easy to understand, but you’ve got to do your part. I know that going into a financial planner’s office can be very intimidating, but we’ve made the process not intimidating. We’ve made it very easy for you to come in and sit down with us and go through and open up your situation to all the things that you’ve been doing without the fear of being judged or being sold something it’s not very often you get the opportunity to come in and sit down with a fiduciary Call us today and schedule your right track retirement review.
Steve 06:39
Hey, that sounds fantastic. Brian, folks, take advantage of what we’re offering here today. This is a chance to come on and sit down, just like Brian said, and go over your financial world, that financial roadmap, if you will, break it down, make it clear, make it easy to understand. It’s a chance to get a true, practical financial review. And it’s a phone call away, 800-656-8616 you heard Brian 10 callers right now, will get that comprehensive financial review. You’ll see where you stand today, yes, of course, and you will get all the extras that Brian just talked about. And then when you walk out the door, you’ll have in your hand that road map, that guide. It’s going to help get you to where you need to be when it comes to retirement. 10 callers right now, 800-656-8616 again, 800-656-8616 we are going to take a quick break. We’ll come on back and continue our conversation right here with Brian Quaranta on the money with secure money.
Brian Quaranta 07:32
Yes, retirement planning can be complicated, even intimidating. It doesn’t have to be, though we come back some tips to simplify the process that could leave you happier in retirement when we come back on the money with secure money.
Announcer 07:54
Do you ever feel like you’re fighting for financial knowledge? Don’t let bad advice be a punch in the gut your retirement 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 08:34
We’re back on the money with secure money. And Brian Quaranta, of course. I’m consumer advocate Steve. Brian president, CEO of secure money, advisors, having a good conversation. I like the kinds of things we’re talking about. Last time we talked a little bit about, you know, how to survive a market correction, or, you know, I hate to use the word crash, because we don’t know that, but again, certainly a correction. And there are ways to do that, and you certainly outlined that. And now let’s talk about, yeah, when you talk about intimidating. I mean, there are a lot of things about planning for retirement that are intimidating. Saving money, that’s the easy part. But then, how do we do it? What do we do? How’s our what’s our mindset have to be to get there? Brian, this just gets complicated.
Brian Quaranta 09:14
Well, it can be tricky. The biggest thing is shifting your viewpoint in retirement. Okay, so what does that mean? Well, you got to go from what we call the accumulating stage of retirement to now, this distribution phase of retirement, where we now are responsible for providing ourselves with a lifetime income stream, while at the same time still preserving or growing our wealth. So, if you accept this focus early in the retirement planning process, then you can go from being a great saver to being a great saver with a rational Retirement Income Security Plan. Because again, at the end of the day, your number one focus when you retire needs to be on how you’re going to plan for income. Because most. Most people retiring today, the only guaranteed source of income that they’re going to have is Social Security, right? So, for most people, that’s just not enough money for them to be able to live off of. So, they want additional money, well, where are you going to get that additional money from? You’re probably going to get it from your investments. The problem with taking the money, let’s say you need an extra $10,000 a year, or an extra $20,000 a year. The problem with taking that money out of your stock portfolio, right? And when I refer to a stock portfolio, what I’m referring to is any account that can go up in value or down in value. The reason why this can be a disadvantage and very difficult and leave you with a higher probability of potentially running out of money before you die is something called sequencing risk, okay, or orders of returns risk. This is, you can look this up, Google it, but basically, let’s say I want to take $20,000 out a year, and I go to do that this year, and I take the $20,000 out that I want for additional income, but my stock portfolio goes down and I lose $50,000 on top of it. So now I lost $50,000 the market took away $50,000 plus I took my 20,000 out for income. Now I’m down 70,000. This locks in your losses, compounds your losses, and now continues to put you at further and further risk of running out of money before you die. The other thing we have to keep in mind is that, let’s say that you don’t even need income when you retire because you got enough. Maybe you’re one of the fortunate few out there that are going to get some type of pension. Well, you’re probably going to need income later, because cost of living is going to go up. Let’s go look what’s going on with inflation right now, 5.6% I think social security just said whether that’s it the 6% cost of living adjustment. So, I mean, inflation is alive and well, we talk we’ve talked about it all the time. We talk about it every year, but it is just right between our eyes right now. And everybody’s dealing with it. I don’t care who you are, you’re feeling it at the gas pump, you’re feeling at the grocery store. A lot of people are starting to really put things off, you know, projects that they were planning on doing, and that’s not a good thing, because that can freeze up the economy. And that’s what goes back to the first segment of you know, when you start to see these things, and people start to withdraw and say, Well, I’m not going to spend any money, or they start to get scared, and they start to pull their monies from the market, this is where you start to get it and run risk of having some type of correction.
