On this week’s episode of Retirement You Radio, Brian Quaranta discusses 5 key strategies to help you make a smooth transition into retirement.

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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

You know, many of us spend our career saving for our retirement. When that time actually comes though, it’s intimidating and downright scary. Change is hard. And on today’s show, we’re going to share some tips with you to make it a smooth transition right into retirement when we come right back here on Retirement You Radio.

Steve 00:57

Welcome, everybody. This is Retirement You Radio increasing your financial IQ with BrianQ. Brian Quaranta, of course, is who we’re talking about. I’m consumer advocate, Steve. Brian is an author. He’s president and CEO of Secure Money Advisors and he is our engineer on the Right Track Retirement Planning System. Isn’t that right?

Brian Quaranta 01:14

We are.

Steve 01:17

How’s it going?

Brian Quaranta 01:19

It’s going great. Steve. Yeah. Hey, I’ll tell you what, though. It’s pretty, you know, I would say that the consistent theme since we started this show, what, four years ago, was it’s all about the plan. Right? It’s all about the plan. I mean, you know, when it comes time to implement the plan, in other words, you know, starting to spend your money that you’ve accumulated a lifetime earning. There’s definitely some very specific processes that you want to follow. Number one is taking stock your situation. And the reason for that is, you know, as your life expectancy increases, which you know, that’s a challenge for everybody going into retirement, when people are living longer. The time you spend in retirement can begin to rival the time you spend working, you know, you know, they said I think I read somewhere, and I think you’ve shared this statistically, you may actually spend more time retired than you did working.

Steve 02:12

I think it’s a possibility. I mean, people are certainly living a long time. And that certainly factors in.

Brian Quaranta 02:17

Yeah. So, number one, make sure you’re reviewing your plan with an advisor, preferably a fee-based advisor that’s obligated by law through the fiduciary responsibility to provide you with a plan so that they can stress test your retirement. You know, I always call that making bad things happen on paper.

Steve 02:35

I like that. Just on paper, yeah, no.

Brian Quaranta 02:37

That’s right. Let’s make bad things happen on paper, you know, especially if you’re a married couple, you know, you want to see well, you know, there’s a number of worksheets that we use here. One of them is our cash flow worksheet and the cash flow worksheet, one of the scenarios we like to look at is what happens if your husband dies first, what happens if you die first? Because there will be a drop in income. The question is going to be how much of a drop, there’s going to be an income, but also the time in which it happens. Because the timing in which you lose your spouse, boy, that can make a big difference, because, according to AARP, the average loss of income to a married couple is 40%. That’s a real reality that people have to face, isn’t it? It sure is. And, you know, if you lose your spouse early on in retirement, and you got 40%, less money, are you going to be able to live off of that, you know, are you going to have to downsize. Are you gonna have to start taking more money out of your investments to make up for that loss of, of income? If you do have to start taking that additional money out? What’s that gonna look like? And what’s going to happen to the balance sheet of that portfolio over time, because you might be taking more money out for a longer period of time.

Steve 03:45

Let me ask you this, let’s go something a little happier in that. We’ve been saving all our lives, and you help us get to retirement, and now I’m just free to spend money, which is a reality as well, isn’t it?

