Episode 150 – Strategies to Combat Inflation

On this week’s episode of On the Money with Secure Money, Brian Quaranta discusses strategies on how to combat rising inflation costs to ensure you retire on time.

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Radio Show Transcript

Intro 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.

Announcer 00:39

Today’s show, we’ve got some ideas for you to fight back against inflation and still retire on time. And we’ll come back with on the money with secure money. And now on the money. Any good retirement plans starts with the foundation. Asset protection, tax reduction, listing planning, these are the things that start to move you towards having a retirement plan. 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 01:18

Hey, welcome, everybody. This is on the money with secure money. And Brian Quaranta is here. Brian, of course, is President CEO of secure money advisors. He is a fiduciary. They are a fiduciary firm, they are independent. That’s all good stuff to know. And Brian, of course, is right here right now. Hi, Brian, what’s going on?

Brian Quaranta 01:37

Steve, how are you? Everybody’s hanging in there with this inflation? I mean, it’s tough right now, isn’t it? Oh, my God, I was sticker shocked at the gas pump the other day, with how much it’s costing to fill up with gas? Oh, yeah, you know, I, had both my land, the guy that cuts my lawn, and then I’ve got a guy coming to pave my driveway. Both of them texted me within the last week to let me know that there’s going to be a price increase, the guy that’s going to be paving my driveway, texted me and said, hey, just want you to know, price of fuel and everything, you know, the cost of the driveway is gonna go up $500. And so, you know, for a while, companies were really trying to eat the cost. But it’s so ridiculously out of control. And there’s just so much more other than price. I mean, you know, when you look at, you know, the, the information out there telling us that, you know, there’s an eight and a half percent inflation rate, I mean, it’s kind of hard to really think about it being eight and a half percent, because you look at the price of food, or you look at the price of an airline ticket, and they’re up way more than eight and a half percent. So, I think a lot of us would argue that that inflation rate is probably even higher. But inflation can be particularly hard on retirees, you know, living on fixed or partial fixed income inflation is it’s always an issue. And it’s something that we address here at security advisors during our planning meetings. And you know, the reason I built our right track Retirement System was to help people put together wealth building strategies that took into account these variables. And I think that’s the unique thing about financial planning is that, you know, there’s a bunch of assumptions that need to be made about the future. And really what you’re looking for, when you have these unknown variables, such as, you know, inflation, or stock market performance or interest rates, you’re really looking at what the probability of success is going to be with your portfolio. And our right track Retirement System does a very in depth review or analysis of the client of the individuals position so that they can see what success rate they have with their portfolio, and you know, what technology, we’re able to take somebody’s statements and during all of their current positions, and we’re able to see, you know, whether there would be an 85% probability of success, a 75% probability of success, or a 95% probability of success. And so, when we’re planning, what we really want to do is we want to make assumptions. Okay, what if inflation goes from 3% to eight and a half percent? What’s the probability of success of the portfolio? Now? What if you don’t get a seven and a half percent average rate of return? What if you only get a four and a half percent average rate of return? What’s the probability of success look right now, and these are the things that have to be taken into account. Because when you look at, for example, a 3% rate of inflation, cutting your spending power in half over a span of 24 years, with people living longer, even a normal rate of inflation can be an issue. So, a lot to think about.

Steve 04:47

Well, it sure is. And again, you know, there’s a new survey a Gallup poll out. Well, technically the US inflation rate fell to 8.3% from April, it was 8.5%. Um, Not sure anybody knows the 0.2% difference there?