Steve 12:17
Right. So, speaking of corrections, I just want to- it’s 5.9% for social security. We said 5.6 it’s 5.9. Yeah, just make that clear.
Brian Quaranta 12:25
Yeah, 5.9% cost of living, adjustment. The other thing you need to do is you need to review your anticipated income needs. You know, and I like doing this by start by collecting information on any pensions room, you may say, may receive. You got to know the amounts due to you and the method of payments. You know, especially if you’re going to get a single life options, joint options, survivorship options, you know, these all comes with different math problems to solve, and you got to figure out. And you got to do the same thing for your other accounts too, whether they’re a defined contribution plan or an IRA or a SEP IRA, or even in annuities. Annuities. You know, people are retiring more and more with annuities that are generating guaranteed income for them. You’re seeing that a lot more so. But knowing your Social Security benefits is another big part of it, and this could be a tricky one. We’ve mentioned this a lot because there’s a lot of different claiming strategies, the timing in which you claim, whether you’re married, single, divorced, there’s all kinds of moving parts when it comes to knowing your Social Security benefits, but this is all part of putting together a written retirement plan and having a real written plan that covers the five key areas in retirement. Number one, most importantly, your income. Number two is taxes. Three is your investments. A healthcare strategy is number four and number five is your legacy plan. A lot of people say, What do you mean by legacy plan? I mean, do you want your family to be the largest beneficiary of your money? Or do you want the IRS to be the largest beneficiary of your money? Most people will tell me they want their families to be the largest beneficiary. Well, in legacy planning, we make sure that your family is the largest beneficiary and not the IRS. See what most people don’t understand, Steve is due to the secure act that their number one asset, for most people is typically some type of retirement plan, like an IRA or four 1k and the tax treatments are not favorable to those accounts right now, with the new secure Act that was signed in the law back in 2019 you’re not allowed to stretch these accounts anymore over your lifetime, and so where they’re creating huge taxable events for people, and the IRS is compressing The amount of time that you that that the money has to come out of these accounts, causing families to pay big dollars in taxes and estates. You know, there was an article in Money Magazine about a son that inherited his father’s half a million-dollar retirement account. The article went on to say that the son owed the IRS 250,000 of that retirement account, $500,000 retirement account. Son owes $250,000. That’s unbelievable, right? I mean, you take an estate tax, income tax, you know, in Pennsylvania, we still have the estate tax. We’re one of the, I think, one of six states that still have it. But this is why we’ve created the right track retirement system here, though, at secure money advisors, it’s truly designed to get you on the right track take the mystery out of financial planning. So, for the next 10 callers who call in right now, we are going to give you a complimentary right track retirement review where we’ll go over the five key areas with you. We will take the mystery out of financial planning. We’ll make it simple and easy for you to understand, but you got to do your part. You got to pick up the phone. You got to call us and schedule that appointment today.
Steve 15:43
That sounds fantastic. Folks. Take advantage of the offer today. It’s a good one. Brian and the team at secure money advisors are there to put together this financial roadmap, this thing that can be so intimidating? Well, they can break it down, make it clear and easy to understand. It’s a practical financial review, and it starts with that phone call. 800-656-8616 you’ll get that comprehensive financial review showing you where you are today, but more importantly, you’ll walk out the door with a road map that’ll help get you to where you need to be when it comes to retirement. So, in short, you’ve got nothing to lose. Give us a call. 800-656-8616 again, 800-656-8616
Brian Quaranta 16:23
There are four major gaps that can have serious impact on your retirement planning. We’ll break them down and offer some ways to close those gaps. When we come back right here with on the money, with secure money,
Announcer 16:41
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 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
Speaker 1: 17:14
Here’s our look at women of accomplishment, women who have soared to new heights and shattered the glass ceiling.
