Episode 171 – How to Reduce Tax Burdens in Retirement

On this week’s episode of On the Money with Secure Money, Brian Quaranta discusses how to reduce the financial burdens of retirement and enjoy more after-tax money.

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Radio Show Transcript

Announcer 00:00

Three 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.

Steve 00:39

They welcome in on the money you’re with secure money and Brian Quaranta that is the show I’m consumer advocate Steve. And of course, today, we are going to help reduce your tax burden or at least attempt to, especially if you’re in retirement, we want to be able to free up more money for our expenses and of course to have more fun. So get some income planning. That’s what they do at secure money advisors. And that’s what Brian Quaranta does, we’re gonna dig into all of that, and so much more on today’s show. Hey, Brian, nice to talk to you,

Brian Quaranta 01:09

Steve, good to talk to you again. And that’s right. When we come back away, I’m going to be talking about a tax burden once you retire that you’re not going to want to miss we come right back with on the money and secure money.

Announcer 01:21

And now on the money. Any good retirement plans starts with the foundation. Asset protection, tax reduction, holistic planning,

Brian Quaranta 01:31

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

Announcer 01:35

Retirement doesn’t have to be complicated. You think that’s the difficult part. That’s just getting started. And now on the money with secure money.

Steve 01:48

Hey, welcome everybody on the money with secure money. That’s the show on consumer advocate Steve said all and that means Brian Quaranta is here. Brian is. You know what, Brian, you are president and CEO of Secure Money Advisors. You’re an author. In fact, you wrote the book Right Track retirement is a simple planning strategy to help you reduce risk, build income and provide peace of mind Heck of a title probably in house things. Yeah, it’s a little bit of a mouthful, right? But we can just call it right track your retirement. Right.

Brian Quaranta 02:15

Right Track your retirement because you know it to this day, when I talk to people, what’s the number one priority, just want to know, if we’re on the right track? You know, a lot of people really aren’t sure whether or not they’re on the right track. And that’s certainly something they want to get confirmation on. And as I always say, if you’re not on the right track, when would you want to know, because if there’s adjustments that need to be made, it’s better you make them now than later, especially now that the markets have been volatile, it’s a great time to relook at things and make sure that the plan is still on track. And you know, one of the best times to make changes when the markets down because the economic environment changes, where you put your money changes. So, you know, there’s a lot a lot that goes into planning, but making sure you’re on the right track is the number one key to making sure you have a successful retirement. So, if you go to right track your retirement.com, you can actually get a copy of my book at no cost.

Steve 03:04

Okay. Sounds good to me. The so one of the things that we’re going to talk about here, we talked about right track retirement, one of the things that you do so well, is to address the tax issue in retirement, and the tax issue means everybody’s got a different tax situation, you get it, and you’re going to help us at least pay no more than what we need to.

Brian Quaranta 03:22

Yeah, I mean, look, everybody’s got to pay taxes. But you know, at the end of the day, I mean, you want to pay only what you owe, right? Yeah, there’s no, there’s no reason to pay more. And one of the things that we have to realize, going into retirement. You know, the number one challenge is that we’ve got 85 to 90% of the people retiring today, not retiring with pensions. So what people are retiring with is tax deferred retirement accounts, like 401 K plans or 403. B plans. And that’s a great thing. But it also poses a problem in retirement, because all of those accounts when you take money out of them will become taxable. And if you’re not careful, not only could it cause you to jump into the next tax bracket, but it could cause you to pay more on your social security, putting more taxes on your Social Security could cause you to pay a higher premium on your Medicare premiums. So, there’s a lot that goes into income planning. And there’s five key areas here at secure money advisors that we address with our clients in the planning model. And that’s the number one is income. Number two is taxes. Number three is investments. Number four is a health care strategy. And number five is estate planning strategy. And I will tell you, the reason why income is number one is because when you retire, you no longer are going to have to trade your time for money. And this is now when you want your money to start working for you. So, you know, you no longer have to go to work and trade your time for money. But when you stop working, the paychecks gonna stop. So, the question is, how are you going to replace that paycheck? How are you going to get your income? And folks I hate to tell you but it’s not as simple as just saying I’m going to take the money out of my 401 K for three B, that I need every single month, because there’s a lot of risk that goes into that, you know, in a great situation to look at, you know, for the best example is what’s happening right now in the marketplace. I mean, think about the individual that needs money out of the retirement account in the year that the markets down over 25%, that causes a problem, people are compounding their losses, locking in losses. And this is why the number one fear of most retirees is running out of money. Because if you take money out at the wrong time, there’s a high probability you could run out. So, you got to be very careful with these things. But your taxation also plays a big role.

