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Video Transcript
Cynthia de Fazio – 00:20
And welcome to On The money with secure money. My name is Cynthia De Fazio and I’m joined today by Brian Quaranta. He is president and founder of secure money advisors, as well as Neil Major senior investment advisor. Brian, how are you today?
Brian Quaranta – 00:32
I’m great. Cynthia, good to see you. As always
Cynthia de Fazio – 00:34
good to see you. As always. Neil, how are you?
Neil Major – 00:37
I’m well, Cynthia, how are you?
Cynthia de Fazio – 00:38
I am fantastic. Always a pleasure to have you both in the studio. Thank you for allowing me to host with you. Because I know that we have such important topics to cover today. Obviously, the most important, Brian planning for retirement when you agree,
Brian Quaranta – 00:51
yes. And why 85% of the people out there right now we’ll run out of money before they die. That’s a big topic to talk
Cynthia de Fazio – 01:00
about. So let’s talk
Brian Quaranta – 01:01
actually, I don’t know about numbers. Right now. But it is a big problem running out of money. And you know, it is a fear. It’s a real, real fear for people. And you know, it’s why we created the right track retirement system, because it addresses that matter of fact that the number one key area that we focus on is income. Because you know, what’s happening today is when people stop working, the only real guarantee, if you even want to call it a guarantee anymore is a social security check. Although I think is it 2032, that Social Security says right on there, that they’re going to be paying more out and benefits that are actually taken in in taxes. So they’ll be operating in the red is basically what that means. Wow. So but I’m assuming if we can create trillions of dollars out of thin air, for a pandemic, we’ve got to be able to create another trillion out of thin air to take care of a deficit on Social Security. But no, planning for retirement, especially your income is very, very important. Yeah. And, you know, we’re gonna talk about some more of that stuff a little bit later in the segment, but we’re very busy at the office right now. A lot of this stuff. So.
Cynthia de Fazio – 02:10
Sure. And Neil, I should also kind of mention, because people are living longer, historically speaking than ever before, that’s even a greater risk for running out of money or longevity, if you will.
Neil Major – 02:20
Yeah, absolutely. I mean, the challenges that we’re facing as retirement planners are significant, right? I mean, longevity is a factor. You know, taxes are a concern. Right now, we Brian just mentioned that, you know, money was created out of thin air, and eventually that’s going to have to be paid for, we talked about on our previous shows inflation being a significant impact to living on a fixed income, and what 7% increase in cost of goods is doing to folks. Longevity, you know, safe money. I mean, people always come in, and they want to get safer as they get closer and closer to retirement. But what are the Safe Money options available? I mean, we know the banks, they don’t need our money anymore, so they don’t offer us much return whatsoever. And so some of the other safer money options just aren’t available to people. And we’re dealing with loss of income, without having pensions and things of that nature. So there’s a lot of different topics that we want to touch on. And that’s why we focus on those five key areas that that are income, taxes, investments, healthcare, and then the legacy aspect of it. So we got to make sure that we’re buttoned in on all five of those areas, or otherwise, we don’t have a true plan.
