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Video Transcript
Cynthia de Fazio – 00:21
And welcome 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. Brian, how are you today?
Brian Quaranta – 00:34
Cynthia, we are doing great. How are you today?
Cynthia de Fazio – 00:36
I am fantastic. Thank you so much for asking, Neil. How are you?
Neil Major – 00:39
Hello, Cynthia, how are you?
Cynthia de Fazio – 00:40
Fantastic. Thank you. I’m so excited to be back together again this week, because I know that you’ve been so incredibly busy with just people calling and coming in and scheduling consultations. So Neil, I should ask you, what are you hearing the most in the office right now? What types of questions?
Neil Major – 00:58
Well, we always have a certain amount of questions that people always come in with, right? Like, when should I take so security? How am I going to generate cash flow? Am I taking too much market risk? Those sorts of questions, but we have a lot of questions lately on inflation, the cost of goods significantly going up. And as you know, people get into retirement, they’re more on fixed income, how that impacts them? Obviously, we’re hearing a lot of tax questions, what can I be? How can I be proactive, to better my situation if tax rates go up? So it’s pretty much the common complaints? Right? Yeah. So
Cynthia de Fazio – 01:35
absolutely. That’s such a thing that we’re all talking about right now. What are the taxes going to be like? Inflation? Should I be concerned with that? Brian, a lot of questions surrounding inflation, because I know I hear a lot of that going on in our I think
Brian Quaranta – 01:47
even before we were in, you know, the severe inflation environment that we’re at now, it’s always a concern, because people understand that they’re going from working a job where they can make money to no longer making money. And the question becomes, you know, did I do everything right, to put myself in the best position possible to be able to retire and not worry. So I, you know, it’s interesting, because I’m going on 23 years of doing this, and, you know, in the past 10 to 15 years, I mean, the questions, you know, from what I can recall, are the same, you know, and that’s retirement planning. It’s, it’s, it’s very unique to an individual circumstance, but the fundamentals are the same, right? Everybody’s gonna walk into our office with the same concerns in mind, do I have the right investment mix? Am I getting the return for the risk that I’m taking? You know, a lot of times when we evaluate a portfolio, we’ve got a really powerful software we use in the office called Riskalyze. Okay. And a lot of times when you sit down with a financial advisor, they might ask you about your risk tolerance. And you know, if you ask somebody about their risk tolerance, we’re probably going to say, Well, I mean, we’d like to make money, but I don’t want to lose a lot of money either, right? I mean, that’s pretty much everybody’s response to the advisor might go, Well, let’s just say you’re moderately conservative, okay, or moderately aggressive. Well, what in the world does that even mean? Nobody quantifies what that means. What Riskalyze does is it’s changed the game, the way we look at risk. Why? Because it’s no longer a word. It’s a number, meaning. I know if I get on the highway today, I can follow the speed limit signs, if it says drive 35 miles an hour, it’s probably for good reason, because I’m probably in a congested area. And if I, you know, go too fast, or I could get into an accident, maybe hurt somebody from a highway, though, it might say I can drive at 75 miles an hour, right? So Riskalyze, quantifies your risk from your portfolio in a number. All right, one to 99. Now, the stock market has a risk score of 75. So a lot of people will say, I’m, I really am a conservative investor, and we’ll run the analysis. And their risk score will come back as an ad. And and they really should be a 40. Yeah. And so for when we show people this, and we bring them through that analysis, it’s really eye opening to them. And they’re going Well, no wonder why when the market goes down, I lose so much money. And I’m tired of my advisor just telling me not to worry about it just to hang in there that I’m in it for the long haul, because I don’t feel like I’m in it for the long haul anymore. I feel like I’ve arrived and I need this money to last the rest of my life. So for us, that deeper dive on the analysis of risk is really important to having clarity of what you currently have, once you understand what you have. Now we can start to make adjustments to better because what we really want to do, Cynthia, is we want to take this much risk and get this much return, right. We want to try to reduce risk and maximize return if we potentially can do that.
