Episode 121 – How to Plan for an Early Retirement

On this week’s episode of Retirement You Radio, Brian Quaranta breaks down retirement planning into two phases: before retirement and after retirement, to help you achieve an early retirement.

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Radio Show Transcript

Announcer 00:00

Information provided is for illustrative purposes only and does not constitute investment tax or legal advice. Information has been obtained from sources that are deemed to be reliable, but their accuracy and completeness cannot be guaranteed. Neither Brian Quaranta nor his guests are liable for the usage of information discussed always consult with a qualified investment legal or tax professional before taking any action. And now, retirement glue rare asset protection tax reduction listed planning featuring Pittsburgh’s wealth financial and income Coach Brian Quaranta.

Brian Quaranta 00:38

There’s no question the pandemic has had a profound impact on most of us. If you’re close to retirement, that impact may be that you want to retire now rather than later on today’s show. Some questions to ask to see if you can accelerate that big day. We’ll come right back here on retirement you radio.

Steve 00:59

And welcome everybody. This is retirement you radio increasing your financial IQ with Brian Q. I’m consumer advocate Steve. Brian Q is Brian Quaranta. Of course, he’s president and CEO of secure money advisors. He’s a fiduciary independent got a great team of folks and so much more. Hey, Brian, what’s go on? Steve, how are you? I’m doing well. Yeah, absolutely. The you know, I, I think this is gonna be an interesting segment, because this really plays into your wheelhouse. And that is seeing if we have enough to retire earlier than we thought. And I know that that’s something that you talk to folks about, you know, if you’ve been a good saver, chances are you’ve made you can make it work.

Brian Quaranta 01:35

Yeah, yeah. Yeah, I mean, we’re seeing a lot. I mean, I’ve had multiple people come in this year that we’ve retired a few years earlier than, than what they were anticipating. And take to pandemic, Steve really has gotten people to the point where they go, You know what, I’ve enjoyed being home, I’ve enjoyed being with the kids, the grandkids, whatever it might be, I’ve enjoyed having my free time. And I want more of that. And now, companies are starting to call people back to work and people are going to timeout, you know what, I was about five, six years away from retirement, maybe I’m just going to retire right now. That’s the nice thing about having a plan. You know, I was meeting with a couple last week. And we had put together a plan for them to retire in about three years. And I got a phone call from his wife. And she said, you know, we want to come in and talk about possibly getting retirement to happen a little bit earlier. Now the good thing was we had a plan put together based around good solid math, we had a plan that we had figured out years ago in regards to their income, their taxes, their expenses. And so, what I was able to do is I was able to shift that retirement three years earlier, not by some type of magic, but by just having a simple plan to be able to execute on that. And it’s pretty simple to do. I mean, you know, getting retired sooner than later is actually a pretty easy thing to do.

Steve 03:02

But you got to have that plan. That’s the key, isn’t it?

Brian Quaranta 03:05

Yeah. Well, unfortunately, most people don’t have that.

Steve 03:09

Oh, yeah. So they have no idea if they can or if they can’t, or, or how they’re going to get there if they do.