Brian Quaranta 05:03

The 2020 basis point Yes, right. Exactly. Yeah. But again, that’s the first decline in eight months. But again, it certainly isn’t stopping it doesn’t seem to be slowing down. Lillian Wu has some highlights of this survey and just who it’s affecting. Americans are more likely today than they were a year ago to report being very or moderately worried about finances. According to a new Gallup poll out, nearly two thirds of those surveyed are concerned about having enough money for retirement, more than half are worried about maintaining their standard of living and 40% are stressed about paying monthly bills up from 32% last year, the findings reverse the improvement seen last year. I mean, two thirds of retirees are worried about their income. I mean, that’s really, I mean, that just boy, you talk about hitting in the breadbasket? Yeah, well, look, I mean, AARP did a study and they said, you know, they interviewed about 1000 people, and they said, What do you fear most, running out of money or death? And 90% of the people we interviewed said, they fear running out of money more than they fear death alone. And, you know, people right now are, you know, especially those that are living off the fixed income, you know, going to the grocery store and spending way more money than what they’ve budgeted for, or you know, going to the gas pump and paying way more money than what they budgeted for. So, it does get scary. And she’s right, because the majority of people that we meet, when they come into our office, there’s a few things that they’ll say to us, they’ll say, number one, I don’t have a plan, you know, I have investments, but I don’t have a real written plan that shows me how to actually utilize these things, and get my money to start working for me, they’ll also tell us that, you know, they’re at a point in their life where they just can’t afford to take another big loss in the market, because they just don’t have the time to recover. And a lot of people just aren’t sure how to generate the income that they’re going to need from their portfolios, without the fear of running out. And so, these are just some of the problems that we help solve for when people come up to secure money advisors. And there’s five key areas that we always focus on one area, and the most important one is your income. Because with your income, there’s two things that will erode your wealth, it’s going to be taxation, and of course, inflation, those things will erode your wealth. And then you look at it like this, let’s say that you plan on retiring, and you’re going to need some additional income, because maybe your only source of income is going to be social security, you don’t have a pension. So, you plan on utilizing the 401k that you have at work as a way to generate income. Let’s suppose that you need $1,000 A month in additional income, and you pull that $1,000 out and you got to pay 20% in taxes on it. That means that you’re only going to net $800. After you pay that 20% in taxes. Well, what’s the real purchasing power after you add in eight and a half percent inflation rate in that two, it’s not going to be $100, it’s going to be much lower? Well, what happens if now, taxes go up, which is what they’re talking about doing? You know, so now taxes, you’ve got to pay 30% on that. So now when you do the withdrawal from your plan, you don’t get $800 You get $700. And you know, let’s say inflation is at the same where’s your purchasing power now, so this is why we always give the opportunity to come to our office, sit down with us and review your plan. And we’re going to give you a complimentary no obligation right track retirement review, where we’re gonna go through five key areas with your income, taxes, investments, health care and legacy planning. You have the opportunity right now to sit down and have a conversation with a fiduciary advisor who can guide you and possibly help improve your situation. So again, for the next 10 callers. That’s a complimentary right track retirement review. Just give us a call and schedule today.

Announcer 08:41

800-656-8616 you’ll see where you are today, of course, but more importantly, you’ll get a roadmap that can truly help get you to where you need to be when it comes to retirement 10 callers right now 800-656-8616 800-656-8616

Steve 09:00

There are still a lot of questions about crypto and using it in your retirement plan. When we come back, we’re going to tackle some frequently asked questions about crypto in your 401 k or IRA or even if it’s possible, the bigger question is should you when we come right back with all the money with secure money

Announcer 09:22

Do you ever feel like you’re fighting for financial knowledge? Don’t let bad advice be a punch in the gut your retirement and take advantage of a complimentary no cost no obligation consultation with a local trusted financial coach. Call Brian Khurana 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 10:00

We are back with On the Money with Secure Money. I’m consumer advocate Steven, Brian Quaranta is here, Brian presidency yield secure money advisors, and so much more. You are a busy guy. I know you’re a new dad for the second time, which is kind of cool. How’s things? Little guy looks great.

Brian Quaranta 10:15

Yeah, yeah, well, you know, I’ll tell you one’s a lot easier than two. And for those of you out there that have more than two, I have a whole different level of respect for you. I think it was put to me, one is one and two is 10. Because that’s what it happened to feel like, yeah, I understand. So, you know, I’m fortunate though, I’ve got a lot, a lot of clients, female clients that are, you know, nurses in the pediatric centers, or even in specialize in child behavior. So, I keep them on speed dial, because having a two and a half year old and a one month old at home is definitely some challenges with the two and a half year old. So, you know, at 46 years old, here I am having kids, you know, Secure Money Advisors was my passion. It was my child, I didn’t know if I was going to have kids. I never met the right person. I did. My wife and I were both very career oriented. She’s 41. And here we are with two kids later on in life. So. So yeah, it’s very unique. But it definitely challenges me to not be that workaholic that I always am, you know, because normally I would go home and work till you know, midnight and had no problem. Now I go home, and I’ve got to shut it down and give a bath and food and all that kind of stuff, and then you’re exhausted.