Brian Quaranta – 03:34
I just had a I had a lady come in, she’s a school teacher. For 36 years. She’s going into her 32nd year of retirement right now. 32nd year of retirement second year, she was referred by a client of mine. And she said, Brian, she says, I have always kept my money at the bank. And I have always bought CDs, and I’ve used that money to pay my taxes each year. I’ve used it to pay the gas bill. I’ve used it to go on vacations. And she said this year, I will earn on roughly about a half a million dollars so you can earn roughly about $470 in interest for the entire year. On about ahead. Someone
Neil Major – 04:17
came in last week. Oh my point two 5% on the five year bank CD
Brian Quaranta – 04:21
and that unbelievable five so so now either asking you to lock it up, hey, lock the lock this money up for the next five years point two 5%. And if interest rates go up, we’re still gonna give you just point two 5% And you can’t take any money out of it. So I mean, you know, two things happen there. One was she’s almost going to be in retirement as long as she was working, which is just fascinating. It is. And number two is that she is right now no longer wanting to do business with the banks. After how many years you know, after probably 50 plus years of having her money the bank she no longer wants to do business with the banks. Now what people don’t realize is that you can get guaranteed fixed accounts paying over 3% You have to do it with the insurance companies through fixed annuities, but they exist. And you know, the reality of today’s environment is people have to understand that the banks are no longer a place where you actually want to keep money anymore, you might want to keep some emergency cash reserves there, but you’re certainly not going to make any money doing it. And, you know, for the longest time, you know, annuity was kind of the dirty word, but not in today’s market. I mean, they’re better than bank CDs, let me tell you why. Number one, you can buy them in three years, five years, eight years, 10 years, you know, we have a eight year CD that pays, you know, 3.33 and a half percent in interest, every single year of interest rates go up, the rate goes up, if interest rates go down. It’s got a contractual minimum of 2% on it. And on top of it, unlike a bank CD, where bank CDs don’t let you touch your money, they let you take out 10% A year, without incurring any early withdrawal penalty. Oh, by the way, it’s also tax deferred, so you don’t have to pay taxes on Wow. So you know, financial products have changed so much. Yeah. But a lot of times people aren’t being made aware of the changes in these financial products. And they’ve gotten better, right? I mean, it’s kind of like, you know, they used to tell us to stay away from fat. Now, they tell us, if you eat a high fat diet, you can lose weight.
Neil Major – 06:16
That’s true. That’s true. So so when you when you think about longevity, right, and being the fact that we could potentially be in retirement for 30 35 40 years, yeah. Can we afford to get point two, five on five year bank CD’s? Probably not? Not? If inflation is at 7%? Yeah, right, because we’re losing money safely. So we got to make sure that we’re doing things in the proper manner, that if you do live 30 35 years, and you had to go into a long a long term care facility, in your 90s, that we have the ability to pay for it?
Brian Quaranta – 06:50
Well, not only that, but I mean, you can’t keep your money at point two 5%. But then what’s the alternative, put it in the market and potentially lose half of it? Right? That seems like a terrible idea, too, right? So there’s got to be this balance and, you know, secure money advisors, we’ve created, you know, a bucketing approach where we have three specific buckets that we use to separate the client’s money for cash reserves, protection and income, and then of also long term growth. Okay, one of the things that is a very simple thing to do. And a lot of people just don’t think about this way is a lot of people take risk with 100% of the money. Not a good idea in retirement might be an okay idea while you’re accumulating money in your working years. But the number one thing that we all need, when we’re growing our money is time, right? They tell us if you just if you’re in it for the long term, you’re going to have no problem. Well, okay, that makes perfect sense. But how are you going to be in it for the long term? If you retire? need your money? Yeah. So so that goes right out the door, right? The long term goes right out the door. So how do you get the long term back the way you get the long term back, because you’ve got to approach it from a to bucket strategy, meaning you got to set up a bucket of money that generates cash flow for yourself. And then you have to have a bucket of money that is going to be invested in the market. But it’s got to be money that you cannot touch for at least 10 to 15 years, meaning you’re gonna have volatility, the market where people go wrong, is it let’s say they want income and retirement. And they’re, and they have all their money invested in the market. And they’re, let’s say they need to take out, you know, $40,000 a year in income. Well, if they’re pulling that money out of a stock account, and they pull that $40,000 out, but at the same time, that account goes down 40,000. Now, not only did they lose 40,000, because of the market went down, but they took 40,000 out now they’re down 80,000. So they’ve compounded the loss, they’ve locked in the loss. And this is why I opened the show and said 85% of your people run out of money. Again, not a true statistic. But it is a lot of people that will run out of money in retirement. This is why AARP said that is the number one fear of retirees today. Matter of fact, they interviewed 1000 people, they said what do you fear most? With the fear of running out of money? Or do you fear death? 90% of those people say that they fear running out of more money more than they fear death alone, because it’s a real thing. And this is why we created our right track retirement system to help people eliminate and mitigate these problems.