Brian Quaranta 03:12

Well, I think a lot of people are mistaken in the world we live in today, they mistake the fact that they have a retirement plan, right, by definition through their employer, maybe a 401 K plan, maybe a 403 B plan, 457 plan, and they are retirement plans. But it’s not actually a plan for retirement, it’s a retirement account that they’re accumulating money in, but that’s not what’s gonna get you retired. That’s like, you know, not having a blueprint. right before you’re about to build a home. I mean, you got to have the specs, right. You got to have the drawings to be able to do it. And so, but what it entails is that we’ve got to look at what will your typical monthly expenses be? Some people assume often, mistakenly, that living costs will be lower in retirement, and I just haven’t seen that most of my clients that are retiring want the same amount of income? If not, they want higher amount of income in retirement because a lot of people want to do the things that they promised that was going to do. You know, there’s three phases to retirement, there’s the Go-Go years, there’s the slow-go years, and there’s the no-go years, right? And the Go-Go years, Steve, we all know what the Go-Go years are, when you retire, you want to go go go, go go, right. You want to do all the things that you say you want to do. And that’s about a 10-year time period, probably after retirement that you’re going and going and going. After about 10 years, people start to slow down, you know, there’s they’re slowing down, they’re not going as much. They’re staying around, they’re doing more home. I just I’ve had multiple clients out on the road for years. You know, they people want to retire and they you know, get a big Winnebago and they travel the country, see all the national parks, work at the National Parks, work at the balloon festivals. But after being on the road for a while people want to come off, you know, or they’re vacationing all over With a country all over the world, you know, and eventually they just want to slow down, they don’t want to do it as much. And you need the money to be able to do that. And so, a lot of times when you’re building retirement plans, you can actually look to build strategies mathematically where you front load the income, and you front load the income by taking more out up front than you are later. And you got to make sure that you do this in the most tax efficient way, because for most people, the majority of the retirement savings is probably in some type of tax deferred retirement account, like a traditional IRA, or a 401 K or four, three B, where when they start taking withdrawals, they have to pay taxes on it. And so, we want to make sure that prior to you retiring, we’re doing some good tax planning so that when you’re pulling money out of your accounts, we can actually make that money tax free versus taxable. And that also helps with increasing the amount of money that we have each month to be able to spend, because taxes no longer get in the way. But you can’t do that without proper planning. But most importantly, is making sure that you have enough money to be able to do the things that you want to do. I mean, look at inflation right now. 4.9% of the last time it was measured, hopefully that doesn’t last forever. Hopefully this, the basic economics of supply and demand starts to level off here. And we see prices start to return back to normal, especially in housing and lumber, cars, things along those lines. But having an executing on a plan for retirement is as simple as making sure if you’re on the right track. And you know, when people come up to our office, that’s the number one thing that they look to find out is if they are on the right track. And let me ask you if you weren’t on the right track, when would you want to know that day before yesterday, the day before yesterday, people tell me that all the time. You know, most people will tell me, Steve, look, I want to retire. And I’m going to need income from my accounts. And I just don’t know how to take that money out. People will tell me I’ve got to take money from our retirement accounts. But I’m scared if I do that, that I might run out of money. People will tell me they don’t know how or when to turn on their social security or what the best ways to do it. They don’t know the order in which they should withdraw money. Maybe they have money in Roth IRAs, maybe they have money in traditional IRAs, maybe they have money in non-IRA accounts, and they’re not sure what’s going to be the best order to withdraw that money. People will also tell me that they don’t want the IRS to become the largest beneficiary of their accounts when they die. Our Right Track Retirement System will help you determine all of those areas of focus on five key areas, income taxes, investments, health care and legacy planning. For the next 10 callers who call in right now. We’re going to give you a complimentary no cost, no obligation analysis of your current situation. It’s not very often you get to sit down with a fiduciary and go through a planning model at no cost. The risk truly is on us, folks. But you got to do your part, folks, you got to call us. So again, that’s a complimentary retirement analysis at no cost no obligation for the next 10 callers. It’s a comprehensive financial review. We’re given away complimentary.

Steve 07:59

Hey, that sounds fantastic. Folks. Take advantage of what Brian’s offering today. It is that opportunity that you’ve been looking for to sit down and put that financial roadmap together, answer all of those questions that you have, like Brian just said, What order should I take the money from? What account should I take it from first? Again, Brian and his team understand that they can help lay it out for you make it clearer, make it easy to understand and more importantly, give you options. It’s a chance for you to get a true practical financial review starts with that phone call 800-656-8616 800-656-8616 You’ll get that financial review. You will see where you are today, of course, but more importantly, you will find that you are on the right track as you head into retirement. Hey, you’ve got nothing to lose. Give us a call 800-656-8616 again 800-656-8616.

