Episode 110 – Retirement Truth Bombs

Brian Quaranta exposes 4 retirement truth bombs and strategies on how you can prepare for them.

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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 You Radio

Asset protection, tax reduction, holistic planning

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

Brian Quaranta 00:37

We are excited about today’s show because we are going to expose four retirement truth bombs and offer some ways to prepare for them, we come right back right here on Retirement You Radio

Steve 00:52

Welcome, everybody. This is Retirement You Radio increasing your financial IQ with BrianQ. And of course, we’re talking about the Right Track Retirement System. Hey, Brian, what’s going on?

Brian Quaranta 01:02

Hey, Steve, how are you doing?

Steve 01:03

I am well, thank you, very well. And, you know, so truth bombs. I like that, by the way, Brian is, he’s president and CEO of Secure Money Advisors, and so much more. I you know, but again, you know, you talk about truth bombs. And I think what, what we’re really talking about here is, you know, things that that you might think are true, but they really aren’t.

Brian Quaranta 01:26

Yeah, well, look, I mean, to truly enjoy retirement, you have to have a plan. And, and you’ve got to plan carefully. Let’s put it that way. I mean, and we talk about this a lot, you know, whether it’s at my educational events, or it’s on retirement, UTV, which by the way, if you want to come out to one of our educational events, go to WWE at secure money, advisors.com, check out our events tab, you can see where we’re going to be next, where we spent about an hour and a half, you know, walking through a lot of the things that we talked about on the radio show, but we really dive deep with people at the educational events. And there’s just so many people that come up to me after those events and say, you know, I’ve been doing a lot of different events of financial advisors, this is the most beneficial one I’ve been to, because I’ve learned so much. And that’s what we do, we’re not here to hide information, we’re here to give you the information, help you plan, whether it’s with us, or whether it’s with somebody else, or whether you want to do it yourself. But everybody deserves to enjoy retirement. And in order to do that, you have to have a plan. So, number one, and most importantly, though, is your living cost may not go down all that much. And, and this is true of matter of fact, a lot of times we’re planning for people, we’re actually looking at trying to get them more income during their retirement years, then even when they’re working. And a lot of people think that once they retire, they’re magically going to start spending a lot less money. And we’ve just haven’t found that to be true. And part of the reason is, this is when you are going to be living out your bucket list, you know about the bucket list, right? At least that’s what all the retirement books talk about. You know, you’re gonna, you’re gonna, you’re gonna travel, you’re gonna, you’re gonna buy efficient bow, you might join a country club, you might, you know, want to do more stuff with your family and your kids or grandkids, whatever it might be. But there’s always more money typically being spent. And a lot of times when we build out a plan, sometimes you can even look front-loading the cash flow to where we build a higher income in the beginning and actually turn it down a little bit as time goes on.

Steve 03:31

Well, that makes the most sense to me.

Brian Quaranta 03:32

Yeah, well, look, I mean, you know, for most people retiring in their early 60s or mid-60s, you know, you figure from the day that you retire, you know, the first 10 years of retirement is going to be where you really spend the most money because you’re going to have your health to do the things you want to do, you’re going to be excited that you no longer have to trade your time for money, time is finally yours. And you’re going to want to go do all the things that you said you were going to do, whether that be your hobbies, or travel, or whatever it might be. So, you know, important to make sure that when building a plan, and this is why our Right Track Retirement System, Steve, focuses on five key areas. And the number one key area that it focuses on is income. And part of the income planning process and building out your cash flow model is understanding what those monthly expenses are going to look like. And so, we want to build it so that you have the freedom and the flexibility to do all the things that you want to do.

Steve 04:27

Well, exactly. And that’s all the part of the conversation that you have, and the Right Track Retirement System as well. And one of the things that again, that I think is well I know it’s a misnomer is that social security is going to cover all my expenses.