Cynthia de Fazio – 09:06
Well, Brian, I think that we should let people get on the right track. I know you have a special offer to present you and Neil Yes, let’s talk about what that is before we open
Brian Quaranta – 09:14
the the right track Retirement System is all about the five key areas of what makes up a really good financial plan. Number one, most importantly is your your income strategy. Number two is your tax strategy three is your investment strategy. Four is your health care strategy, and five is your estate planning strategy. If you have every i dotted and every T crossed in those five key areas. Now you truly do have a well thought out retirement strategy. If you just have a 401k some IRAs with some investments in it. That’s great, but that’s an investment strategy. That’s not a retirement plan. So get yourself a retirement plan today. Get yourself on the right track for the next 10 callers who call in right now. We are going to give you a complimentary right track retirement review When you come into the office, all you got to do is pick up the phone. Call 1883821298 and schedule that right track retirement review with us today.
Cynthia de Fazio – 10:09
Brian, thank you so much, Neil, thank you so much to the viewers at home, the phone number to call is on your screen. That number is 888-382-1298. We know you have a lot of questions about how to plan your perfect retirement, Brian O’Neill have the answers for you, all you have to do is pick up the phone and call 888-382-1298 We have to take a very short commercial break, when we come back, I’m going to talk to Brian and Neil a little bit more in depth about taxes and where they’re going in the future and how that could impact your retirement. Stay tuned.
Brian Quaranta – 10:39
So everybody can tell you how to invest your money. There’s not a lot of people out there and a lot of firms that can teach you how to use your money. Most people also tell you that they’re scared. And the reason they’re scared is because they’re afraid of running out of money.
Neil Major – 10:53
The last thing you want to do is have a really good job and your 60s retire, be looking for work again in your late 70s.
Brian Quaranta – 11:01
The average person might say, well, a good portfolio would be a good mix of stocks, bonds, mutual funds, kind of a good portfolio is all designed around the five key areas income, taxes, investments, healthcare and legacy planning.
Neil Major – 11:15
It’s we’re not just product pickers here, what we do best here as we build retirement plans,
Brian Quaranta – 11:20
nine out of 10 people when they walk through the door would ask us, we just want to know if we’re on the right track. And I always say if you’re not on the right track, when would be a good time to know it. Probably now,
Neil Major – 11:31
people you know can actually see a vision once we start to really build out their plan.
Brian Quaranta – 11:37
This is about you if you’re not getting what you need. And you feel that when you walk out of the advisors office, it’s time to get a second opinion. And you can’t get a second opinion from the person that gave you the first of the difference at secure money advisors. As a fiduciary firm. We help you manage the risk, build the income and give you the retirement.
Cynthia de Fazio – 12:09
And welcome back to on the money with secure money. My name is Cynthia De Fazio. I’m joined today by Brian quanta. He is president and founder of secure money advisors as well as joined by Neil, major senior investment advisor, gentlemen, a great show that we’re having. And I really want to spend some time this segment if we could please talking about taxes, because that’s the other thing that people are really talking around the watercooler about they’re discussing tax rates could be increasing in the future. So Brian, how can rising tax rates impact someone’s retirement portfolio? Yeah.
Neil Major – 12:39
So I got another stat for you. 100% of people are concerned about increased tax rate.