Brian Quaranta 08:49

So many people have asked me Steve, what exactly is a retirement plan? Well, we come back, I’m going to teach you how to build your plan from start to finish. We’ll come right back here

Announcer 09:03

When should I take my Social Security, how much risk can I tolerate, I’m afraid I’m overpaying my taxes, Did I save enough? I can’t keep up with all these rules. There are a lot of components to your retirement planning, and it can seem overwhelming. It’s time to establish a partnership with a professional who can provide you with a written plan the proper strategies and then be there with you along the way. Call Brian Q 800-656-8616 or text Brian Q two 800-656-8616 Call or text Brian Q to 800-656-8616

Steve 09:45

We are back on Retirement You Radio increasing your financial IQ with Brian Q, Brian Quaranta of course who we’re talking about President CEO of Secure Money Advisors, he’s a fiduciary and independent and you know I like what you’re talking about here Brian as always because it’s such Sure, it’s such a big deal to start to lay it all out. I mean, we’ve been saving our whole life. And then you get to a point where, Okay, I gotta do something with this money. I gotta, I gotta put a plan together. And that’s where you come in,

Brian Quaranta 10:12

like, maybe I need to get this money to start working for me, right? Yes, yeah, like that. Yeah. Because when the paycheck stops, let’s face it, I mean, you know, the bills, taxes, the money you need to do the things you want to do. That’s, that’s not going to stop. So, any good retirement plan starts with the Foundation, and the foundation to a retirement plan is income. So, let’s talk about the basics of building out your income strategy. So, number one, and most importantly, we’ve got to look at all of the different income sources that you have coming in. Now, let’s say that you plan on retiring in the next three to five years. So, and let’s say that you’re married, so we want to look at husband and wife, we want to look at their employment income, we want to see when it when it’s going to stop because that income is going to drop off. And then if they have a pension, or they don’t have a pension when that pension may start. And then ultimately, when would be the best time to turn on Social Security. And then from there, we can determine how much money do we need to withdraw from our retirement accounts. Now, here’s where it becomes very confusing for people. You know, I just met with a couple last week from Moon township that had told me, you know, that they were getting they wanted to retire, the husband wanted to retire before the wife did. Now the wife is working. But here’s what’s unique about their situation, husband is going to stop working in two years, all right, wife is going to continue to work for the next two years, and she’s going to work full time. But when the husband retires, she’s going to go to part-time. So now we have a loss of income for his employment income. But we also have a 50% reduction in her income. So now when we look at the situation, the husband can turn on one of his pensions when he retires, but he’s got to wait to turn on another pension. And then on top of that, we’re going to wait a little bit to collect his social security, just to get to the next gap. So, he’ll be about 64, once we start to do that, and we’ll be able to get bumped to the next income level. So, think about this, you got income, stopping starting and coming in all over the place? How do you keep track of what’s going to be coming in on a monthly basis?

Steve 12:10

I hire you.