Speaker 2: 17:21
Growing up, Sally, ride was not only interested in science, she was also a nationally ranked tennis player. She earned a PhD in physics in 1978 while doing research on the interaction of X rays with the interstellar medium. Ride was selected to be an astronaut as part of NASA astronaut group eight in 1978 the first class to select women. She was one of 35 selected out of 8000 applicants in overcoming gender bias. During a pre space flight press conference, she was asked such ridiculous questions as, do you weep when things go wrong on the job, and will the flight affect your reproductive organs? And America’s first woman astronaut. Ride became the first American and the third woman in space aboard the Challenger in 1983 many people attending the launch wore T shirts that says Ride, Sally Ride. She served on the committees that investigated the Challenger and Columbia space shuttle disasters. The only person to participate in both, Ride died of pancreatic cancer on July 23, 2012. Sally Ride, one of the many women to shatter the glass ceiling.
Steve 18:43
We are back on the money with secure money. And Brian Quaranta, I’m consumer advocate. Steve, having a great conversation today. Boy, we covered a lot of ground. Brian.
Brian Quaranta 18:49
We sure- we really did. We, we always cover a lot of ground. Yeah, we always, I think we’re the best show out there. Well, I could be a little biased, but, you know, I think we’re doing things that most people aren’t.
Steve 19:00
Well, I completely agree. And I mean, again, that’s kind of what makes this show interesting and fun, and that, you know, you’re sort of interesting and fun too.
Brian Quaranta 19:10
Well, I think we got some questions here. So, John’s got, John’s got a- John’s got a question. Life’s beeping. Let’s get him in.
Steve 19:16
All right, John, here you go. John says, I’m 56 I want to retire in 10 years. Should I convert some of my pretax money currently in my IRA to a Roth IRA to give me tax free funds down the road to draw from, aka tax diversification. He says I got about 900,000 in my IRA. What are the pros and cons of a strategy like that?
Brian Quaranta 19:37
Well, remember our five key areas when it comes to planning your retirement income taxes. Number two, right? Taxes are number two. Why? Because what John’s referring to here is the diversification of tax monies. Why is that important? Well, because what he’s talking about is converting, probably IRA money, okay, that he got a tax deduction on. So. So if I’m putting money away into an IRA each year for a 401 K, I get a tax deduction, and the money that goes into that account grows tax deferred. So, let’s just say I put $10,000 in that account, and it grows to $100,000 and I want to take that $100,000 out of that account. Well, I’m going to pay taxes on all $100,000 now, what if I were to put that money into a Roth IRA, take $10,000 rather than put it in an IRA or a four 1k I put it into a Roth IRA. Well, now that $10,000 grows to $100,000 if I want to take that $100,000 out, I don’t have to pay any taxes on it. Now I didn’t get a tax deduction for putting it in, but the 10,000 grew to 100,000 and I didn’t have to pay taxes on the 100,000 I took it out. And this goes back to would you rather pay taxes on the seed or the harvest? I’d rather pay taxes on the seed. It’s a lesser amount, right? Yes, so, so what he’s referring to here is, what if I take a little bit of the money that I’ve accumulated in my retirement accounts, and I start to convert that a little bit into a Roth IRA, so some of my money in retirement that maybe I’m going to generate income from. When I generate that income, I don’t have to pay the taxes on that income. I actually get to do it tax free. Absolutely, I would encourage you to do that. I really don’t think there’s any cons to this strategy. The only the only cons are the fact that you’ll have a five-year waiting rule. So, this has to be done with time to be aware of time, so that you know when you’re doing these conversions. You give it enough time to sit there before you start pulling your money out. But if you’re doing it as a way to convert and use that money later on. It’s just an outstanding strategy. I do it myself. I’ll be doing a big conversion this year myself. Also, for that reason, I want to get Uncle Sam out of the picture.