Brian Quaranta 04:40

Yeah. Well, it used to be that when you retired 30-40 years ago, it was simple because for most people, they got a Social Security check. And then on top of it they got a pension but today what we’re seeing is that 85% of the people retiring, if not more are retiring without pensions and you can’t live on Social Security alone. You may be planning to Most of you rely on your Social Security benefits to stay afloat in retirement. But those benefits will only replace about 40% of your paycheck if you were an average earner during your working years. And you know, as we’ve, as we’ve just discussed, your living cost may not drop at all that drastically once you leave the workforce behind. In fact, Social Security pays the average senior today, about $1,543 a month. So, you know, a lot to me, it’s not so you know, you know, and if it doesn’t seem like a like enough for you to live on, then you better plan to ramp up your 401 K or your IRA contributions. But more importantly, you better understand the distribution phase of retirement. And this is where we really separate ourselves from other planning firms. Steve, most firms focus on the accumulation phase, secure money advisors focuses on the distribution phase, the strategies, the techniques that got you, through the accumulation phase to where you are today are not the same strategies and techniques that you’re going to use during the distribution phase, the game changes, and how you build out that planning model completely changes, because for most people, what they’ll tell us is that they’re at a point in their life where they are going to start taking income from their investments. Now, you know, you probably know the probably, I think it’s the most famous line in the investment world that it’s out there today. And that is, hey, over time, you should do well with your investments. Well, that’s true, if you’re not taking money out of your investments, but the minute you start taking money out of your investments, market, volatility becomes a big problem. So, the challenge that everybody is going to deal with in retirement is taking income from their investments and doing it the right way. And there’s a right way to do it and a wrong way to do it. The Right Track Retirement System will teach you the proper ways to distribute money from your IRAs from your 401 Ks and give you the highest probability of success with that portfolio by eliminating something called sequencing risk. And Steve, but this is why we always offer the Right Track Retirement System for our listeners, and for the next 10 callers, who call us, we’re going to give you a complimentary meeting, no cost, no obligation, we’re going to spend about an hour to two to an hour and 15 minutes with you going over your current situation. And here’s what we’re going to talk about when you come in. Number one, we’re going to talk about income, 2. we’ll talk about taxes, which is very important. Taxes become a big problem in retirement, want to make sure we mitigate that as best we can, number three is how your investments are positioned. Remember, you’re going from accumulation to distribution, so the game is going to change. And then we talk about health events and legacy planning. You know, most people will tell me, Steve, I’m not sure when to collect social security. They’ll say: I’m not sure you know if I can afford another market downturn, you know, because I don’t have the time to make my money back. If this is you and that’s the way you’re feeling, The Right Track Retirement System really is designed to help you take the mystery out of financial planning, again, it’s a complimentary review, no cost to you. We’ll run a tax analysis for you. I’ll show you how to customize your income plan utilizing proven strategies and techniques in the distribution phase to help you turbocharge your retirement income. In short, the most important thing is we really help you take the guesswork out of financial planning and show you how to put together real plans, So for the next 10 callers. That’s a comprehensive financial review the Right Track Retirement Review, that we’re going to give away complimentary with no obligation.

Steve 08:28

800-656-8616 You heard Brian; you’re going to get that comprehensive financial review plus all the extras that go along with it. And then when you walk out the door, you’re going to have in your hand that roadmap that guide is going to help get you to where you need to be when it comes to retirement 800-656-8616, Again 800-656-8616

Brian Quaranta 08:51

According to research from Northwestern Mutual’s 2020 planning in progress study of the economic impact of COVID 19, the pandemic has changed the retirement timeline for 30% of Americans. We’ll break it down we come right back right here on Retirement You Radio.

Announcer 09:09

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 BrianQ 800-656-8616 or text BrianQ to 800-656-8616. Call or text BrianQ to 800-656-8616

Steve 09:43

We are back on Retirement You Radio increasing your financial IQ with BrianQ. Brian Quaranta, of course, is who we’re talking about. He is president and CEO of Secure Money Advisors. I’m the consumer advocate Steve, and again, yeah, there’s a lot of statistics here in this survey, Brian, that are kind of mind blowing.

Brian Quaranta 10:01

Yeah, yeah. I mean, the study finds that 20% of US adults, aged 18+ plan to delay retirement beyond what they expected. Wow. And now, there’s about 10% of them that plan to actually accelerate their timelines and retire earlier than anticipated. Now, we’re actually dealing with a lot of that 10%. You what we have found is that well, we retired quite a bit of people last year, I think we were we retired somewhere around 100 plus people last year, Steve. Wow, that sounds right. Yeah. And these are people that we had, you know, maybe, you know, three to five years plans put together for. But you know, after working from home for a while, and being able to be home all day, and not having to drive to the office every day and spend time away from the house and family. I think when it got time to get called back to work they said: I don’t know if I want to do this anymore.

Steve 10:57

Well, can you blame them, really?