Brian Quaranta 03:58

Yeah. I mean, people are afraid to spend money. And because you’re going through this accumulation phase, all of your life. And there’s two phases, we all go through with our money. There’s the accumulation phase, and then there’s the distribution phase. And the strategies and techniques that you use during the accumulation phase are not the same strategies and techniques that you use during the distribution phase. You know, I think I was just reading this to you before the show it started Steve, I was talking to you about Motley Fool right now I was I’m a subscriber to Motley Fool, you know, I spent like five grand with them a year to get their stock picks. And I will invest some of my personal money in there. And they’re very, very risky portfolios, but you know, they’ve got a huge following across the country of do-it-yourself investors. And, you know, I own a number of their different portfolios and man, they have just gotten absolutely demolished over the last 15 days. Matter of fact, I mean, I have one portfolio through them. That’s down like 30-40 %. And here’s, and here’s the concern with that right now, I’m 44 years old, I got a long time before I ever need that money. But my concern is, Molly Fuller had put out a letter to the investors that said that over the past 15 months, it’s been a terrific time to be in the stock market, but the past 15 days has been far more turbulent. And they go on to say, we know that it can be painful to see those losses in your portfolio, you know, and they’ll say, you know, they’re right there with us. And they own many of the same recommendations across their portfolios. And during times like these, here’s what they encourage their members to do. Number one, be a long-term investor plan to hold the stock for at least five years. Well, okay, that makes sense if you’re in the accumulation phase, but what happens with Bob who just retired, who, who just put his entire life savings into one of these portfolios, and was planning on taking out 25,000 or 30,000, a year to live off of, and that’s where people get twisted up in retirement, because they think that all investing is the same. And it’s not, the distribution phase is completely different. And the distribution phase, you don’t have time on your side anymore. You know, we all will agree that if the markets go down, they will recover. The question is how long is it going to take to recover? And the question is, is it going to recover in the time period, you need it to recover it? You know, one thing that people also have not been told the truth about, Steve, is the fact that, you know, let’s take this Motley Fool’s portfolio down so much, most people, a lot of people probably put their retirement dollars there, you know, they may be wanting to take money out, if they’re taking money out on top of losses, not only are they compounding the loss by taking income out, so let’s say they just lost $40,000. And on top of it, they took out $40,000, now they’re down $80,000, on the year, yeah, portfolio is gonna have to work very, very hard just to keep the principle intact, you know, without getting into a spin down. So, you know, once you reach retirement, you’re really no longer a long-term investor. Now, you have to have a two-bucket approach, so that you got some money built in the distribution phase to buy time. And then you can have some longer-term money in a different bucket. But you’ve got to have distribution money for at least 10 to 15 years. And then the remainder of the money can go into a growth bucket, but you’re giving that growth bucket 10 to 15 years to grow, and you’re not touching it and pulling money out. And that helps with a whole lot of different things. So anyway, this is why we always offer the right track Retirement System, Steve, this is why I built it because there is a lot of confusion around what to do in retirement, how to build out your plan, what areas need to be focused on. But folks for the next 10 callers who call in right now we’re going to create a one-page financial review that really is going to indicate whether or not you’re in need of a full-blown financial plan now, the right track retirement system focuses on five key areas income, taxes, investments, health care and legacy planning. It takes the mystery out of financial planning and truly simplifies the process. We’ll run a free report for you we’ll show you how much you might be paying in your current portfolios. We’ll run a tax analysis to show you where you might have tax savings, and how to build a customized tax plan to make your retirement much more tax-free, if you will. We’ll show you how to build a customized income plan to turbocharge your income utilizing strategies that we’ve been using for the last 21 years. Most importantly, help you take the guesswork out of planning and give you a real written plan. So that’s the next 10 callers that a comprehensive financial review the right track retirement review, complimentary with no obligation

Steve 08:40

800-656-8616 You heard Brian the next 10 callers right now are going to get that comprehensive financial review the Right Track Retirement Plan, and you will see where you are today. But more importantly, you find that you’ve now got a roadmap that can help get you to where you need to be when it comes to retirement. 800-656-8616 again 800-656-8616.

Brian Quaranta 09:05

When faced with the loss of a spouse, there are many decisions that have to be made. A wrong financial decision can be costly when we come back mistakes to avoid when a spouse passes away.

Announcer 09:18

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 09:53

And we are back on Retirement You Radio increasing your financial IQ with BrianQ. I’m consumer advocate Steve. Of course, this is Brian Quaranta who we’re talking about. President and CEO of secure money advisors, and you’ve got that Right Track Retirement System thing going, that’s really become sort of your go-to, isn’t it? Well, yeah,

Brian Quaranta 10:10

because it really does give a comprehensive approach to financial planning. And that’s what we’re all looking for every, you know, everybody that’s listening to the show right now, what we all want is a comprehensive financial plan. Well, what does that even mean? What makes up a comprehensive financial plan, because if you just have a pile of statements, and you’re talking about performance every single year with your advisor, you’re not talking about financial planning there, you’re talking about investing, comprehensive financial planning, and includes an income strategy for distribution. So, we’ve got 85% of the people retiring today without pensions. So, most of the people that we’re meeting with are going to need to generate some type of income from their portfolio. And there’s a right way to do that. And there’s a wrong way to do it. Getting on the right track for retirement is all about making sure that you have best practices when it comes to the distribution plan. But also, along with, with the distribution plan, let’s say that you’re one of the 15% of the people out there that are fortunate to have a pension, well, you may think to yourself, hey, I’m good. I don’t even need to take money out of my retirement accounts. Well, that’s just not true. Because you might not need to take it out, like most people need to take it out to supplement Social Security, but you’re going to be forced to take it out at the age of 72 whether you want to or not. And if you don’t do that correctly, there’s big penalties, like 50% penalties if you don’t take the right amount of money out. Did you know that Steve?