Brian Quaranta 12:12

That’s right. And that’s why- Look, we’re not we’re not just about having a conversation about stocks, bonds, mutual funds, and investments and performance. We’re here to give you a real written plan, we have a cash flow worksheet that we’re going to work from, to look at the right track system to determine where all these income sources are coming in and stopping and dropping off. Okay. So, once we’ve got it figured out, now, if you look at their first five years of retirement, I mean, the income bounces around for the first five years because of all these incomes moving around. The important thing is, you’ve got to know in that first five years, because you’ve got income starting and stopping all over the place. There’s these income gaps that change on an annual basis, one year, we need $20,000 withdrawals the next year, we need $30,000 withdrawals, the next year, we only need $15,000 worth of withdrawals. The next year, we need $25,000 worth of withdrawals. How are you going to figure this out on your own? You know, I mean, I’ve spent 22 years building out a model that works really, really well. And I can’t take credit for it. I’ve connected with some of the smartest people across the country when it comes to retirement planning that have given me the best fundamentals. I’m building out a solid retirement plan when it comes to cash flow. Now, you think that’s the difficult part that’s just getting started, Steve. So, the next part is, what happens if your spouse dies. Now, if you’re single, widowed, divorced, it’s a little bit different. And there’s a process for that that we have for you if you fall into that category. But getting to the example of husband and wife, what we want to do is we want to look at what would happen if your husband died first, if your wife died first, because what’s going to happen with Social Security when your spouse dies, Social Security is going to take away the lowest check. So, let’s just say that your check every single year is $30,000. And your spouse’s check is $25,000. On one of your die, Social Security is going to let you keep the 30,000 and the $25,000 is going to drop off. Okay, so now we need to see what happens to the income at death once we determine what happens at the income from debt. And now we can start to figure out okay, what exactly do we need from our investments. And this is where we look to define three rates of return. We defined the present or the spin down rate, the preservation rate and the legacy rate. Well, what the heck are those rates? Well, the spin down rate, it’s very simple. What’s the least amount of interest I can earn on an annual basis with the money that I’ve accumulated over my lifetime to withdraw the money that I need for income and spend that money down to zero by the time I’m 95 or 100. So, the last check we would write would be to the Undertaker, okay, that’s our spin down rate. The second rate is our preservation rate. That’s the rate that everybody really wants to achieve, because that’s the rate of return where you could be taking the money that you want on an annual basis to do generate the income you need. And at the same time preserving your principal. The third rate is the rate of return that would allow us to withdraw the money that we need for you to live on retirement, but at the same time still grow the money at a rate that would leave a legacy or a larger sum of money than what you have today to your beneficiaries. These are the things that start to move you towards having a retirement plan. These are the mathematical data points that you have to figure out in order to be successful retirement. So many people think it’s about stock market performance, or what mutual funds I have, or what individual stock allocations I have. That’s important, but it’s not as important as what I just described in structuring the framework for the cash flow model and determining and targeting the rates of returns that we need. Why is it so important to figure that out? Because how are you going to invest your money if you don’t have that data? See, that’s a roadmap, those data points that I just shared with you are a roadmap to tell us exactly what financial products and solutions to use to give you the highest probability of success with your portfolio. Because it’s not about getting the highest rate of return and retirement. It’s about giving yourself the highest probability of your portfolio working without running out of money and running out of money too early. And folks for the next 10 callers who call in, we’re going to show you how to do that in detail. When you come in at no cost. We take the risk, our Right Track Retirement System is going to go through these key areas with your income taxes, investments, health care, and legacy planning. We’re going to show you how to do it, we’re going to take the guesswork out of financial planning, we’re going to walk you through the process and give you the peace of mind and security that you deserve moving into retirement for the first time, you will be shown the proper way to truly build out a retirement strategy. But you’ve got to do your part, you got to pick up the phone and call us, folks. Again. That’s a complimentary financial analysis at no cost to you. That sounds

Steve 17:01

fantastic folks, really take advantage of this one, I mean, the chance to really get your retirement on the right track. And that’s why he calls it the Right Track Retirement System. And it is a system that can help get you to where you want to be when it comes to retirement, it’s a chance to get a true practical Financial Review. It starts with a phone call 800-656-8616 You’ll get that comprehensive financial review that Brian just described, plus all the extras that go along with it. And again, there’s no cost no obligation, just to get to know your meeting. And again, when you walk out the door you will have in your hand a roadmap that guide- that’s going to help get you to where you need to be when it comes to retirement. 800-656-8616 again 800-656-8616 We got to take a quick break. We’re coming right back though we’ll continue the conversation right here on retirement you radio with Brian.