Steve 05:37

Absolutely. And, folks, if you want to get a head start, it’s 800-656-8616. So, as we start to look at this, where do Roth conversions fit into this plan?

Brian Quaranta 05:46

Yeah, well, sooner, the better, Steve. Okay, the sooner we can get the IRS out of our, our retirement situation, the better now, you know, a lot of 401k companies now are offering Roth 401 K’s. So, I always like to look at the Roth as this, you know, would you rather pay the taxes on the seed or the harvest, paying taxes on the seed is, you know, putting money into a Roth IRA. So that means I am not going to get a tax deduction for the money I put in. So, you know, if I’m putting in $10,000, into my Roth 401 K, I’ve got to pay taxes on that $10,000 This year, unlike a traditional 401k, where I actually get to deduct that $10,000 contribution from my gross income. But if the $10,000 in the Roth IRA grows to a million dollars, and I want to pull that out of the account, I don’t have to pay any taxes at all. It’s all tax free. Now, if that $10,000 were to grow to a million dollars, and it’s in a tax deferred account, 100% of that million dollars is now taxable. So, the sooner you can do the Roth, whether it be you know, switching from traditional 401 K contributions to Roth 401 K contributions, or just starting to do conversions of your existing 401 k or IRA accounts, out of your retirement sooner than later is better. Because I don’t know if you’re like most people, if you ask people, if they think taxes are going up or down in the future, most people will agree that taxes are probably going up, right?

Steve 07:13

Yeah, but what else? Where else can they go? They can’t get any lower? And I mean, I’m not being facetious. That’s true, right? Because we’re in the lowest tax rates that we’ve been in in years.

Brian Quaranta 07:22

Yeah, look, I mean, we’re seeing it with interest rates, we’re at the lowest interest rates we’ve ever been in history. So, you know, look at where interest rates are going to now. I mean, so you’re all of these things are going to adjust. When you print trillions of dollars, there’s only one thing you can do. And that’s raise taxes. So, people are going to need to be prepared for going into retirement and you better have a plan and a strategy to handle it, like our right track retirement plan. And this is why every single week, we keep the phone lines open for people that want to take advantage of a right track retirement review. And this is something that is so powerful this review because of the technology that we use to be able to evaluate what you currently have. A lot of people just don’t know the risk that they’re taking the fees that they’re paying, or how much income their accounts are actually producing. When I tell people, ask people, how much is your accounts producing, they say, Well, I’m not really sure you know, what people can tell you is what their account value is, but they can’t tell you what their income value is. What do I mean by that? Well, every stock or mutual fund can produce a dividend that produces income, great thing about dividends is that they’d never go away. As long as the companies continue to pay them, you’re going to continue to get a dividend, but you’re not you don’t live and die by the ups and downs of the market. So, our right track retirement review truly is going to help you get on the right track. And it’s going to identify five key areas for your income taxes, investments, healthcare, and of course, your estate plan. So, for the next 10 callers who call in right now that’s a complimentary right track retirement review, we’re going to go over those five key areas with you folks, don’t kick the can down the road on this Do not hesitate on this, pick up the phone and call us when you call my team is gonna be standing by. And we’re also going to give you a copy of my right track retirement book for free when you call in to schedule that appointment today.

Steve 09:06

800-656-8616 you’re going to get that comprehensive financial review that Brian just described, plus all of the extras there’s no cost, there’s no obligation. Just make that call today and get you on the right track to retirement 800-656-8616 800-656-8616

Brian Quaranta 09:25

You want to make sure you stay on track for retirement when we come back. We’ll outline some ways baby boomers are wasting money in retirement and offer some options to help keep those coffers full we come right back with on the money with secure money.

Announcer 09:43

Are you fighting for financial knowledge? Don’t let bad advice be a punch in the gut to your retirement. Take advantage of a complimentary no cost no obligation consultation with a local trusted financial coach. Call Brian Quaranta and his team at Secure Money Advisors 800-656-8616 800-656-8616.

Steve 10:14

We are back On the Money with Secure Money and Brian Quaranta, I’m consumer advocate Steve. Brian, of course, is the President CEO of Secure Money Advisors. He is an author, right track your retirement to book that’s available to you at no cost, you just need to give us a call, we will get to all of that. But this is something I think this segment, Brian is going to be interesting because I think it’s going to address some things that that maybe we are aware of, but we don’t want to admit. And you know, nobody’s going to tell you how to spend your money right now. But you’re right, but you’re here to help us say you got to hang on to some of that money. And one of the things I know that it’s very easy to really overload the grandkids with stuff because you just love them.