Steve 11:33

I did know that. Yes, that’s not- I mean, that’s pretty- that is the most- what- it’s the biggest penalty that the IRS has isn’t it? 50%,

Brian Quaranta 11:42

It is the biggest penalty, the IRS has. As a matter of fact, let’s say you just had a half a million dollars, right? Yep. And let’s say that you’re required to take money out. So, at the age of 72, you’re gonna have to take it about $19,000 and change. And let’s say you forget to take that money out, right? I mean, you’re talking about what maybe a $9000-$9500 penalty somewhere around there. That’s unbelievable.

Steve 12:07

Plus, you’re gonna pay taxes on top of that.

Brian Quaranta 12:10

Yeah, plus you gotta pay tax on top of that. So. So, keep in mind, folks, distribution isn’t just for those that actually need to take money out of their plans. It’s for all of us, because the IRS forces us down the road. But the right track retirement system has been developed to give you at all five key areas of comprehensive planning. The second one is taxes. Because if you’re going to distribute money, you might as well do it in the most tax efficient way. Three, when it comes to a distribution plan, you can’t own the same risky stuff that you’ve been owning in your accumulation plan, because just like I said, on the first segment with Motley Fool, right, I mean, they recommend, you know, hanging on for next five years, well, what happens if, you know, you would have put your money with them their portfolios down 30%, I mean, that’s just not a good thing. Now, you can split your money up into different buckets. So, you could have some of that money in that type of bucket. But to many people, Steve, put 100% of their money at risk, with no distribution plan in place, and no plan to create more time in their portfolio. See, that’s the number one commodity that we all don’t get to get more of. And that’s time. And that’s what your portfolio needs is time. Well, how do you do that when you’re retired, and you need to start taking distributions, you’ve got to use a bucketing strategy to do that. Three is your investments, health care, and legacy planning, all comprehensive financial planning with the right track retirement system. Again, you can call 1-800-656-8616. And you could schedule a Right Track Retirement meeting with us complimentary at no cost.

Steve 13:40

That would be great. I mean, you know, I like what you created here. Let’s talk for a minute you talked about at the beginning about when we lose a spouse. And I know that’s not a pleasant topic for a lot of folks. But it happens. And I know that oftentimes, when you’ve got a client and one of them passes, you’re one of the first calls that gets made because we need to be on top of our finances.

Brian Quaranta 14:02

We are the first call. We are absolutely the first call. And you know, the way it works is Social Security is going to take away the lowest check. So, let’s say you’re you know, let’s say you got a husband and wife will say the husband’s check’s $25,000 a year, the wife’s check’s $15,000 a year, and the husband dies, the wife is going to lose the $15,000 check, she’s going to pick up the $25,000 check. So doesn’t matter who dies first, lowest check falls off, highest check they pick up. But that’s a loss of income. And that needs to be calculated. And I talked about it, you know, on the first segment, right? We want to make bad things happen on paper. If we make bad things happen on paper, then we can have a plan that can handle anything.

Steve 14:43

Right and so when that does happen, and you have those conversations, there’s still a bigger picture. And the good news is I know that when you work with people, you take that into account that at some point one or the other will probably pass away and the plan is designed in such a way that it kicks into a different mode. And hopefully, you know, everything’s, you know, as good as it can be.

Brian Quaranta 15:09

Yeah, and there’s three, there’s the way we do that, Steve, it’s a process that we’ve developed around math. And math is your friend when it comes to retirement planning. And there’s a number of ways that we do this first thing, and most importantly, is we figure out how much money needs to go into what buckets. So, number one is, we’ve got a growth bucket, right and, and that can be your risk bucket. And that’s got to be a 15-20 year bucket, then we have a distribution bucket, this is money that you’re going to need, you know, for distribution on a monthly basis, maybe because you don’t have a pension. So maybe you’re gonna get two social security checks. But you need another $30,000 a year in income to live off of that’s going to be your distribution bucket. And then you need immediate emergency money, which is going to be your bank money or your everyday bucket. So, there’s three buckets, your everyday bucket, your distribution bucket, and then your growth bucket. And then what we’ve got to determine is what rate of return depending on the withdrawal that you want to take from your portfolio, what rate of return does your portfolio need to do? And we’re looking for three interest rates. Number one is your spend down rate.

