Episode 126 – How to Protect Your Retirement in a Volatile Market

On this week’s episode of Retirement You Radio, Brian Quaranta provides tips on how to keep your retirement savings safe in a volatile stock market.

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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

If you’ve made it to retirement or you’re close to retirement, the question is what happens if the market takes a dip? Can you recover? On today’s show tips on how to protect your nest egg. In spite of a market downturn, we come right back on Retirement You Radio.

Announcer 00:57

And now, Retirement You Radio

Brian Quaranta 01:01

Good retirement plans start with the foundation,

Announcer 01:03

asset protection, tax reduction, holistic planning.

Brian Quaranta 1:06

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

Announcer 01:10

Featuring Pittsburgh’s wealth financial and income coach, Brian Quaranta.

Steve 01:17

Welcome everybody, this is retirement, you radio increasing your financial IQ with Brian Q. Brian caught off this year. Brian is President, CEO of Secure Money Advisors. He is well he is a fiduciary, is an independent, he’s been helping folks for a good long while getting to and through retirement. Hey, Brian, what’s going on?

Brian Quaranta 01:34

Steve, how are you today? This is a big one on our agenda today?

Steve 01:38

Oh, it is there’s a lot of stuff to go through on this one. And, you know, we talk about it all the time. And you help folks make that transition from the acquisition to the distribution preservation. And then but what happens? I mean, we’re seeing inflation kind of out of control. At this point, the market is going absolutely crazy the last few weeks. How do we deal with that?

Brian Quaranta 01:57

And how much longer can it go? Right? Yeah,

Steve 01:59

again, what are we doing? Yeah, and

Brian Quaranta 02:01

what happens when you’re retired, and you need that money in the market goes down, that’s where it gets really scary. And this is where secure money advisors really differentiates itself from a lot of the planning firms out there. You know, we talk about it a lot. But I think it’s important to always revisit fundamentals, and that is, when you look at building wealth, there’s two phases of the money. There’s the accumulation phase, and there’s the distribution phase. accumulation phase is very, very simple. I mean, all you got to do is buy a well-diversified portfolio of stocks, and have time to let it ride, right. I mean, time is your friend, when you are investing at risk in the market. So, what happens though, if you’re one of the 85 to 90% of the people today that are going to be retiring, without a pension? Because this is a big problem. And you know, quite frankly, if you look at the solutions that are in place of a guaranteed pension, it’s pretty scary. I mean, you know, they’ve replaced a guaranteed pension with a 401 K plan. A 403. B plan, a thrift savings a TSP, depending on where you work will depend on what type of retirement plan you have. But why is this scary? And why do I call it the grand experiment? I call it the grand experiment, because nobody’s really going to know how this is going to work out. I mean, you know, as you were talking about earlier here, I mean, the markets have been going like crazy. You know, the question is, what happens if they start to go down? And how long will they go down. And when you have a guaranteed retirement pension, like people did, 3040 years ago, if the markets went down, you didn’t have a whole lot to worry about. Because you were still going to get your guaranteed check every single month. So, people retirement 34 years ago, it was simple. They had a Social Security check. And they had a retirement check called a pension. And as a matter of fact, that pension was guaranteed for their life. And if they had a spouse, they could choose for that pension to be guaranteed for their spouse’s life. But we don’t have that anymore. This is why you don’t see retirement parties anywhere. It’s Steve, let me ask you, when’s the last time you actually went to a retirement party?

Steve 04:15

It was my mother. And it was 1987 True story, right. That’s the last retirement party I went to,