Neil Major – 04:37
Yes, some of the other data that we can gather from that software program is one I want to know how fast somebody is going right? How much risk are we actually taking? Because we’ll see some people even go the opposite end. Right that they they think they’re in a relatively aggressive portfolio and they’re at 22 and they’re not going to see much yes.
Brian Quaranta – 04:55
22 would mean they’re very conservative, right? Okay. Yes. Right.
Neil Major – 04:59
But Some of the data once we know what your number is, yeah, then we can see, well, what’s your portfolio max drawdown? That’s an important number for folks to know. They want to know how much can I lose? Two, three years away from retirement? You know, can you withstand a 40%? Market loss? No, you can’t. So things like that are important to us. But also it will give us three year returns and five year returns. So here’s an example of a guy that just came in to me, you know, I see that he’s taking a 72 risk, which is equal to what Brian just said, the stock market, the s&p 500. Okay. And over that period of time, the s&p 500 averaged a little over 18%. This guy’s a 12%. So what that second opinion is giving him is he’s taken a lot of risk for not nearly enough reward, right? Because there’s 6% missing somewhere. Absolutely. There’s that over the past five years, you could have been in a more efficient portfolio in but be much further ahead. On your retirement goals.
Cynthia de Fazio – 05:58
Absolutely. And, Neil, you just mentioned something very important. The second opinion, in your mind, let me ask you, how important is it to have a second opinion from a fresh set of eyes?
Neil Major – 06:07
What’s really, really important, I mean, you can’t get a second opinion from the person that you currently utilize. Right? That’s tough to do, because they’re going to justify the reasons that they’re doing, what they’re doing, right. So I think it’s important to randomly get that second opinion, to see, you know, are your investments performing, you know, maybe you talk through some strategies with someone else that you’d never knew, were even available. And you come up with some ideas that could be really impactful to your situation, you know, maybe your advisor is not the right person to lead you into retirement, maybe that person was good for the accumulation phase. But now that you’re in the retirement phase, that person no longer applies,
Brian Quaranta – 06:50
you know, and I would, I would say this, I don’t even like using the word second opinion. And here’s why. Because we don’t give opinions, we get facts, when we talk about their risk score, and what you know what their current returns are, versus the risk that they’re taking. We’re giving them real data, I prefer to look at it as a portfolio X ray, if you will, right, a portfolio MRI, we’re actually looking at the the internal workings of things and just presenting the data, the data gives the individual the information, they need to make a change. And that’s all we all want. We don’t need to be sold anything. We don’t need someone saying, Well, if you are my client, I would do it differently this way. It’s like, well, what do you want? Do you want a 72 risk score with a average return of 12%? Or do you want a 40 risk or with an average return of 15%? You know, so that’s what that software can do. And it takes the opinion process out of it, and just gives you the black and white information you need. You know, we
Neil Major – 07:50
hear a lot of people say, I’ve never been presented information like this, I really appreciate how you’re showing it to me it’s an apples to apples comparison, just based on data.
Brian Quaranta – 07:59
Yeah, you know, it’s like, kind of like, I went to the chiropractor a couple weeks ago, and he says, Listen, before I do anything, I need to do an x ray. And so he says, I’m gonna do an x ray, and I’m gonna have you come back, okay. Now, I knew I was having a little bit of pain. But he says to me, at the beginning, he says, Look, I think I’m going to need to probably see about three days a week, you know, until we kind of get this thing moving in the right direction. And I was like, he just wants me to come in three days a week, right? He just wants my money. But then he pulls up the X ray, and he shows me what the problem is. And I say, why can’t I come in four days a week? You know, so the X ray really gives you the information you need. And that’s where you really see the problem. That’s where the problems really identified. He wasn’t giving me his opinion. He was showing me the X ray, which gave me the information I needed to say, Yeah, I’m on board. Let’s get this done. Because I don’t want that happening.
Cynthia de Fazio – 08:48
Absolutely. Well, Brian was at from skiing, I have to ask, you know,
Brian Quaranta – 08:52
from picking up a two and a half year old, man. That’s exactly what it is.