Brian Quaranta – 12:46
At least. Yeah, well, so I will say that is to a certain degree, if it stats at our office. It’s true. Almost everybody comes in wants to talk about taxes. Yeah. But here’s how simple it is. And I and when I think people say I’m concerned about taxes, I don’t think they really know what they’re concerned about. But let me tell you what they should be concerned about. If you need to generate income in retirement, most likely, you’re probably going to have a 401k or an IRA, maybe a 403, or a 457 plan, depending on what you did. Does it matter, they’re all the same. All it means is that you got a tax deduction when you made the contribution, that money has been growing tax deferred. Now when you go to pull it out, it’s going to count as income. So, let’s suppose that you need $1,000 A month in income. Let’s suppose that right now you’re in a 20% tax bracket. So, when you pull that $1,000 out, you are not going to get $1,000, you’ve got to pay 20% in taxes on it. So you’re only going to net $800. What happens now if tax rates go to 30%, that same withdrawal of $1,000 is only going to net you $700. Now, so the biggest rotors of your wealth are going to be market volatility, taxes and inflation. So taxes will erode your wealth very, very, very quickly, especially if you don’t plan for them. And this is why a lot of people want to know about Roth conversions. They want to know about how to go from taxable money to tax free money. They want to know strategies of how to leave tax free money to their children. Right. And this is the strategies that we put in place. I had a gentleman come in the other day, he’s he was married, he’s now divorced. He’s got one daughter, he was a schoolteacher. So he has a really in Pennsylvania school teachers have a really nice pensions. So he’s got plenty of money coming in. He’s got a little over million dollars sitting in his IRA account. And his intention is just to leave it to his daughter. That’s it. All he wants to do is leave it to his daughter, okay, he’s reached his required minimum distribution phase. So for those of you that aren’t familiar with what required minimum distribution means it’s just the amount of money that the IRS is going to require you to start taking out of your IRAs, whether you want to or not. And it’s a set amount that you have to take out and it gets larger and larger every year beyond the age of 72. So he’s got to take that money out. There’s a few ways that we’re helping In him with us, number one, we’re doing a charitable distribution to a charity. So people can actually take their money, their RMDs. And rather than paying taxes on that money, they can actually give some of that money to a charity, like their church or another type of charity. And the IRS won’t let that won’t charge them taxes on that money that they’re going to give to charity, which is nice, because a lot of people do give to their churches. So rather than giving that money out of your checking, or savings account each year, if you’re in the distribution phase, you can do it through there. That’s fantastic. The other part is he wants to leave this money to his daughter, a little over a million dollars in the IRA to his daughter. Yeah, so what we did with the remainder of the required minimum distribution is we purchased a life insurance policy by about 1,000,005, and life insurance. He’s paying for that life insurance policy each year. So when he dies, the daughter’s gonna get 100% of what’s in the IRA. Okay, now she’s gonna have to pay taxes on that. But the insurance policy that was purchased is going to pay to her $1.5 million 100% tax rate, no dime, nothing owed in taxes. So now we’ve turned a little over a million dollar investment, right to probably 2 million to two and a half million dollars now that the daughter will inherit very tax efficient because of that strategy. And these are all the different things that we can do. And this just goes this goes beyond when you’re working with a financial planning firm, like secure money advisors, where we’re truly building you a plan, these are the strategies that you’re going to get leverage on that make a difference in people’s lives. Right, definitely do make a difference make a huge difference in people’s lives. We’ve
Cynthia de Fazio – 16:30
talked about this before, that it’s so important to walk to work with someone that’s licensed fiduciary for that reason, because you’re putting your client’s best interests first above anything else.
Brian Quaranta – 16:40
Well, and the thing is, we’re talking strategy, right, right. We’re not talking our returns important. Sure they are right is protecting money in short, important, shortest, but we want to talk financial strategies, eggs and non financial products, financial strategies come first, financial products are a mean of making the strategy happen. We have to have the financial product to make the strategy happen. But there’s a lot of different ways to approach the strategy. And it’s very creative in the way that you can build out a plan that gives you and your family a lot of leverage.
Neil Major – 17:10
Absolutely, yeah. You know, what you talked about with increased tax rates, we also had a major tax law change at the start of 2012. That’s right. So that made people want to be more proactive about how they handled taxes. So previous to 2020. In the secure act, if mom or dad or somebody left you a beneficiary IRA, you had a lifetime to inherit the money? Well, they changed that. And now you only have 10 years to inherit the money. So think about that, if within 10 years, Mom and Dad leave a million dollars to pre tax Yeah, and now you have to get a million dollars out over the next 10 years. Add that to your income and your spouse’s income, you know, what kind of impact does that have? And does more money go to Uncle Sam than intended? So what are the two? The answer is yes. So what are the things that we do today to help REM right? That correct. And so that’s why we’ve been very active at secure money advisors, November in December, we’re doing a ton of Roth conversions, we’re talking more about Roth contribution for folks that are eligible to do that in their their current retirement accounts. So it’s all about strategy and approach and making sure that you’re very sound.
Brian Quaranta – 18:26
And we should, we should say Roth conversions are not for everybody. I mean, you know, I’ve got clients with a couple million dollars that is all in IRAs, and Roth conversion would not be beneficial to them. Okay. They’ve, there’s, they’re at this point, there’s no benefit to them at all, for many reasons. But Roth conversions do get you from taxable money to tax free money, doesn’t mean it’s a strategy for you, though, for sure.