Brian Quaranta 04:21

really and when I mean, you know, do you ever talk to any of your friends about their retirement party? But seriously, yes, seriously, you know, and the reality of the situation is the reason why we don’t see him anymore is because nobody knows when they can retire. Because the fundamental principle that is needed in retirement is the replacement of income, you see, because when you stop working, you know and your paycheck stops coming, bills, taxes and the money that you need on a monthly basis to do all the things you want to do. None of that stuff. to stop, so how are you going to replace that paycheck? Well, for a lot of listeners out there, you’re probably going to be entitled to a Social Security check. And it’s going to vary how much you get on social security based on how much you’ve paid in. But the other way that you’re going to get income, and if you ask most people, if Social Security is going to be enough for them to live off of, they’ll tell you know, it’s just it’s not I’m going to need more money. You know, so let’s just say somebody needs $20,000 or more of income a year, where are they going to get it from, they’re probably going to get it from their retirement account, like a 401. K. But that’s part of that’s what you do? Well, it is, but see, the strategies and techniques that got you to where you are and got you to where you are right now are not the same strategies and techniques that you’re going to use in the retirement planning phase of your life, meaning, you’re not going to use the same strategies and techniques in the distribution phase. Here’s why. Because you don’t have something that is critical to the investment formula. And that’s time. You see, if you’ve ever lost money in the market, and you’ve spoken to a financial advisor about a loss that you’ve taken, they’ve probably said to something along these lines, Steve, see if you can finish this for me. Don’t worry about it. Hang in there. You’re in it for the long haul. There you go. So now ask yourself this, if you’re getting ready to retire, and or you’re already retired, and you plan on using the money that you’ve accumulated in your retirement accounts as income, how can you be in it for the long haul, when you need your money right now, you see the whole, that whole concept goes out the window, don’t worry about it hanging in it, you’re in it for the long haul, the long haul is over. You need your money right now. So how are you going to start taking money from your retirement plan, without the risk of running out of money, with the risk of volatility because look, if you’re invested in the market, you are going to experience volatility. Now, you can certainly sit down with a financial planning firm, and they could probably help you reduce or mitigate that risk. But at the end of the day, you’re still going to be exposed to losses. Now, here’s what you have to understand. And we’ll talk about this more we come back on the next segment, Steve, but the one thing I want to teach you is actually how to buy time back on your long-term money. And the only way you’re going to be able to do this is through the bucketing approach, which I write about in my new book called the right track retirement and we’ll talk about that more when we come back to but for the next 10 callers who call in right now. Calling today and sign up for our complimentary no obligation right track retirement review. This is a portfolio review that will help you determine whether or not you’re on the right track. Being on the right track really has to do with five key areas it has to do with your income, taxes, investments, health care strategy and legacy PLAN strategy. We literally will take the mystery out of financial planning will help take all the guesswork out of it. And we’ll show you how to get from point A to point B, but you’ve got to do your part. You’ve got to pick up the phone. We know that calling a financial advisors office can be relatively intimidating, but I don’t want you to be intimidated by the process. Be proactive here, this is not a time to procrastinate. Be proactive, pick up a phone call, schedule a time to come in and meet with my team and myself. And we’ll walk you through a very simple approach that will give you peace of mind and security. As you approach retirement. Steve, why don’t you tell them how they can do that?

Steve 08:22

I absolutely I’d love to this is a great opportunity for you folks to come on and sit down and really put together that financial roadmap exactly what we’ve been talking about. And again, with the very volatile world that’s going on out there, Brian and the team at secure money advisors understand that they can help smooth it out, make it clear, it’s a practical financial review. If you’re looking for that second opinion, now’s the time to make the call 800-656-8616. Again, that’s 800-656-8616 you’ll walk out the door with that roadmap that we talked about that can help get you to where you need to be when it comes to retirement, make the call while you’re thinking of it 800-656-8616 Again 800-656-8616

Brian Quaranta 09:06

Fall is a perfect time of year to review your retirement and income plan with your advisor when we come back some things to check off your list before the end of the year. When we come back right here on retirement you radio

Announcer 09:26

Do you ever feel like you’re fighting for financial knowledge? Don’t let bad advice be a punch in the gut your retirement to 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 10:06

Welcome back. This is retirement, you radio increasing your financial IQ with Brian Q. Brian Quaranta, of course, is who we’re talking about. He’s president and CEO of secure money, advisors, fiduciary, independent, and I really liked this. We just talked about this off the year that there are so many things, you know, with fall in the year, we’re into October, there are a lot of things that need to happen before the end of the year. And it needs to start now because December 15, is not the time to start.