Cynthia de Fazio – 09:00
You have a very special offer to present to the viewers at home. Brian, let’s talk about what that is. And then open the phone line.
Brian Quaranta – 09:06
Sure. So that you know we developed this right track retirement system, so that people really can have an analysis and figure out whether or not they’re on the right track. Are you doing the right things? You know, are you getting enough return for the risk that you’re taking. So for the next 10 callers who call in right now, it’s a right track retirement review that we’re giving away complimentary. All you got to do is call us and schedule the appointment. It’s 1-888-382-1298. Folks, take advantage of it. It’s very valuable information that you’ll get when you come in. It’ll give you the clarity and the peace of mind you need to move forward with retirement with confidence and clarity. Again, 1-888-382-1298
Cynthia de Fazio – 09:45
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 and if you’re not on the right track, you deserve to know Today, all you have to do is pick up the phone and call 883821298. We have to take a very short commercial break when we come back, I do have a viewer question. So please stay tuned, the next one could be yours.
Brian Quaranta – 10:13
So everybody can tell you how to invest your money. There’s not a lot of people out there are 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 – 10:28
The last thing you want to do is have a really good job and your 60s retire, be looking for work again in the late 70s.
Brian Quaranta – 10:35
The average person might say, well, a good portfolio would be a good mix of stocks, bonds, mutual funds, none. And a good portfolio is all designed around the five key areas income, taxes, investments, health care and legacy planning.
Neil Major – 10:50
There’s we’re not just product pickers here, what we do best here as we build retirement plans,
Brian Quaranta – 10:55
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 – 11:06
people you know can actually see a vision once we start to really build out their plan.
Brian Quaranta – 11:11
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 the difference at secure money advisors as a fiduciary firm, we help you manage the risk, build the account and give you the retirement
Cynthia de Fazio – 11:44
and welcome back to on the money with secure money. My name is Cynthia De Fazio and I’m joined today by Brian quanta. He is president and founder of secure money advisors as well as joined by Neil majors senior investment advisor. Gentlemen, we do have time in the show today for some viewer questions. I’d love to get through some of them if we could, because people have been so patient, and they’re so interested in what you have to offer as far as advice and guidance. So this first one I’m going to guide to you, Brian, then I’m going to come back to you, Neal. It says, Brian, I have not yet retired. I am considering purchasing an immediate annuity using all the funds in my 403 B plan upon retirement. Would the annuity distribution satisfied required minimum distributions? How will place in the entire amount in an annuity be taxed? How will the monthly payments be taxed?
Brian Quaranta – 12:30
Yeah, some helpful that’s about that’s a lot of really well, let’s let’s break this down. First off, let’s talk about annuities for a minute. Okay. So there’s lots of different types of annuities, what they’re referring to, there is what we call an immediate annuity. I like to consider that kind of old technology. Think about the flip phone. Remember the flip phone? Of course, did anybody texts when they had a flip phone? No, because just to type the letter though, you had to hit like, you know, nine keys, because you had to go through and cycle to the letter you needed. But there’s lots of different types of annuities. But the immediate annuity is kind of old technology. And the reason I call it old technology is because yes, it will provide the income that they need. Yes, it will cover the required minimum distributions, it will be taxed based on the IRA tax guidelines, but they lose control of the money. So the downside behind that is if they do an immediate annuity, and let’s say they put $500,000 into it in the annuity, that’s it, they’re never going to be able to have access to that money again, except for the income that it generates. So and depending on what payment option, or annuitization option they choose, even if they died, the money could stay with the insurance company, not in my opinion, a really great way to do it. The new annuities, what we call accumulation, annuities, and even income annuities will provide you and keep you in control of your money. So everything will remain the same. The only difference is if you need to change strategies, right, you can go in here and you can take that money out. Now, depending on when you take it out, you could have you could be subjected to some early penalties to pull it out. But the point is, you can get the money out. Okay. So hopefully I answered all the questions on that. I think that was because it was it was a lot there.