Brian Quaranta 10:59

No, can I retire at 63 versus 65? Can I retire at 65 versus 67. And our planning model allows that to happen. I mean, you know, most people come in with a target retirement date. But when you put together a written plan, the way that we do that’s mapped around those five key areas income, taxes, investments, health care and legacy planning. Once the model is built, now we can throw anything we want at the model, we can say, you know, what happens if we want to retire a year earlier and collect social security a year earlier? So, you know what, what changes is that going to look like maybe, you know, we might get less income from Social Security, maybe it means that we need to take withdrawals from retirement accounts for a longer period of time. And we have to see what those impacts are. The other impact that we need to look at. And this is really one thing that’s very overlooked in financial planning is determining three different interest rates that of the portfolio. The first one is what we call your spend down interest rate. So, if there’s a certain amount of cash flow you need from the portfolio, we need to see what the minimum rate is of return that we need in order to let’s say, take the money that you need to take on an annual basis and maybe spend that money down. By the time that you’re age 95. And maybe the last check you write’s to the underwriter; or not the underwriter.

Steve 12:18

The undertaker.

Brian Quaranta 12:19

How about the undertaker? The underwriter is who we would use if we bought life insurance, right? So, you know, and then then the second interest rate we need to determine is really what our preservation rate is. And this is if we need a certain amount of money. You know, let’s suppose that we needed $5,000 a month from the portfolio, what rate of return is the portfolio going to need to do in order to maintain principal. And then of course, we look at the legacy rate, the legacy rate is if we want to take, you know, a certain amount of money out, let’s say $5,000 a month and we still want to grow the portfolio? What does that need to look like, and for most people not having pensions, we also want to look at how to bucket that money correctly, to eliminate the sequencing risk, which is a major risk in retirement. And this is why people do run out of money prematurely. It’s something that most people are not educated on. And certainly, something we go over with people during the Right Track Retirement Meeting and walk them through how the sequencing risk can be very dangerous to their retirement and cause them to prematurely run out of money before they die. And you know, according to AARP, they did a study of about 1000 people. And they said they asked all these people, Steve, they said what do you fear most running out of money, or death, and about 95% of those people said they would fear running out of money in retirement more than they would fear of dying alone. So, we have to have a good written retirement plan in place. And we’ve got to make sure that we’re focused on those five key areas. Number one, and most importantly, being the cashflow model, and that’s the income planning part of retirement.

Steve 13:49

And again, as we look at this, we’re talking about some retirement obstacles. And, you know, of the study that was done last year and the impact that COVID has had on people. And you know, we talked about the obstacle in that before COVID. People said lack of savings was number one, followed by healthcare, and economy. Now, it’s the economy number 1. 49% of the people are worried about the economy. And I certainly get that sense.

Brian Quaranta 14:15

And that’s because a lot of people haven’t taken the time to truly understand how to remove that risk from their portfolio. If your retirement is dictated around the performance of the market, then you just don’t have a retirement plan. You know, certainly, we all need to lean on the markets long term for the growth of our money, and of course, to keep pace with inflation, and so on and so forth. But if you don’t understand the basic fundamentals behind building a distribution plan, then you’re probably still doing things the old way and the old way is keeping you at risk and becoming reliant on the performance of the market. In our planning model, under the Right Track Retirement System, we guide you and show you through a bucketing strategy how to buy back time on your accumulation portfolio. Remember, you know, there’s two phases to retirement, there’s the accumulation phase, and there’s the distribution phase. And again, 85% of the people out there are retiring with pensions, they have to understand the distribution model, more than the accumulation model, anybody can accumulate your money. I mean, any advisor out there can very easily buy you some stocks, bonds, mutual funds, and show you how to accumulate your money, that is not a very hard thing to do. The reason why you don’t find many advisors, focusing on the distribution phase is that it is a more complicated process. And most guys have not taken the time to really make that their specialty, we’ve been doing it for the last 15 years out of my 21-year career. Most of the people that we meet on a day-to-day basis are all going through the same thing, they all have the same worries, the same concerns. And you know, quite frankly, they’re tired of the same old conventional advice. And that is, you know, going to meeting with their advisors, it’s the same old story, don’t worry about it, hang in there, you’re in it for the long haul, everything will be fine. If your plan is not built around good math, and you don’t have a real written plan, then quite frankly, you just don’t have a retirement plan for the next 10 callers, who call in right now, you’re gonna get a complimentary no cost, Right Track Retirement Meeting. Look, we’re very passionate about, you know, what we believe in here at Secure Money Advisors, you know, and we want to help you build an independent retirement that really can help you get through the volatility of the market and help you know that as you retire, you have the peace of mind and security. So, our consultation, Right Track Retirement meeting really is going to help you focus on those five key areas income, taxes, investments, health care, and legacy planning. Look, you’ve worked hard for your money, we all have. Think about how long it’s taken you to accumulate this money, we don’t get a second chance at this, this is not a dress rehearsal. So, you have to get it right, you’ve got to protect it, and you’ve got to grow it. And there’s a wide variety of tools and services available in the financial world. We’ll show you how to harness those tools and services to create a plan that’s tailored for you. And we’ll also show you how to achieve that lifetime of security that everybody’s looking for. And that’s what we built the Right Track Retirement System around. And we’re ultimately going to take all the guesswork out for you and show you what a real written plan will look like. So, against the for the next 10 callers. That’s a comprehensive financial review that we’re gonna give away complimentary. But folks, you’ve got to do your part. Pick up the phone and schedule today.