Steve 11:35

All right, let’s talk about the crypto because I you know, I was surprised when I read that fidelity said that they’re going to let workers invest up to 20% of their 401 K contributions directly in Bitcoin that seems to me to be I mean, I know that they’re leading the way there probably won’t be the last one that will give that opportunity. But as you said at the very beginning, is it? Is it something we should do? Let’s again, we’ve got questions.

Brian Quaranta 11:59

Yeah. Look, you know, all I can say is, for those of you that are listening, Google Luna, L U N A, Steve, you and I were just talking about this during the break. But you know, there’s an absolute disaster in the crypto market right now with this company called Luna, which was essentially a crypto currency pegged to the US dollar. So, it was one for one, it’s down 94% People literally have their life savings in here. So, cryptocurrency is something you absolutely have to be unbelievably careful with, you can only invest money that you’re willing to lose. I know it’s exciting. I know, there’s a lot of buzz around it. People think this is the future. And it may be but we don’t know, keep in mind, this is an unregulated market. Still, we still need a lot of regulation around this. So yes, you are starting to see big financial giants like Fidelity here announcing earlier this year that they’re going to let their investors invest up to 20% into Bitcoin, you know, and they’re going to actually be the first to offer crypto, but it certainly won’t be the last. I mean, as soon as you see a big company like Fidelity doing this, you’re gonna see others following suit, but let’s dig into a lot of the questions we get stuck here at the show. So, one of them was what?

Steve 13:10

How can I fold crypto into my retirement plan? How do I do that?

Brian Quaranta 13:13

Yeah, well, this is interesting, you’re actually starting to see commercials on this stuff. Right now, I know. On TV, right? Where you got to use self-directed IRAs or solo 401. K plans are the most convenient ways to purchase crypto in retirement accounts. You know, Bitcoin IRAs bit IRA, I trust capital, an IRA financial trustee that allows you to hold your cryptos. So nevertheless, retirement account giant Fidelity has made it possible for workers to do the 20% Regardless of the exact plan you chose, can also use the self-trading platforms like personally myself, you know, I use Coinbase, very simple to go there and trade on the exchange and buy the crypto you want, you can set up that automatic buys now, at Coinbase. I do not use that I don’t I don’t use it in my IRA. And I would encourage you to really not consider using cryptocurrency within your IRA. And the reason is, is because of the volatility. So, keep in mind, when you invest money outside of an IRA, and you lose money, you have the ability to write that off against your taxes against gains. So, you know, if you’re investing in crypto, and there is a loss, you may potentially be able to write that off. If it’s in an IRA, you can’t write any losses off. So just think about it, you know, and again, you’re really, you know, tread lightly here, folks, you know, I know it’s exciting, but, you know, if you study this crypto market, and you see some of the stuff that’s happened along the way, you know, there’s documentary after documentary that documentary of this disastrous things happening to people and losing large sums of money investing in cryptocurrencies, So, I would say if you were interested in it, I would say stick with the big one, which is Bitcoin, right? And Ethereum. But you know, there’s 800 Different crypto coins right now. So,

Steve 15:11

I mean, so here’s an example. I’m just gonna give you my own little example the so if you if you sign up for Coinbase, and you mentioned Coinbase, yep. Right. So, I signed up for Coinbase that says, hey, if you sign up, I’ll give you $5 in Bitcoin. Alright, well, I haven’t done anything else with it. Except I had the $5. You don’t my five? This was in November when I did. Okay. You know what it’s worth today my $5 that they gave me? Yes. $3.04.

Brian Quaranta 15:34

There you go. There you go.

Steve 15:35

That’s exactly. And again, if you just think of that $5 was 5000 or 50,000? I mean, oh, my gosh, that would be just that would break me.