Cynthia de Fazio – 18:49
Let’s talk a little bit about the difference between a Roth conversion and a Roth contribution before we open the phone lines, in case someone’s wondering Yeah,
Brian Quaranta – 18:57
so Roth conversion is very simple, right? So well, I should say Roth contribution has a limit. I don’t know, where’s it at right now? 6000 to 7500, somewhere around there, depending on what your age is, right? So you can only contribute so much. And I think the your income, your gross income has to be around 130,000. If it’s over that you can’t even make a contribution. Okay, we’re conversion has no limit. So if, if you’re well over the $130,000 income level, and you don’t qualify to make a Roth contribution, you could make a contribution to, let’s say, a SEP IRA, right, or traditional or even a individual 401k, whatever you would qualify for, and the IRS would then allow you to convert that money immediately. And you could convert any amount of money, you’d want it. So if I had $100,000 sitting in a traditional retirement account, I could convert all $100,000 to a Roth IRA. That’s the conversion versus the contribution that limits me to six to $7,500 a year depending on your age and how much income you make. Okay, okay. So that’s the that’s the difference. Okay, you’re still at the end of the day. getting the money to where it needs to grow. And that’s into an account that grows tax free. And then in the future when you take the money, it’s tax rate.
Cynthia de Fazio – 20:06
Brian, thank you for that. I know that you and Neil have a very special offer to present to the viewers. Let’s talk about what that is and then reopen the phone line.
Brian Quaranta – 20:13
Yeah, all right track retirement review really was created to help get you on the right track to give you the clarity and the peace of mind that we all deserve going into retirement. And it really does take the guesswork out of financial planning and really helps you understand where you are and where you need to go. It’s going to go over five key areas for you when you come in, we’re going to talk to you about your income. Talk to you about your tax strategy, your investments, your healthcare strategy and your estate planning strategy, you will have a lot of clarity and understanding of what a real retirement plan should look like. But you’ve got to do your part. You’ve got to take the time to schedule this and come on into the office. Call the number today it’s 1-888-382-1298 and schedule your right track retirement review with us right now.
Cynthia de Fazio – 20:57
Brian, thank you so much, Neil, thank you so much to the viewers at home, the phone number to call is on your screen. That number is 888-382-1298. We have to take a very short commercial break, but don’t go anywhere. I do have viewer questions the minute that we return, stay tuned.
Brian Quaranta – 21:12
If I could help you increase your income, if I could help you pay less taxes, if I could help you potentially maximize the returns of your investments while reducing risk reducing fees if I could help you prepare for a health event or more importantly, when the good Lord decides to take you home to make sure that the money you’ve accumulated over your lifetime goes to your family and to your charities rather than the IRS. Would that be worth the time to come in and get a second opinion.
Cynthia de Fazio – 21:43
And welcome back to on the money with secure money. My name is Cynthia De Fazio and I’m joined today by Brian Quaranta. He is president and founder of secure money advisors as well as Neil major senior investment advisor. Gentlemen, my favorite part of the show. I know it’s yours as well. We have viewer questions, and everyone has been so patient they call in every week and they’re just waiting to have their question address. So if you don’t mind, we’re going to jump right in. Alright, we’ve got my glasses on here so I can see a little bit better. Neil, I’m going to guide this first one to you says Neil, can I contribute to a Roth IRA and still participate in my employer sponsored retirement plan? What advice do you have for me?
Neil Major – 22:19
Yes, you actually can, depending on where your income is, right. So there are income eligibility, as far as contributing to a Roth IRA, on top of contributing to your current retirement account through your employer. Now, there is another way around a tax loophole if your income is too high. That’s called a backdoor Roth IRA that you might be eligible for, you might be able to utilize. There’s been a lot of talk about eliminating the backdoor Roth IRA. As of right now, I don’t believe they’ve been able to accomplish eliminating that role. But I know there is a lot, which is still
Brian Quaranta – 22:57
really a good use for high income earners. So if you are a high income earner, and you want to take advantage of getting some money in the Roth, you could look at a backdoor Roth, or even a conversion. So the backdoor and conversion kind of get the same get the same thing done. So
Cynthia de Fazio – 23:10
Okay. All right. Brian, this next question is for you. It says I was advised to roll my 401k plan from a previous employer into a traditional IRA, which I did. I haven’t made any contributions to it since rolling it over and it’s grown very little. I have a 401k with my new employer, should I roll my traditional IRA into my new 401k account?