Announcer 17:54

You see a doctor for your health, sometimes a specialist, a mechanic for car problems. Anyone under 20 for your smartphone; “well, duh,” you need to look at retirement that way. You need help setting up a plan that avoids pitfalls and provides lifetime income. You need a retirement that you can enjoy without the worries. You need someone who can help take the mystery out of retirement. You need Brian Q. Call 800-656-8616 or text Brian Q to 800-656-8616 Call or text Brian Q to 800-656-8616.

Steve 18:36

Back on Retirement You Radio, increasing your financial IQ with Brian Q, Brian Quaranta, of course is who we’re talking about. I’m consumer advocate, Steve. Brian is President and CEO of Secure Money Advisors. And he is a fiduciary, 21 years in the business in independence as well as Brian, you put together such a great team of folks at secure money advisors. And I mean, you know, you can meet them essentially virtually, you know, on your website. But I mean, again, I’ve talked to a bunch of them. And they’re a bunch of good folks. Lots of good people there.

Brian Quaranta 19:05

Yeah, they’re very dedicated people. And, you know, that’s, that’s one thing that I feel very proud of is that everybody cares deeply about all of our clients. You know, we’ve helped retire over 1200 people now, Steve, wow. You know, we’re a very busy office. But you know, we have systems and processes that allow us to teach people simple and easy ways to retire. But I appreciate the compliment. They’re a great team of people. If you want to find out more about our team folks go to www.securemoneyadvisors.com You can see our team there. You know, you can go there and listen to some of the older radio shows. I even have all the TV shows on there now. So, if you’re looking for content and really to educate yourself, it’s a great place to do it.

Steve 19:48

All right, let’s jump into some questions here. We’ve got Lauren who’s asking, he says I plan to retire next year. I need to decide if I should roll my retirement account into an IRA. My current plan has very few investment options. I’ve also worked for the same employer for 30-plus years. So, I’ve got a lot of company stock on my 401k. Any suggestions?

Brian Quaranta 20:07

Yeah, that’s a great question. I mean, you know, obviously, the canned answer to that is, you know, rolling your money to a self-directed IRA is going to give you a lot more options to invest in. Now, typically, the company’s stock conversation will differ depending on what advisors you talk to. But just like we were talking about, at the beginning of this show, we were talking about D cumulation. The distribution, the distribution of your money, works a lot better from an IRA account than it does a 401k account. Although, you know, I’m not really sure how old Warren is here. But this kind of reminds me of, of an individual that I helped a couple of weeks ago, that’s retiring. And he’s actually under the age of 59, and a half, and the 401k actually becomes an asset to us, because the 401k allows us to take money out, something called the 55 rule, prior to age 59, and a half without incurring a penalty. So, you know, there’s a lot to discuss here. There’s a lot in this question, you know, and I’m kind of given some generalities here. But to kind of wrap this up and summarize, always more options, if you roll to a self-directed IRA, much easier to control taxation from an IRA, because you can choose the tax rate you want with a 401k, there’s a 20%, mandatory withholding. And then when it comes to company stock itself, you know, depending on how much you have there, you could always roll that out to the IRA also, without incurring any taxes or anything along those lines. But just from an easy use, the IRAs are gonna be a little bit easier to use in the 401k, and probably a lot cheaper to

Steve 21:49

Sure. So, Lauren, if you’re interested, 800-656-8616 got a great question from Kyle. He simply is asking what happens to my annuity after I die?

Brian Quaranta 21:59

Yeah, that’s a good one, depending on what type of annuity Kyle owns. You know, there’s three types of annuities. There’s fixed, there’s variable, there’s index, and there’s actually a secret little fourth one called an immediate annuity. So that’s kind of the old annuity though the immediate annuities. But if he had an immediate annuity, you know, let’s say he put, you know, $200,000 into this annuity, and he was generating income. When he dies, you know, the insurance company keeps the money. You don’t see too many of those very often anymore. But with most annuities today, Steve, the reason why they’re used to becoming very popular in retirement planning, and probably some of the best tools for income planning, is because if you die, the balance of the annuity just pays out to your family. You know, if you’re even if you’re married, you know, I’ll use myself as an example, I have a large portion of my money in annuities, why do I do that? Because that will generate pension income for me that I can’t run out of, if I die, that income will pass on to my wife. And if my wife dies, the remaining balance in the annuity will pay out to my son, so they’re very friendly today compared to what they used to be.