Brian Quaranta 10:56

Yeah, yeah, that’s definitely true. And you know, money decisions that you make can make a big difference. So, you know, in buying too many gifts for the grandkids is definitely one of them. And I see that my own family. But look who doesn’t want to spoil their, their grandkids, right? I mean, but before that flashy, new toy or adorable outfit just seems to jump into your car. Remember that it’s not just your wallet, you may have to save if you refrain, I mean, a little restraint can actually, you know, stave off some resentment from parents who may not be able to afford as much so for one, keep materialism and tots under wraps. I mean, I you know, it’s just, it’s, it’s a great thing, but you know, I think people can overdo it. When I see though, the big one I see a lot is supporting adult children, though still.

Steve 11:47

All right, right. Yeah. Well, I mean, again, that’s a baby boomer dilemma, so to speak.

Brian Quaranta 11:51

Yeah, it is, and it can be rough out there. For young adults. You know, inflation’s you know, the highest we’ve ever seen it. It’s taking longer for people to save for, you know, a home, the biggest thing that’s oppressing, you know, kids is college loans. But, you know, I would say that if you’re blindly writing a check to your adult child every month, reconsider, especially if you’re endangering your own financial well-being, and this is, unfortunately, I see this situation where people are putting themselves in a bad situation, you know, to make sure their child, you know, can pay their rent, you know, rather than having them move home, you know, they’re supporting and paying the rent, and when they can’t even afford it themselves. Yeah,

Steve 12:36

Yeah, cuz we don’t want them moving home.

Brian Quaranta 12:41

Yeah, and maybe that’s why they want to write those checks. So bad, but, but you know, God, you know, and we all want to take care of our kids. But you know, I think there’s a, there’s a, you got to draw a line in the sand and say, you know, enough is enough, especially if it’s jeopardizing your retirement future,

Steve 12:57

Well, keeping track of our money, that’s, again, that’s what working with the fiduciary advisor, independent advisor, like you is all about, you’re, you’re looking out for us. And if we start to go down a path, a wrong road, you take a detour, and you can help us get back on track.

Brian Quaranta 13:14

Well, look, you know, the nice thing about the planning that we do here at Secure Money Advisors is we give you a real written plan, the cash flow model that we use is probably the most simplified model that you could possibly put cash flow in, I think it’s great, because, you know, everybody can understand our cash flow model. And it really is simple. I mean, you know, in retirement, it’s money in and money out. And I think when people are just blindly spending money, and they’re really not running their finances, like a business, they’re not running the retirement like a business, they just think that the money is just always going to be there, or they have unrealistic expectations of how their investments are going to perform or, or what their investments are really going to be able to produce for them over time, or they’re just, you know, blind to the fact that they’re going to run out of money. And when you start to put things on paper for people, and they start to see the impact of the withdrawals that they’re taking to, you know, buy too many gifts for grandkids or supporting adult child or, you know, taking advantage of every senior discount or blindly paying for life insurance that they might not need

Steve 14:24

Pause there for a second talk about that. How does that work? And give me a scenario of when that’s a bad thing, or that that’s an awkward thing, the blindly paying for life insurance?