Neil Major – 14:10
You know, we always talk about the four things that money can do with investment can do for you, right? I mean, they can provide income, yep, they can be safe, they can grow and they can be liquid, right? If you buy that sort of an annuity, well, you’re gonna have income and you’re gonna have safety, right, you’re gonna lose out on growth in liquidity. You’re not gonna have wiggle room if the cost of living increases in the future. Okay, so that’s probably why you never want to put all your eggs in one basket. Yeah, yeah. You know, so we have to figure out a plan that gets us a little bit of all of those all we eat all four of those in our plan, right? I mean, if you think about it for most people, ideally, they probably want to keep their money all at the bank, right? It’s it’s available to us. We can walk in any given day. We know it’s safe. It’s liquid, right? But what are we given up at the bank? We’re giving up growth, right? So we can’t have all of our money in the bank. So we just have to figure out what buckets are we going to put money into, to make sure that you’re able to get the the immediate income type, annuity or income, but also make sure that we have the ability to make adjustments as the cost of living increases on.
Cynthia de Fazio – 15:21
Absolutely, thank you both. Excellent response. Neil, this next question is for you. It says my current advisor, Neil actually only invests in stocks and ETFs, my new advisor group only invests in their own products. If I sell off my current advisor holdings, will I incur extra income and pay more income tax on the sell off? I have six account types, two Roth IRAs, one traditional IRA, one Sep, and two regular investment accounts. I can repeat that Roth IRAs, I know,
Brian Quaranta – 15:53
I will say thank you for all these detailed questions we have. I mean, do you wanna? Do you want to break this one down? So Ross explained that any taxes on the Roth that
Neil Major – 16:04
they saw you can make you can make changes and adjustments to your Roth IRA? Yeah, with no tax consequences? Okay. The same applies for the traditional IRA and the SEP IRA. Yeah, okay, can make adjustments now. Okay, after tax money is always a little bit of where you have, you know, questions pop up right after tax money, money that you’ve already paid the taxes on, in any growth, you’re going to have to pay capital gains at some point. Okay, so let’s say that you have $100,000 of, of Apple stock, and it grows to $150,000. And you want to sell that Apple stock and buy Microsoft stock? Well, that $50,000 is those capital gains are going to be have to be paid, before you can make the decision, the sell and by the Microsoft. Okay, so those are the only two accounts that you’re going to have to pay taxes on, if you make a decision like that. But we appreciate the lengthy question. Well, the other the other part of
Brian Quaranta – 17:03
the question, was that the advisor that she was considering going to or I don’t know if this is a male or female, but was using proprietary,
Cynthia de Fazio – 17:12
only invest in their own products? Hmm. And, you know,
Brian Quaranta – 17:15
you don’t see that very often anymore. Yeah. You know, it’s kind of frowned upon in the industry. You know, a lot of companies got away from doing that for for regulation, liabilities and stuff. So, yeah, you know,
Neil Major – 17:27
if you get back to the beginning of the question, and she had talked about our current advisor, utilizing mostly individual stocks and ETFs. Yeah, that would be more
Brian Quaranta – 17:36
I would actually, I would want to, I would, that’s, I was gonna say, if I had to make the decision for myself of which advisor to use, I would use the advisor using the stocks and ETFs not the one use and proprietary product. Yeah, cuz I, you know, I think there’s a lot of disadvantages with proprietary product. So you know, who knows, but
Cynthia de Fazio – 17:57
yeah, that was an excellent question. And you both handled it very, very well. And I was impressed that you do. I think we did. Really? That was awesome. All right, Brian, before we open the phones, again, I want to ask you one quick question says, Brian, I’m five years away from retiring. What should I be doing today?