Steve 17:30

800-656-8616 You’ll get that comprehensive financial review; you’ll see where you are today. But more importantly, you’ll end up with that roadmap that can 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

Brian Quaranta 17:50

You’ve got a 401 K and that’s great. But when we come back, we’re going to talk about why having a Roth IRA to complement it is just what the retirement doctor ordered.

Speaker 1 18:00

How’s the market doing?

Speaker 2 18:01

It’s fine.

Speaker 1 18:03

How’s the market doing now?

Speaker 2 18:04

The same as it was five seconds ago,

Announcer 18:06

Stop worrying about market volatility. A good retirement plan will keep you from panicking when and if there’s ever a panic even during a correction or a mild recession, get that solid retirement plan with lifetime income and protection from pitfalls get in touch with Retirement You Radio’s BrianQ 800-656-8616, 800-656-8616

Steve 18:35

We are back on Retirement You Radio with Brian Quaranta. I’m consumer advocate Steve’s at all having a great conversation today getting through everything I love the rock, the Roth talk, you know, Roth, it’s what’s for dinner? I mean, again, what you were saying Brian makes so much sense. And it. I know it’s not for everybody, but boy, it’s worth having a conversation.

Brian Quaranta 18:53

It is absolutely worth having a conversation again. I mean, why would you make the IRS your largest partner and most people don’t realize that with the retirement plans that we’ve all been convinced to do, whether it be a 401 K and Ira A 403 B plan, the IRS is your largest partner in those plans, and you need to make the decision of whether to buy them out now. And you know, a lot of times the math looks better if you do that. And you know, if you’re a do it yourselfer, you know, consider, you know, calling your custodian and having them help you do a conversion. If you’re currently working with an advisor, call them and help you do a conversion. If you’re not getting that advice, it’s probably a good idea that you get a second opinion because what I have found over my life, is that you know, you get what you pay for. And you know, you should be getting comprehensive financial advice, which includes good tax planning,

Steve 19:44

Right. And again, folks that the way you can get started is just call Brian 800-656-8616. And get on the calendar. Let me let’s jump into some of these questions here. What do you think?

Brian Quaranta 19:55

Let’s do it.

Steve 19:56

All right. We’ll start with Robert; he writes us and he says I inherited a small IRA when my mom died. Is there any way to avoid income taxes? I don’t need the income at this time and can keep it in an IRA. I mean, that’s a good question. I know that’s changed recently.

Brian Quaranta 20:11

It has. The secure Act has changed it. But again, you know, let’s just go, you know, continue down the road that we’re on had mom just converted that money, Robert could be inheriting all this money tax free, he wouldn’t even have to worry about asking a question about income taxes. But since Mom didn’t take the time to buy, you know, to get the IRS out of the equation, he’s now stuck with having to possibly pay these taxes, and he’s gonna pay them whether he wants to or not, he’s going to pay them the question is when. So, the inherited IRA that he received from his mom, there is some big rules that changed on inherited IRAs. As you know, most people know, and if you don’t know, if your listener doesn’t understand this, this is a very important thing for you to understand. And something very important to add to your planning strategy. And that’s the way that your beneficiaries are going to inherit your retirement accounts. So, in this case, Robert inherits a small IRA from his mom when she dies. And he wants to know if there’s any way to avoid income taxes, well, you know, under the prior to the Secure Act Changing, which was in December of 2019, what Robert could have done is he could have kept that money in an inherited IRA. Now that money had to go from Mom’s IRA to an inherited IRA for the benefit of Robert, it could not go to Robert’s IRA, or it will become completely taxable. Now, what Robert, would then be required to do is take a little bit of money out of that account each and every year. So, to give you an example, there was a great article in Money Magazine, this was probably a few years ago, about a son that inherited his father’s half a million-dollar retirement account, the son finds out that he’s the primary beneficiary, just like Robert here, of his dad’s retirement account. So, he calls the custodian that the money’s worth, they sent him the paperwork, and he fills it out, and he sends it in, while the custodian sends the son a check. And a couple of weeks later, the son gets a 1099 for a half a million dollars, which basically means he has to count all of that money. Now as taxes. Yeah, the article went on to say that the son wound up owing $240,000 in taxes off of a half a million-dollar retirement. Now think about that. I mean, the IRS became almost 50% beneficiary in that account with that son, that’s, that’s unacceptable. But those are the tax traps that are out there for you. So, under current law, you know, Robert could actually move some of this money into an inherited IRA. And he’d be required to take a little bit of money out each and every year, but he’s got to deplete the account over a 10-year period, but that would help mitigate some of the taxation and spread out the tax liability and cause Robert, to come ahead a little bit rather than the IRS winning in that situation. But you got to understand the IRA rules for inherited IRAs in order to take advantage of something like that.