Steve 16:13

Folks, if we piqued your interest on any of these things, now’s the time that you need to give Brian a call and get on the calendar.

Brian Quaranta 16:17

That’s right folks, for the next 10 callers who call in right now we are going to create that Right Track Retirement Review for you. It goes over five key areas income, taxes, investments, health care and legacy planning. I’ve said this before, we’ve seen people charge up to $1,000 or more for similar features or offers, we’re going to do it at no cost, no obligation. If you’re one of the next callers who call in it will take the mystery out of financial planning. It’ll simplify the process. We’ll look at a fee report we can see what you’re currently paying. Working with your current plan or advisor will run a tax analysis and reveal how you could possibly reduce your taxes. We’ll even run a customized income plan utilizing the bucketing strategies and techniques that can turbocharge your retirement income to make sure that you don’t run out of money in retirement. In short, it takes the guesswork out of financial planning. That’s the right track Retirement System, five key areas that we go over in the comprehensive review for the next 10 callers. We’re gonna give away complimentary no obligation,

Steve 17:13

and it’s as close as the phone call, folks. 800-656-8616. You get the ball rolling, let Brian translate for you a lot of that complex financial world and it can get very tricky very quickly. It can help smooth it out for you make it clear, make it easy to understand, get that true practical financial review, no cost, no obligation. By calling 800-656-8616 You’ll get that comprehensive financial review, plus all the extras that Brian just described, you’ll see where you are today. But more importantly, you’ll find you’ve got a roadmap that can help get you to where you need to be when it comes to retirement. 800-656-8616. Again, 800-656-8616

Brian Quaranta 17:54

There are many kinds of risks when it comes to retirement planning from longevity risk to health care costs risk, we’ll break them down and highlight how to avoid them when we come back right here on Retirement You Radio.

Speaker 1 18:07

How’s the market doing?

Speaker 2 18:08

It’s fine.

Speaker 1 18:10

How’s the market doing now?

Speaker 2 18:11

The same as it was five seconds ago,

Announcer 18:13

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 18:41

We’re back on retirement, you radio increasing your financial IQ with BrianQ. And boy, you’ve been doing a great job of doing that today. Brian, I’ll tell you, I mean, again, you just lay it all out there in terms of the bucketing strategy. And, and you know, just helping folks understand that it doesn’t have to be a big, complicated mess. It can be something very straightforward. And just lay it out on paper. So, you see it. That’s got to be you know, we started the show talking about stressors. I mean, that’s got to be a huge stress relief, just to see it laid out on paper. Yeah,

Brian Quaranta 19:13

it is. I mean, and we see it in 20, you know, 21 years of practicing now. I know because I see it in the conference room. I mean, people come in and say, Look, you know, we’ve been to three, four different financial advisors. And, you know, we’ve just decided to come with you guys. Because number one, you guys have really broken it down to where we understand it. And you’ve made it very simple and easy for us to understand. But more importantly, it’s because we’re bringing them through what a real written plan should look like. And when people see a real written plan, they go, Oh, this is what retirement planning is. See, I think people are just so used to thinking that the retirement plan is a bunch of statements. And it’s just not how it works. You know, there’s three very important documents we use here that secure money advisors as part of the written plan number one, most importantly is the cash flow model. And the cash flow worksheet that we use has all the sources of income each year that you’re getting those sources of income. We take into account taxation, we take into account what your expenses are, whether they’re going up or whether they’re going down. And that’s nice. I mean, a lot of people in three to four years or maybe five years or 10 years, they might have a car that’s paid off or a mortgage is paid off. And so, their scheduled expenses go down over time, so they pick up more cashflow, as they’re scheduled expenses go down. But what happens if tax rates go up at the same time that their expenses go down? What impact does that have? Are they going to be required to take more money out of their retirement accounts? What happens if their spouse dies, these are all things that we can figure out on the cash flow worksheet. And we can run lots of different scenarios. So that we can make all these things happen on paper so we can be better prepared when they do happen. But we can also put enough pressure on the plant itself to make sure that it’s actually going to work so that when you are retired, you’re not waking up with anxieties or worries of whether or not this thing is going to work, we want to make sure it absolutely is going to work. And we’re looking at the black and white math to make sure that we know that we have a plan in place that’s going to work