Brian Quaranta – 18:12
Yeah, paying that off, okay, your debts paid off, maximize your contributions to a retirement accounts. If you’ve paid your debt off, and you’re maximizing contributions to retirement accounts, think about protecting some of the money that you’ve accumulated, so that if the market gets volatile, and it loses money, you don’t have to delay your retirement date. So those are the three most important things I would tell you to do right out of the gates. But again, as a fiduciary, I can’t give that advice. I can only assume that that’s maybe what they’re asking if you want to come in, we can talk a little bit more in detail about your situation. But those are the three fundamental rules that you really should follow, pay the debt off, if the debts paid off, make contributions. And then of course, after you make the contributions, try to protect money, so that if the market drops, you don’t have to delay retirement. So okay. But you know, when people come in, we go through all this with them. And these are the questions. Alas, I mean, everything we’re going through here, Neil, and I will see, you know, 25-30 times a week. That’s how busy we are at the office, and our right track retirement system. Even if you don’t know what to ask the right track. Retirement review really flushes a lot of this out, so that when we when we build your plan, you’re executing on all the fundamentals that you need to execute on again, it’s giving you clarity and peace of mind going into retirement. And when you have a plan that’s truly what it does. You retire with confidence. And that’s what we want to see you do. So for the next 10 callers who call in right now. We’re going to give you a complimentary right track retirement review. All you got to do is pick up the phone and call us and schedule the appointment today. The phone number is 1-888-382-1298.
Cynthia de Fazio – 19:42
Brian, thank you so much, Neil, thank you so much to the viewers at home the phone when a call is on your screen, that number is 888-382-1298 Would you have to take a very short commercial break but don’t go anywhere. We have time for just a couple more questions. And again, the next one could be yours. Stay tuned.
Brian Quaranta – 19:58
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 into your charities rather than the IRS. Would that be worth the time to come in and get a second opinion.
Cynthia de Fazio – 20:28
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 Neil, major senior investment advisor. Gentlemen, a wonderful show we’re having in the viewer questions are just amazing. So, I don’t want to skip a beat. I want to keep going. Is that okay? Let’s do it. All right, Neil, you’re up next. It says Neil, my spouse and I are 70 and 67 years old and retired. We have a fixed and variable annuity. Is this a good investment for monthly income? Because we sometimes need extra income for home maintenance?
Neil Major – 21:01
Hmm, interesting. Yeah. So, you know, I like fixed annuities, fixed annuities do something very, very important for us, they protect our principal. So, we’re able to generate steady cash flow from variable annuities can play a part in developing income and cash flow. A lot of times variable annuities, have riders on them that provide guaranteed income. Now, the question kind of alludes to maybe there’s a shortfall potentially. So once again, you never want to have all your eggs in one basket. So, you know, sometimes if you put all your money into an annuity, and maybe it has that income rider attached to it, and you’re stuck on getting $1,000 a month, if you need $2,000 A month, you’re stuck on that. 1000. Right. So, unless I knew a little bit more about the entire situation, I can’t answer the last part of the question. But, you know, annuities can play a really good role for developing cash flow, and income in retirement.
Brian Quaranta – 22:02
And I just want to expand on this this income rider that he just referred to when he talked about these annuities. You know, it was probably 10 or 15 years ago, the insurance companies solve a need for people to have guaranteed income. So, they created this thing called an income rider. Basically, what it does is it pays somebody an income stream for the rest of their life. But it costs money. Why would you pay money for something like this? Well, the benefit of paying the money for it is because if you’re taking that money out of the account, and the balance of that account goes to zero, while you’re still alive, the insurance company will continue to pay you the income. So, you can never run out of money if you have one of these accounts that has an income rider. So, for some people, that’s peace of mind. But to Neil’s point, there’s lots of restrictions, you have to play by their rules, which means that if it says that you can only take out $1,000 a month and you need $2,000 A month, you can take it out, they’ll let you do it. But you’re going to void the contract, which means if the balance goes to zero, you’re going to be out of money, you follow me because you’re voiding the contract by taking more than what they say you can take. So, this is where people have to be careful. Again, we like annuities. I don’t think there’s anything wrong with them. Use correctly in a portfolio, they can be a great advantage. And Neil and I and the team, we really look at the annuity market really is kind of the bond alternative today, because we can get a bond like rate of return three to 6% in an annuity. But we can actually shift the wrist to the insurance company. What do I mean by that? Well, if I buy a bond, I have interest rate risk, which means that if interest rates go up, my bond price goes down, I lose money. Well, rather than me putting myself in a position to I still have risk of loss of principal, I can still get a bond like rate of return but have no risk of principal now. And that’s a better solution as part of the portfolio versus the bonds strategy.