Brian Quaranta 15:46

Yeah, I mean, crypto’s, down over 20% right now and, you know, again, crypto was supposed to be the hedge against inflation. And it’s down 20%. You know, of course, gold has also been told that that’s supposed to be the hedge against inflation, but gold only has a 10-year return of a little over 1%. It’s up about 3% for the year. But you know, with that eight and a half percent inflation rate that’s not keeping ahead of inflation either. So if-

Steve 16:11

I’m gonna do it, Brian, what do I do? How much should I put in there? Is there is there a rule

Brian Quaranta 16:15

I mean, according to so Yale did a study in 2019, between 4% and 6% of your portfolio should be allocated to cryptocurrency. The study included all cryptos, though, including Bitcoin XRP, which is also known as ripple. And either, you know, either of those, you could use financial advisors or CFPs. And other money, experts increasingly recommend a crypto asset allocation of 1% to 5%. I’m probably more on that lower end of one to five. Okay, and this is why we leave time open on our calendars. To meet with our radio listeners each week, you have the opportunity to come in right now call and schedule today a complimentary right track retirement review, where we will go over five key areas with your income taxes, investments, health care and legacy planning. We’re gonna go over a lot when you come in, we’ll show you how to build a customized income plan, we’ll show you had to do a tax analysis, we’ll show you how much you’re paying in fees, how to reduce risk and maximize returns. But you got to do your part, folks, you got to call us and schedule today. This is not a time when you want to procrastinate and kick the can down the road right now is the best time to get a second opinion. And remember, you can’t get a second opinion from the guy that gave you the first opinion. So, call today and schedule your right track retirement review

Steve 17:28

800-656-8616. You heard Brian, 10 callers right now, it gets that comprehensive financial review seeing where you are today. But more importantly, you walk out with that roadmap that can help get you to where you need to be 800 656 at 616 800-656-8616.

Brian Quaranta 17:46

We live life in stages, and one of the last frontiers most of us will experience is going to be into retirement with some solid planning and attention to detail. The road to retirement should be smooth, we come right back with on the money with secure money.

Announcer 18:04

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 Brian q 800-656-8616. Or text Brian Q to 800-656-8616 Call or text Brian Q to 800-656-8616.

Steve 18:40

And we are back on the money with secure money and Brian Quaranta. I’m consumer advocate Steve said all and of course, we have reached the final segment of this show. This has been one of the fastest shows ever they always go quick, Brian but what we covered some ground as always. And that’s really you know, I mentioned the website. And that’s where you can kind of get some insight to what you do because it’s more than just a, you know, promotional piece. You guys put information out there you put educational materials out there at your website secure money. advisors.com.

Brian Quaranta 19:10

Yeah, that’s right. Take a visit, folks, because there is a lot of information there. And we also archive our radio shows and our TV shows there. So, you know, if you want to listen to topics on taxes or Social Security, you can probably find a show or two. That dives into that a little bit.

Steve 19:25

Sure. So, let’s talk about your TV show for a second does that I mean, I know what airs on different channels, different times that right?

Brian Quaranta 19:32

Yeah, as a matter of fact, if you go to the website, it’ll give you a schedule of what times we’re on. But we’re on Fox, we’re on KTKA. And I believe we’re on the CW, 22 to a point. So yeah, a lot of different stations. Check it out, you know, on the money with secure money. It’s just a television show version of it. And oh, but do you get to see me? Yeah. And you know, the nice thing is I have other advisors that To, you know, are part of our team here that are also joining me on the show. So, the major one, yep. Neil, and then, you know, we’ve got Michael and Maggie who also, you know, will attend. And it’s great because people get to really kind of see how we think as a team. You know, I think that’s one, one real compliment that we always get is, you know, I can’t tell you how many folks I talked to that say, you know, well, you know, we were with this individual at the, at the firm that we were at, and then he left and then they gave us to this individual. And, you know, this individual wants to make changes, because he didn’t really care for the way the other guy had it. And this is happening within the same company, right? You know, secure money advisors, you’re gonna find a group of people that it wouldn’t matter whether you sat down with me, Neil, Maggie, Michael, you know, we believe in the same philosophies, we believe in those fundamentals. And what’s great about that, is that you’re not just getting one advisor, you’re getting a team of people that are dedicated to helping you achieve your goals and get you through retirement, you know, you know, look, look at what’s happening in the marketplace right now. You know, a lot of volatility, high, high inflation rate, costs of living are living through the roof. Our phones are quiet. Why? Because one, my clients get communications from me every single week, we got to a current state of the markets dress coming up, which we do every quarter for our clients. So, we’re engaged. But they also understand that the planning model that we’ve put together for them really helps protect during times like this. And these are the times as a retirement planner. This is what we live for. This is really where we get to really see our work come to life. Because you know, in a in an up market, Steve, everybody looks like buddy wins. Exactly. Yeah. Now, that doesn’t mean that our portfolios haven’t been a little bit volatile. But we are approaching things differently, because we have a way of creating a buffer account, so that we don’t have to worry about the little bit of volatility we’re seeing right now in our stock market accounts. And that buffer crowd creates so much peace of mind. And it gives the client so much certainty about making it through times like this. And now the client isn’t tasked with the worry, or anxiety of should I get out of the market. You know, when should I sell, we don’t play that game here. Because we’re protecting enough money to protect the first 10 to 20 years of the retirement lifestyle, that we can absorb volatility. And again, when you have inflation rate, that’s eight and a half percent, or probably even higher, volatility does become part of the solution. And everybody understands that until the markets get volatile. Once the markets get volatile, it’s hard for people to deal with that. But it’s typically those that are still taking risk with 100% of their life savings. And in my opinion, that’s the worst thing you could be doing going into retirement or even before retirement. And that’s the biggest mistake that people make.