Steve 23:08

Okay, so that makes sense. You know, again, I like that question. Anyway, let’s go 800-656-8616. All right. Before we run out of time, I want to go to Ron, he says, I just turned 52 been working for the same company about 21 years, I came in at the tail end of pensions, and then was converted to a 401k. No, I’ve never met with an advisor. I think it’s time, what should I be looking for? And how should I prepare? Interesting? Do you see a lot of folks who were kind of in that transition

Brian Quaranta 23:37

All the time, especially in western Pennsylvania, I mean, I’ve got a lot of financial advisor colleagues across the country that don’t see it as much as we do. But we see it a lot, especially with the steel mills, and just some of the older companies, the airlines things along those lines. You know, where people did have a pension, and then that was stopped, and a new contract took over. So, what happens they have a small little pension, that they can either take a lump sum of or maybe take some monthly income from, but the bulk of their retirement savings is now in this 401k. And for a lot of those folks, you know, when they retire, you know, they’re going to need to generate income from that money that’s accumulated in that 401k. And that’s really where that decumulation comes in. Steve, what we’ve been talking about all show is how do you distribute that properly, without putting yourself in a position to where you run out? And that’s exactly what the right track Retirement System will help you do is all of these moving parts that you deal with, you know, we help build out a cash flow plan for you we help build out an asset summary. We show you what happens if you take withdrawals and what the impact of them will be. It will show you what interest rates you should be shooting for. There’s three interest rates you always want to be looking at. And those three interest rates are very eye opening. It teaches you how to cumulate your money the proper way, so you don’t run out of money during retirement. That’s what the right track Retirement System is all about. If you’ve ever wondered to your So if you know, I’m not really sure how to generate income from my portfolio, that’s what the right track Retirement System will do. Maybe you thought to yourself, Hey, I just can’t afford to take a big loss in the market, because I just don’t have the time to recover. The Right Track Retirement System will show you ways to avoid that type of stuff from happening. So again, for the next 10 callers who call in right now, we’re going to put together that Right Track Retirement System at no obligation to you. We’ve seen others charge up to $1,000 or more for the similar features. But this will literally take the mystery out of financial planning, it’s going to go through five key areas with you, which we’ve talked about on the show, it’s going to help you look at how much you’re paying in taxes, how much income you could generate from your portfolio through utilizing proven strategies and techniques. Most importantly, it’s really going to just take the guesswork out of it. And that Right Track Retirement System that we’ve developed here at secure money advisors is going to give you turn by turn directions. And that’s for the next 10 callers who call

Steve 25:53

800-656-8616 That’s the number to call 800-656-8616 You’ll get your that comprehensive review that includes the Right Track Retirement System, and so much more you will see where you are today. But more importantly, you’ll find you’ve got a roadmap that can really help get you to where you need to be 800-656-8616 again 800-656-8616 Or better yet, text Brian Q to 21000 Brian Quaranta, Brian Q to 21000. You’re Brian Quaranta Always a pleasure, Brian. It’s fun to get together again and just talk retirement.

Brian Quaranta 26:29

Steve it’s always great seeing you and folks we’re gonna see you again next week right here on Retirement You Radio. Have a great weekend.

Announcer 26:40

Information provided is for illustrative purposes only and does not constitute investment tax or legal advice. Information has been obtained from sources that are deemed to be reliable, but their accuracy and completeness cannot be guaranteed. Neither Brian Quaranta nor his guests are liable for the usage of information discussed. Always consult with a qualified investment legal or tax professional before taking any action.

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