Cynthia de Fazio – 23:52
Wow. All right. Thank you so much. Thank you, Bryan. Bryan, this next question is for you on IRA as being well, to me, if I inherited before the age of 59 and a half, can I have it sent directly to my own IRA? What are the tax implications?
Brian Quaranta – 24:07
Yeah, so IRAs cannot be put into an individual’s own IRA account. They can be inherited through what we call inherited IRAs, also known as stretch IRAs. But if you do it that way, there’s rules that need to be followed. You know, if the money goes into an inherited IRA, you don’t have to pay any taxes on it. But you’re going to be required to take that money out over a 10 year period and pay taxes on the withdrawals. The other option would be just to cash the IRA and completely, but if you do that, it becomes a taxable event. And all that income that you read, or all that money you receive from the IRA will count as income on top of your income that you earn that year. So you know, there was a great article in Money Magazine not too long ago about a son inherited his father’s half a million dollar retirement account. So the son finds out that he’s the primary beneficiary of his dad’s retirement account. You know, he calls the company, a company says, Yep, you’re the primary beneficiary, please send the death certificate fill out this paperwork, and we’ll process the account for you, the Son does that they send him a check for a half a million dollars. And a couple of weeks later, he gets a 1099 in the mail, which basically shows that he has a half a million dollars of additional income to report that year, because the minute the money came out of the IRA, it counted as income. The article went on to say that the Son owed $240,000, in taxes that year, folks, that’s half of the IRA being wiped out in taxes. And this is why I always say one of the biggest rotors of your wealth will be inflation and taxation, but taxation more than inflation, because of that reason alone, dad probably would have never guessed that he would have given up 50% of that account balance to the IRS, right, the IRS became one of the largest beneficiaries. And this is happening to people every single year when they pass away, because they understand the planning process behind inheriting or passing your IRAs to your loved ones. And this is what our right track retirement system goes over with people, it really helps them get this stuff dialed in. So none of those mistakes are made at death.
Cynthia de Fazio – 26:09
So really, what it comes down to Niall is the need for a proper plan across the board.
Neil Major – 26:16
Yeah, for sure. I mean, just in the example that Brian was just speaking of, you know, I have a newer client, he’s still working, he has a beneficiary, Ira from his mother doesn’t need the income from it right now. So he pulls out the required minimum distribution. He’s, he’s on the old rules, he he takes his requirement of distribution to kind of offset some of the taxes for having to take that distribution, he started contributing to an IRA. So he has a retirement account through his employer. And now he started doing $7,000 to a traditional IRA to offset some of the taxes of the required minimum distribution.
Brian Quaranta – 26:53
Yeah. And so that was a great strategy that Neal put together for him. Because as he’s taking income, right, he can deploy that contribution and reduce the income. So that was an excellent strategy that the team put together for them. Because again, we want to control taxes. And that’s the creativity that you have to have in order to control taxation.
Cynthia de Fazio – 27:13
Absolutely. Well, Brian, I can’t believe we’re almost to the end of another amazing episode this weekend, Neil, any final words of advice you want to give folks schedule
Brian Quaranta – 27:20
your right track retirement review with us? Come on in sit down with us? We’re going to take the time to go over the five key areas that we talked about all the time, income, taxes, investments, health care and estate planning. All you got to do is call us today. schedule the appointment, don’t procrastinate on this. Call us right now and schedule today. It’s 1-888-382-1298.
Cynthia de Fazio – 27:41
Gentlemen, thank you so very much to the viewers at home. Most specifically. 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.