Steve 23:01

Of course, let me… let’s go to another Roth question for you. Okay. Maddie is asking. She says my company offers a 401K and a Roth 401K, currently I contribute 6% to my 401 k 8%. To my Roth, is this a good long-term strategy? I want to contribute all to my Roth 401 K, beginning in July of this year, is that a better strategy? I’ll be curious to get your take on this.

Brian Quaranta 23:28

Yeah, well, again, Maddie, I mean, you know, everybody’s situation is different. And as a fiduciary, it’s hard for me to give very specific advice without knowing the specifics about your situation. We don’t know how old Maddie is right? True. But let’s assume that man, she’s young. Right? But maybe she’s not that, you know, maybe she’s 50. Certainly, you know, it’s going to be better to contribute all of the money to something that’s going to be tax-free, and no longer have to worry about the IRS being part of the picture.

Steve 23:56

Now’s a great time to give Brian a call. In fact, this is going to be the last opportunity today that we’re going to let folks get on the calendar.

Brian Quaranta 24:03

Yeah, folks take advantage of our Right Track Retirement System. I mean, you deserve to determine whether or not you’re on the right track. And we certainly can help you do that at Secure Money Advisors. You know, we’ve seen others charge up to $1,000 or more for similar reviews, we’re going to do a complimentary with no obligation. You know, you’re going to come down and sit down with our team for 45 minutes to an hour. We know that that can sometimes be an intimidating process, but it’s not. At Secure Money Advisors, we’re really going to help you take the mystery out of financial planning. We’re here to serve and we’re here to help take advantage of our Right Track Retirement Review. It truly is very helpful to help you identify five key areas in retirement: it will be able to go over your income, your tax situation, investments, your health care strategy, and then your legacy. We’ll run a fee report, we can see what you’re currently paying your advisors. We can also see if you’re actually getting the return for the risk that you’re taking. A lot of people are taking Risk and they’re really not getting the return. Or they’re paying a lot of money and not getting in return. I don’t mind people paying fees, but you better be getting something for the fees that you’re paying. And you better be getting good advice and a good return. Most people are not. We’ll show you how to save on taxes by doing a tax analysis. And more importantly, if you’re one of those people out there that are going to need income from your retirement accounts, I’ll show you how to create an income plan, utilizing the best strategies available in the best techniques and the best practices to literally help you turbocharge your retirement income. But folks, you’ve got to do your part. You’ve got to pick up the phone, you’ve got to call us you’ve got to set the time aside, make it a priority. This is something you don’t want to kick the can down the road with. We don’t get a second chance at this. This is not a dress rehearsal, get it right. So again, for the next 10 callers. That’s a comprehensive financial review that we’re giving away complimentary with no obligation take advantage of it, folks.

Steve 25:52

800-656-8616 the next 10 callers are going to get that comprehensive financial review. You’ll see where you are today. Yes, but more importantly, you’ll end up with that roadmap that can really help get you to where you need to be when it comes to retirement. 800-656-8616 again, 800-656-8616 Brian has always it’s really fun to just go through all of this information. And it really helps folks, I think make the right decisions.

Brian Quaranta 26:19

Absolutely. Folks, get yourself on the right track. Take advantage of the Right Track Retirement System. We really truly designed it for you. It’s so helpful. It’ll give you the clarity, the simplicity and the peace of mind that you want going into retirement. Until again, next week. Right here on Retirement You Radio. Have a great week.

Announcer 26:40

Information provided this 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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