Brian Quaranta – 23:32
I mean, you know, well, how would you answer that question? The answer is, it depends. Okay. It depends. I would say this first off, the reason why we’re not seeing a lot of growth in the traditional IRA. Okay, is because that money when it got rolled over, no contributions are going in. So people sometimes are misled on their account balances. They’re going geez, my 401k is growing faster than this IRA that I have? Well, yes, because that’s because you keep making contributions to this, and your employer keeps making contributions to this. Whereas your IRA, you’ve just rolled it over, and you left it alone and just keeps growing. So it’s a little deceiving of how fast one is growing over the other. However, basic fundamentals are, if you can roll to a traditional IRA versus a 401k, you’ve got much better investment options available to you because you’re not limited to what you have in the 401k. Like, for example, secure money advisors has a 401k for all of our employees. And you know, we’re limited to what we can choose within the 401k. Why do we have it because we can make large contributions to a 401k. So that’s the advantage. The limitation is we don’t have a whole lot of stuff to invest in. Right. So that’s why investing on the outside when you have the ability to roll over your 401k is much more advantageous because now you can get access to pretty much everything that’s available in the marketplace to invest in.
Cynthia de Fazio – 24:58
Thank you, Brian. That was an X response. Neil, this is a great question as well, this is a caller that actually called in from Mount Lebanon, they left the city says, Neil, just want to ask you a quick question. I am 10 years away from retirement, what should I be doing today? I do not have a plan in place 10 years away from retirement.
Neil Major – 25:16
Well glad that they’re thinking about it, right. I mean, now is the time to what I call the financial redzone. Right. So the next 10 years are significantly important to how your retirement is going to end up. So you want to do the right things, right. And when you start getting on the right track, you want to get on the right track. So I mean, we can’t say it enough, but 10 years away, you really should be zoned in on those five key areas, right? There’s things that you can be doing, as far as tax planning. Now that’s going to help you for retirement, there’s things that you want to start to build out of how income is going to look, when you decide to no longer trade your time for money, there’s investments that you should be picking. Now, that might be different from 10 years prior, right. So now is really the time to start to lay the fundamentals of that plan and start working with a fiduciary that focuses on retirement planning, that’s making sure they’re guiding you and coaching you to make each necessary decision along the way.
Brian Quaranta – 26:17
And I will say when you know, you’re 10 years away, that’s probably where your best tax planning comes out. Right. That’s where you can really take advantage of a lot of the tax strategies that are available for us as we approach and enter into retirement for sure, you know, versus, you know, somebody calling and saying I’m retiring next week, I need it. I need you know, there’s not a whole lot you can do as far as tax planning goes, because tax planning takes a little bit of time. Okay, so it’s not, it’s not a quick fix. It takes time over a couple of years. That’s the best way to do it. Sure, fundamentally, yeah.
Cynthia de Fazio – 26:49
Well, Brian was just a little over a minute left, I have to ask you, is it ever too late to get started on a plan for retirement, never
Brian Quaranta – 26:54
never too late, you know, because and most people we do meet typically are retiring within the year within two years. And that’s okay. They’ve had their head down, and they’re working, but they still need a plan. And if they want to confidently exit work, and go into retirement with peace of mind and security, it takes a plan to be able to do that. And that’s what the right track Retirement System has done. It’s provided our clients with peace of mind and security going into retirement, knowing that they have a plan that they can rely on. And no matter what happens in the marketplace, they have the ability to respond to it. So for the next 10 callers who call in right now. It’s a complimentary right track retirement review. You’ve got to do your part. Call us today. Pick up the phone right now and schedule that meeting. It’s 1-888-382-1298.
Cynthia de Fazio – 27:42
Brian, thank you so much, Neil, thank you so much to the viewers at home. Thank you for spending time with us. That number is 888-382-1298 Be safe. Be happy, be blessed. We’ll see you back one week from today.