Brian Quaranta 10:33

No, it is absolutely not the time to start. And before I get into talking about the things that should be done by the year end, yeah. Let’s go back to that first segment that we’re talking about. We’re talking about the bucketing strategy. Yes, yes. Here’s the number one mistake that people make. The number one mistake people make going into retirement or in retirement is they think they can follow this rule called the 4% rule. Now, Steve, you and I have talked about this a lot before, right. This is a simple rule that’s been around since the mid-90s, created by a financial advisor by the name of Bill bend, genetic California, you can look all this up. All right now, when he created this, this this strategy called the 4% rule, he basically looked at a 6040 split of stocks and bonds in retirement and said, Look, if somebody would Drew 4% of their portfolio each year, they could increase the, the withdrawals each year by the pace of inflation, which would be about 3%. So maybe if you had a million dollars, you’d start off with a withdrawal in the first year of 40,000. And then the next year, you’d increase that withdrawal maybe to 41,000. But the idea was that you could do this, and you know, and not run out of money throughout retirement? Well, if you look at when this rule was created, it was created in the 90s when he was running, when he was running all his Monte Carlo scenarios at the time, he was running them based on what was happening in the markets in the 1990s. Now, are we in different times than we were in the 1990s? Yes, we absolutely are. I don’t think anybody would disagree with that. The markets are much different today, they move much faster, they go up faster, they go down faster. So, the 4% rule been written about a lot by many financial institutions, including a lot of, a lot of the well-known educational institutions like Harvard, Harvard, wrote a wrote a great article on the, for a number of economists about the 4% rule. Wall Street Journal just came out with an article not too long ago that said, hey, this 4% rule. You know, there’s some flaws here. As a matter of fact, if you follow this 4% rule, depending on when you retire, the article said, and they were saying if you retire at the top of a bull market, and that you may have up to a 56% chance, you could run out of money before you die. Now think about that. If I’m building a retirement plan for myself, and I’m looking at the probability of success of that retirement plan, there’s no way that I’m going into retirement with the potential of having a 56% chance of failure. No, of course not. There’s just no way. So how do you do this? It’s called a bucket approach. This is where we separate the monies into different timeframes buckets. So, we have long term buckets, mid-range buckets, and now buckets, right? Yes, yeah. So, look at the buckets as now, soon later, right. Now, soon later, if you think you’re just going to keep all of your money in one account and withdraw money when you need it. I think, again, because if the market goes down, when you make a withdrawal, not only you’re going to lock into that loss, but you’re also going to compound that loss, and math starts to work against you. And the math that starts to work against you is something called sequencing risk. This is where we get an unfavorable order of returns when we’re withdrawing money. And this is why people will run the risk of running out of money. As a matter of fact, AARP interviewed about 1000 people and they said, Hey, what do you fear most? running out of money or death? You know, 98% of those people, Steve said that they fear running out of money more than they fear death alone. I understand that. Yeah. And I would agree with that. So, if you come to secure money visors, we’re gonna teach you how to bucket your money, how to create that now, soon, later buckets, how to properly position that because remember, the strategies and techniques that got you through your accumulation years are not the same strategies and techniques that are going to get you through your distribution’s years. So, let’s go ahead and make a switch here. Steve, let’s talk about Fall being the perfect time of the year to wrong retirement.

Steve 14:27

All right. I like what you were talking about, though, Brian. I mean, it’s so important that that whole strategy, and I like how you’ve turned them, I mean, I’ve heard them called a billion things, but that’s a pretty interesting way to describe them.