Brian Quaranta 14:34

Well, I mean, there’s, you know, there’s some situations where people are overburdened with huge life insurance premiums that they may not need. And, you know, one of the things that you do in planning is if you’re a married couple, you always want to look at what the loss of income would be if you if a spouse died. So, you know, for example, you know, we know that if you’re married and you have you both have social security checks. I mean, Social Security is going to take away the lowest check now According to AARP, you know, there could be a 40% loss of income if your spouse dies. Now, the question you have to answer, and the question people should be asking themselves is, if my spouse dies early in retirement, that’s your worst-case scenario, because that means that you’re going to need to probably need more money from your retirement accounts for a longer period of time, versus your spouse dying later on in retirement. But, you know, we only want to pay for life insurance, if it truly is going to have an impact at death, in helping replace some type of income, you know, so, for example, you know, there’s people out there that have plenty, enough money in savings that, you know, they might not need to spend, you know, you know, I had some folks come in a couple of weeks ago that were spending $6,000 a year on a life insurance policy, I’ve got no problem with it. But when we looked at their entire situation, there really is really no benefit. But because when we simulated death happening, we just saw that the life insurance benefit wasn’t great enough to continue to pay that premium of $6,000. A year. So, you know, the nice thing about planning, Steve, is that, you know, you can make all these bad things happen on paper, and it gives you the clarity that you need to make very informed decisions. And that’s what I’ll say that our right track system has done for people is it’s given them clarity. And when you have clarity, it truly helps you have peace of mind in retirement. And that’s what we’re all after in retirement is just peace of mind knowing that we’re doing the right things. And I always say, look, if I can help you generate more income and retirement, if I can help you pay less taxes, if I could help you own the right mix of investments, because the investments you owned, getting to retirement are not the same investment strategies you want to use through retirement. If I could show you how to mitigate the risk of a health event happening if you have a heart attack or stroke, whatever it might be, and more importantly, show you how to properly put together an estate plan that can have a big impact on your family. When you pass away. Would that be worth 45 minutes of your time, because that’s what our right track review is all about. So, when you come in, we’ll go through those five key areas with your income taxes, investments, health care and legacy planning. We’ll show you how our right track retirement system is different than you’ve ever seen. Any other financial planning firm ever even if you’ve ever worked with a firm, it’s so simple. It’s a planning strategy to help you reduce risk, build the income and provide peace of mind retirement. So, for the next 10 callers take advantage of this folks, don’t kick the can down the road. Call today my team is standing by and schedule an appointment with us today. And when you schedule that appointment, we will also send you a complimentary copy. It is free I pay for shipping and handling. You don’t want to miss this. When you schedule your appointment, we’ll send you a copy of the book at no cost. Right Track your retirement. So call the number today.

Steve 17:41

800-656-8616. You heard Brian, 10 callers right now get that comprehensive review that right track retirement review. That’s what we’re talking about here keeping you on the right track to retirement, and you get the book as well, which is a pretty good read.

Brian Quaranta 17:56

We’re all familiar with fake news or misleading stories or those well-meaning people that have the answers to questions you haven’t asked the problem is much of that advice being offered is just plain wrong and should be ignored details when we come right back with on the money with secure money.

Announcer 18:13

He’s letting the clock run out on his social security at 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 BrianQ 800-656-8616. Or text BrianQ 800-656-8616. Call or text BrianQ to 800-656-8616.

Steve 18:46

We’re back on the money with secure money. Brian Quaranta is here. And yes, he is the advisor we are asking the questions of today. And we’ve got some good ones. Brian, before we jump into that, remind me again of all not all, but you are doing seminars, aren’t you?

Brian Quaranta 19:00

Yeah, matter of fact, if you go to our website, secure money advisors.com, you go to our events tab and you can see all of our upcoming events, which usually try to get out there about four to six times a month, where we do the right track retirement educational event where we go through a lot of the five key areas that we talked about here on the show, but we really dive into a lot of case planning and examples is very eye opening and very powerful for people to see it’s a lot of times people come in, they say I had no idea that you could do these types of things. And really, you know, folks, what I will tell you is that your investments, your strategies are really only as good as the people advising you. And you know, the most dangerous part about anything in life is the things that you don’t know that you don’t know. So come on out to one of our events. They are complimentary. So again, go to secure money advisors.com Go to our events tab and you can schedule to come to one of our events. That

Steve 19:55

sounds great. And so again on that note, let’s jump into some of these questions. Brian They, yes, some interesting ones. Indeed, Ralph is up first. Roth is wondering, are there any other benefits to contributing to a traditional IRA besides deductions, and qualify for deductions and would like to make a well-informed decision? I plan to retire at 67? That’s two years.

Brian Quaranta 20:17

Yeah. Well, I mean, look, you know, at the end of the day, I mean, you know, the benefit used to be before we had the Roth IRA is that the money would grow tax deferred, too. So, any interest that you were earning would grow tax deferral, so the tax deferral was a benefit. But when you can get tax free growth over tax deferred growth, and now if Ralph’s had a situation where he can’t make deductions, that probably means he’s a little bit of a high-income earner. But he could still make a nondeductible contribution to an IRA. And what I would tell him is to use the backdoor Roth IRA rules and convert that immediately to a Roth IRA. A lot of people that are in high income think that they can’t get money into a Roth IRA. And in fact, making a nondeductible IRA contribution to a traditional IRA, and then converting it to a Roth IRA is the easiest way to do it. That’s kind of a, you know, what we consider a backdoor Roth IRA. So very powerful strategy to use. But now, we’re growing all the money tax free.