Steve 21:49
Exactly. And you know, you talk about doing a conversion this year. Keep in mind that folks, if you want to do a Roth conversion that needs to be completed by December 31 That’s right. Good point. Steve and All right, so John, if you want to know some more, 800-656-8616 let’s go to Gerald. Gerald says you often talk about claiming Social Security at the wrong time. Well, how do I know when it’s the right time? I’m 64 my FRA Full Retirement Age is 66 and six months, my wife just turned 60. We’d like to retire in four years together. We have $425,000 in IRAs and about $20,000 in a Roth.
Brian Quaranta 22:26
Yeah. Well, this is where income planning comes into play, right? I mean, you know, we’ve got a cash flow worksheet that we lay out for our clients and our potential clients. And if you come in, we’ll do this for you. So, Gerald, we would actually lay out your different social security sources based on age, and we would start to look at the math and figure out when would be the best time for you to do this. But the big question I would have is, How’s your health? Because your health is going to play into when you should collect social security, not just the math. The math is black and white, right? It the math works in a perfect world, meaning it’s going to take into account that you live till age 95 but if you’re in poor health, and you know, none of your family members have lived past the age of 70, delaying taking your social security may not be in your best interest, even if you’re getting, you know, Social Security delaying credits of 8% per year. So, when you come in, we’ll kind of walk you through that process of how to go about choosing the right time, and then also above and beyond that, if you’re going to need additional income, above and beyond that, the $425,000 that you’ve got sitting in your IRA accounts. This goes back to how to properly diversify that amongst the different buckets that we talk about, right? We talk about the now bucket, the soon bucket, the later bucket, or what we also call bank money, pension money, risk money. And once we understand how to properly allocate this money to buckets, we can actually maximize the cash flow in retirement, get you the most income, but also show you how to increase that income over time and make it the most tax efficient.
Steve 24:03
So, what you’re saying is that the claiming Social Security that strategy becomes part of a bigger picture when it comes to making sure you’re doing it at the right time. Is that fair?
Brian Quaranta 24:13
Yeah, Social Security claiming strategies can’t just be looked at alone. If you’re not taking in the whole plan into account, there’s no way you’ll be able to make an informed decision, which is why so many people get it wrong. They get it wrong, and the biggest mistake people make is they say, Well, I’m going to bridge the gap. I’m going to wait to take my Social Security and I’m going to use my money first. Well, that’s, in my opinion, that’s the most ridiculous thing you could do, because you’re depleting your assets when you could be used utilizing a source of income that’s subsidized by the government for something that you’ve paid in your entire life, and you only get it while you’re living.
Steve 24:47
Yeah, absolutely, and so again, Gerald, (800) 656-8616, boy, I can’t believe how quickly the show has gone today, Brian.
Brian Quaranta 24:56
That’s right, folks, if you call in today, we are going to give you that right track retirement review, complimentary, no cost to you, but you got to do your part. You’ve got to call us. It truly is going to help you figure out how to get on the right track. We’ll go through the five key areas that we always talk about, your income taxes, investments, health care and legacy planning. We will take the mystery out of financial planning. We’ll give you turn by turn directions of how to get from point A to point B, but you’ve got to do your part, pick up the phone, call us today and schedule that appointment.
Steve 25:24
That sounds fantastic. This is a last opportunity today, folks to make that call. 800-656-8616 sit down with Brian and the team at secure money advisors. Take a lot of that complex financial world and make it easy to understand. It’s a practical Financial Review. A lot of you looking for a second opinion, now’s the time to make that call. 800-656-8616 you will get a financial review showing you where you are today, but more importantly, you’ll end up with a road map that can help get you to where you need to be when it comes to retirement. 800-656-8616 again, 800-656-8616 Brian, what a fun show on the money with secure money and Brian Quaranta, secure money advisor, this was a fun one.
Brian Quaranta 26:07
Yes, Steve, we will see you again next week. Folks, thanks for joining us.
Announcer 26:17
Investment advisory services are offered through Foundation Investment Advisors, LLC and 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, referral into 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,
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