Brian Quaranta 14:39

Look, these are basic fundamentals that you absolutely need to follow. And what you have to remember, folks, is it’s really easy for you to go sit down with an advisory firm, and for them to give you advice on taking risk with your money, especially if they get paid a commission to do it. Yeah. This is why it’s so important to work with a fiduciary firm, that’s fee only that can charge you for a plan that can charge you to manage your money. But at the end of the day, what you’ve got to remember is that it’s not about growing the money. The number one priority in retirement is about cash flow generation growing the money is important. But if you don’t have a plan for cashflow, forget it and the plans, and the strategies and techniques that you use to grow the money or just are different than the strategies and techniques you use to actually get income on a monthly basis. So, let’s talk about these quick things before we run out of time, Steve. So, number one is let’s talk about contributing to your 401 K plan. Number one deposit to your 401 K plans are typically due by the end of the calendar year. So, for 2021, you can contribute 19,500 with an additional 6500. If you’re over the age of 50. That’s always a good one to take advantage. And that’s got to be in there by December 31. That’s right. So, we’ll make a list here take required minimum distributions. You can donate your IRA distributions through something called qualified charitable distributions. You can consider tax mitigation strategies like Roth conversions. Remember, conversion strategies are not conversions. But backdoor Roth IRAs may be going away, folks. So, if you’re thinking about how to go from taxable money to tax free money, now’s a good time for you to sit down with an advisory firm, and talk about how to mitigate taxes because your number one erode over your wealth is not only going to be inflation, but it will be taxation, and this is why we offer our right track retirement system. Because if you’re not looking at the five key areas retirement, you just don’t have a retirement strategy number one, and most importantly as your income number two is taxes. Number three is your investments. Number four is a health care strategy. And number five is a legacy strategy. When the good Lord takes you home, you want to make sure that the money that you’ve accumulated over the past 40-50 years of your lifetime goes to your family, your charities and the people you love and not the IRS. So, for the next 10 callers who call in right now that’s a right track retirement review. We’re giving away complimentary no obligation, but you got to do your part pick up the phone today call us we know the process of meeting with a financial advisor can be intimidating, but it’s not what secure money advisors, we’ve made it very simple and easy to understand. We truly will take the mystery out of financial planning and help you take all the guesswork out of it. But again, you got to do your part. Call us today. That’s the next 10 callers. A complimentary right track retirement review

Steve 17:13

10 callers right now 800-656-8616 It’s a chance for you to get that financial roadmap put together, tick off the boxes. Again, if you’re looking for a second opinion, now’s the time to make that call 800-656-8616. It’s a practical financial review. You owe it to yourself to have that done to make that call. Sit down with Brian and his team, get that comprehensive financial review. And you’ll find out where you are today, of course, but more importantly, you’ll find that you’ve now got a road map. It’s a guide that’ll help get you to where you need to be when it comes to retirement. 10 collars right now. 800-656-8616 again, 800-656-8616. We’re going to take a quick break; we’ll come back and continue our conversation on Retirement You Ready with Brian Quaranta.

Announcer 18:07

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 two 800-656-8616.

Steve 18:43

And we are back on retirement you radio increasing your financial IQ with Brian Q, Brian Quaranta of course is here, I’m consumer advocate Steve and this has been a really fun show Brian, and we’ve covered so much ground but we’re not done yet. And so, I think it’s important that we just continue down this list. And I know we touched on that a little bit earlier about beneficiary designations as part of estate planning but again, having the incorrect transfer on death payable on death the TOD POD designations. Boy, that’s a critical piece of the puzzle too. And it’s so easy to do it beforehand and impossible to do after something happens.

Brian Quaranta 19:20

Yeah, if you have a trust or estate plan, fidelity recommends double checking your transfer on death Tod and payable on death pod designations to ensure that they will match. Look, I don’t think people really realize how important the titling of your accounts are. I mean, the titling near your accounts could mean the difference between probate and no probate and who wants to go through probate that no that’s a process. Right. So yes, checking your account titling, Steve is very, very, very important. And, you know, it’s just again part of the process, but with thorough financial planning, these are the things you’re going to be talking about.

Steve 20:08

Right. And again, that estate planning, and I know we’ve done a show on this in the past about estate planning and how important it is, and boy, that’s so true. You know, and you talk about, you know, just getting that estate in order to make sure that you can get to where you need to be and not have any surprises when something happens. I’ll tell you; I just went through something with, you know, my wife ended up in the hospital, and we knew that she was going to go in for surgery. And so, we finally got off our butts and put the estate thing plan together. And I mean, so it shouldn’t let it come to that it shouldn’t be done. Good.

Brian Quaranta 20:39

No, and you know, what, and take Steve’s advice, don’t do it, you know, during a crisis situation like that, because guess who else did it in a crisis situation? I did. Right? I had I had an emergency a personal emergency that I had to go in for. And this was probably I don’t know, maybe 10 years ago. Yeah. And I didn’t have any of my estate planning documents done. Right. And I’ve been doing this for 21 years. It’s the shoemaker thing, right? Yeah, it’s the cobbler’s kids got no shoes, right. But it’s so important, because really, there’s just some basic documents, you know, financial powers of attorneys living wills, basic will, right, a lot of people don’t really need a trust. And depending on your situation, most likely your beneficiary documents are going to get the job done. Sure. That’s not for everybody. But yes, basic legal documents are very important. And they are part of that those five key areas that we talk about, right, the fifth area that we talked about, and retirement planning here at secure money advisors is the legacy planning piece. And this is where we talk about how do we get this money to transfer to your loved ones, without the IRS getting a large portion of it or getting caught up in probate or getting taken from nursing homes. These are the processes that we go through to help you solve identify and solve these types of problems.