Steve 21:20

Well, and again, for a Roth conversion. That’s something that takes a little time. And so pretty much it’s got to be done by the end of the year by December 31. But right now is probably about the limit. I mean, we’re closing in on Thanksgiving, Brian, it’s, if you’re gonna get it done it better get done now.

Brian Quaranta 21:35

Yeah, you better figure out a strategy real quick to do it. You know, in that, and you bring up a good point, Steve, because number two in our five key areas is taxes. And, you know, people think that taxes is something that you do in April, but it’s not. Tax Planning is something that you do right now, when you file your taxes, you file that in April, but your tax accountant is always looking at the history of what was done. Tax Planning is looking at the future. And a lot of people are not getting tax planning. And I really would encourage you to get with a team that focuses on tax planning to help you identify some strategies, and there’s not always strategies available. But certainly, you should be part of a team that’s at least helping you Sure. You know, a lot of people I’ll talk to will say, Look, you know, I don’t even get any, you know, advice outside of the performance of my accounts. You know, they’re talking about charts and graphs and how the account did over the year. But, you know, where’s the planning, because there’s so much more to planning than just performance of accounts,

Steve 22:28

right? 800-656-8616? All right, Ralph, that’s the number you can call on we go to Laurel says I’m 57 285,000 in a brokerage account, but the same in my 401k. Now I’m currently max at maxing out the amount I can put in my employer’s retirement plan. However, with the market continuing to go down, I’m wondering if I should keep more in cash. I understand what the market down I’m essentially buying shares on sale. But if the price continues to fall, I won’t have that long to recoup my losses due to my age. Your What are your thoughts? Yeah, look, I

Brian Quaranta 23:03

mean, I agree with her. I mean, as you get older, I mean, you want to think about protecting money, you know, and people just blindly throwing money into the market, because they’ve heard that, you know, that it’s a good time to buy when the markets down is not always the best strategy. I mean, you know, because time plays a big role in the investment strategy. So, the question for Laurel is, well, what’s the purpose of this money? You know, because the purpose of that money is really going to define what you can do. If you can honestly say that these accounts are long term accounts, then maybe dollar cost averaging and during volatile times, is something that will benefit you, but just blindly throwing money in when you may need that money in a very short period of time, could wind up being the worst mistake ever. And there’s nothing wrong with stockpiling cash. You know, a lot of people might say, Well, you’re not going to earn any interest on that, well, you’re not going to lose any money either. Right? So, you know, you tell me, you know, what’s better, not earning a few percent interest or potentially putting that money in an account that goes down 20%, I would rather forfeit, giving up some interest, then potentially losing 20% of that money, especially when you’re 57 years old. And you could be five years out from retirement. So, but in my right track retirement book, I talk about these things, and I talk about getting people to start thinking like pensioners and not gamblers. Because as you get closer to retirement, you gotta quit gambling with your money. My industry has got you convinced that it’s a great idea to continue to roll the dice and take risk with your money. But the first thing you need to do is put a foundation under what you have so that you protect your retirement. You should never be in a situation to where if the markets go down, you’ve got to delay retirement or come out of retirement and if you are, I highly recommend that you take advantage of our right track retirement review for the next 10 callers who call in right now. We are going to give a right track retirement review at no cost. My team is standing by when you call to help you schedule this appointment. Look. If I can help you increase your income. Show you how to pay A lesson taxes, show you how to mitigate risk to protect your retirement and own the right investments that are going to do the right things for you, and retirement gives you the peace of mind and clarity that you deserve in retirement, would it be worth 45 minutes of your time? I hope it would be my promise to you is this. It’s not a sales pitch when you come in, leave your checkbook at home, we’re there to have a discovery meeting with you and go over some things that could potentially make a huge difference and your retirement lifestyle. So, call us today and schedule the right track retirement reveal and when you schedule that appointment, my team is going to also send you a copy of my book complimentary right track your retirement

Steve 25:37

sounds great folks. It’s a phone call away at 800-656-8616 a comprehensive financial review. And things are going to be explained in a way that you understand, and it makes sense. If you walk out the door with a roadmap that can help, get you to where you need to be in retirement. It’s 800-656-8616 again, 800-656-8616 Brian, it’s always a pleasure to be here. It’s fun to reconnect and just have these conversations information. So good,

Brian Quaranta 26:04

Steve, it was great seeing you again and folks we’ll see you again next week right here with 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.

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