Steve 22:50

Sure, folks, if you’d like to avoid that mistake, or at least maybe get some guidance. 800-656-8616. Let’s jump into a couple of these questions here. Well, we’ve got some time Ben is wondering, he says, “I’m inheriting a small IRA this year, can I wait until year 10, after the death of my father to take the full distribution? Or do I have to follow a required minimum distribution schedule and take some out every year for 10 years?” That’s a pretty common question these days.

Brian Quaranta 23:18

Yeah, the way the IRS rules read is that, you know, you can just wait the 10th year and pull it all out. You know, but then there’s been a lot of mix up lately. There’s like, Well, some people say you need to have a schedule. Some people say you need to pull it out in the 10th year, the way we’re understanding it, and you can go the IRS is website on this is that depending on your age, and who you inherit the money from, you do have the ability to leave the money in there and just pull it out in the 10th year.

Steve 23:45

All right, then 800-656-8616 If you’d like to learn a little bit more, let’s go to Jimmy now. And Jimmy says “I’m 62 trying to manage what I have in my stocks. And I’ve been looking into annuities. Now this product sounds great because of fixed funds, but I don’t know much about them. What are the pros and cons of annuities versus stocks?” Well, you got a couple hours?

Brian Quaranta 24:06

Right. You know, you should get order my book on annuities. But yeah, really, you know, that the, the thing you got to know here is this, you know, there’s no perfect investment out there. And when it comes to annuities, it’s like saying sports car or you know, SUV. Well, there’s a lot of different makes and models. So what type of annuity are we talking about here? Variable Annuity indexed annuity, fixed annuity? I like two of them for retirees I like fixed and I like index because they do something very important. They guarantee and protect the principal. The variable annuity I don’t like, it’s typically high in fees, you still have volatility in the market.

Steve 24:41

800 656-8616. And on that note, Brian, we are up against the clock already.

Brian Quaranta 24:47

That’s right, folks, take advantage of our right track retirement review. No matter what questions you have, we’ll be able to help you. Come on in sit down with us. It’s not very often you get the opportunity to sit down and have a conversation with a fiduciary financial advisor who can help guide aid you and possibly help you improve your situation. So, for the next 10 callers who call in right now we are going to give you a complimentary right track retirement review. Take advantage of this, folks. It’s not very often that you get the opportunity to sit down with somebody come in, you get to ask any questions you want. We’re there to truly help. We’re going to roll up our sleeves, we’ll have a conversation. I’ll show you some. We’ll answer your questions. But I’ll show you some different approaches that you might be able to take, hey, if you if that would fix your problems, and maybe help you be in a better situation. It’s worth 45 minutes of your time. So, what do you have to lose? Call us today? That’s a right track retirement review, no cost, no obligation. Give us a call on schedule today.

Steve 25:38

Make that call while you’re thinking of it, folks. 800-656-8616 10 callers will get that comprehensive financial review and you’ll see where you are today of course, but more importantly, it does become that roadmap. It’s a guide, maybe a GPS point to point directions to get to retirement 800-656-8616 800-656-8616 Well, Brian, as always, it’s a pleasure. The show goes by so quickly, but the information is so important for folks to hear.

Brian Quaranta 26:05

Always a great show Steve and folks we will see you again next week 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 Carranza 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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