Steve 22:00

Sure, so one of the things that you know there’s the fire movement, that financial independence retire early movement, if you will, but and I understand people want to retire early they work real hard they want to they want to have a fun retirement but that can lead to problems candidate

Brian Quaranta 22:15

What were you retiring early has two main disadvantages first, the early the earlier you’re tired that obviously the less time you have to save for retirement and to your point that that fire movement right financially independent retire early. I think it’s Mister Money Mustache, right? If anybody wants to look him up. Yeah, you know, Mister Money Mustache is, is the is kind of the pack leader in that whole movement. But you know, it’s there. They basically teaching you how to retire early. So, but there’s disadvantages because you’re not paying into Social Security anymore. And so, your Social Security benefit, you know, is not going to grow because they’re making the assumption that you’re going to continue to pay into Social Security. So, there are disadvantages and retiring too early to Steve.

Steve 23:00

Well, and again, absolutely. And, you know, I know we’re kind of running out of time here again, already, holy cow. But let’s talk about medical expenses. Because you got to plan for those, even though you don’t want to the numbers for 2021 are startling.

Brian Quaranta 23:14

Yeah. I mean, you know, not planning for medical expenses. I mean, according to Fidelity, a 65-year-old opposite gender couple retiring this year 2021, can expect to spend $300,000 in health care and medical expenses throughout retirement. Wow, holy cow. Those are big numbers. Those are big numbers. And again, this is why it’s so important to sit down with a fiduciary planter that’s truly held to a standard of providing you with a plan because these are the exact discussions that you need to be having of how you’re going to handle not only the cash flow that you need to maintain your lifestyle, but how are we going to handle the cash flow that we need for medical expenses and things along those lines now, for single retirees in 2021, the estimate is $157,000. For women, and $143,000 for men now here in Pittsburgh, you can understand why everywhere you look, there’s a new medical facility being built. That’s how much money is in this per person. Right?

Steve 24:12

Right. Absolutely. So again, just with that, the big takeaway here is what we just have to know what we’re looking for and what we want in retirement, right. And the best way to do that is to sit down with you.

Brian Quaranta 24:21

Yeah, look, retirement really is about planning folks. It’s about understanding that you’re going to be going from an accumulation phase to a distribution phase. And that distribution phase has five key areas that you have to focus on its income, taxes, investments, health care and legacy planning. If you make sure that you have every i dotted every T clock crossed and those specific areas, you will have a solid retirement plan, your retirement plan will be on track. If you want to find out if your retirements on track, call us schedule an appointment and schedule a right track retirement meeting with us so that we can help you determine whether or not you’re on the right track and we can give you a advice on the best moves to make to make sure that your retirement gives you peace of mind happiness, and the life that you deserve. So, but you’ve got to do your part, you’ve got to pick up the phone, you’ve got to call us for the next 10 callers at the right track retirement meaning no cost, no obligation, it truly is going to take the mystery out of financial planning. We’re really going to take the guesswork out of it all. But you have to do your part for the next 10 callers. That’s a complimentary financial review, no cost, no obligation

Steve 25:27

800-656-8616 Your heard Brian, you’re going to get that comprehensive financial review. There’s no cost, there’s no obligation. And you’re going to see where you are today. Yes, of course. But more importantly, you’ll find that you’ve got a roadmap, a guide that’s going to help get you to where you need to be when it comes to retirement. Brian and the team at secure money advisors are there to help that happen. help make that happen for you. 800-656-8616 again, 800-656-8616 Brian, as always, a pleasure and what a great, just a ton of great information today.

Brian Quaranta 26:02

Steve, what a great show, folks, we look forward to seeing you again next week. Keep your retirement on track. Right here on retirement you radio

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.

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