Steve 21:11

well. And you know, not only the math, but you take the emotion out of it, it gets so easy to get caught up with, especially when we’re talking about our money, it can get pretty emotional for the for, you know, for the individual, but you see it differently, you’ve you’re that second set of eyes, that looks at things a little bit differently, people need

Brian Quaranta 21:29

to realize that, you know, we’re human beings too. And yes, I manage money for a living. But at the end of the day, I want to report good news all the time to my clients. And you know, so we, you know, we have a vested interest in making sure that not only do the plants work, but also for the clients to hang around for a long period of time. You know, and we’ve got a very good retention rate, you know, we’ve got a 98% retention rate, you know, we just don’t have people leave, because you know, of the planning that we do, and, and when people have a plan in place, even when you have a pandemic, like we did last year, nobody’s calling into our office panicking, because we’ve already looked at worst case scenarios in the planning model. So, we know that the plan is going to work. And that’s the peace of mind and clarity that people get. I think that people panic when they only have statements coming in. But when you look at a real investment plan, which focuses on five key areas, it focuses on your income, your taxes, your investments, your health care, and your legacy. And when you have all the i’s dotted, and all the T’s crossed, and those areas, that’s when you experience that calm peace of mind that everybody is looking for when they shift into retirement, even if there’s chaos going on in the outside world.

Steve 22:40

I like it 800-656-8616. Let’s jump into a couple of these questions here. While we have time I’m going to start with Tyler, what advantages do exchange-traded funds have over mutual funds?

Brian Quaranta 22:52

Well, exchange-traded funds are simple. I mean, they just trade like a stock.

Steve 22:56

And that’s really as important. I mean, that really is a major difference, isn’t it?

Brian Quaranta 22:58

Yeah. I mean, you know, it is a big difference, actually. I mean, you know, unlike mutual funds, you know, ETFs, you know, they’re also very tax efficient. You know, there’s no investment minimums, you know, many mutual funds have minimum investment requirements of maybe $2500 or $5,000, and ETFs, on the other hands can be purchased, you know, with as little as one share. And that’s, that’s the other thing, too, is that, you know, a, you know, if you were to sell a mutual fund right now, throughout the day, you wouldn’t get the price and until the end of the day, which is called the nav or the net asset value, where with an ETF, you’re literally trading it like a stock share. So, if I, if I bought apple right now and sold it, now, I get the price. If that was a mutual fund, you got to wait till the end of the day to get the price and a lot can happen from the morning till the end of the whole, of course it could. And they’re also lower costs. And it really is kind of the future. I mean, if you look at where investing is going, I mean, a lot of big-time money managers are leaning towards ETFs because they’re much more nimble, much more cost-effective. The mutual funds kind of a little bit of a dying animal, if you will. Yeah, terrible analogy. But it really is, I mean, but things change over time, you know, product designers get gets smarter about how things are designed technology allows us to design products that we normally not be able to create. So, they are very beneficial to and a much more cost-effective way to go and investing.

Steve 24:24

I like that. I mean, because I know people will ask me well, I hear about an ETF. What is it? Well, I’m not an advisor, but I kind of understand why they might be advantageous to put into a retirement portfolio.

Brian Quaranta 24:37

Oh, yeah, very advantageous, much more nimble, much, much more cost-effective and they’re much more accurate in the day-to-day trading.

Steve 24:44

I like it. And you know what, we’re up against the clock already. Brian, why don’t we go ahead and invite folks to get on the on the horn and call you one more time one last time today.

Brian Quaranta 24:52

That’s right, folks. And for the next 10 callers who call in we are going to give away that the right track retirement meaning now it’s again, it’s at no cost, no obligation. to you. The reason I call it the Right Track Retirement meeting is because that’s the number one question I always would get is Brian, I just want to know if I’m on the right track, Am I doing the right things? Let me ask you, if you’re not on the right track, when would you want to know that? Would it be beneficial for you to know that now versus later? I think it would, but I could be biased, I don’t know, but, look, we’ve seen other people charge. I have seen people charge so much money for the work that we do up to $1,000 or more. We do it at no cost. We’re literally going to help you take the mystery out of financial planning, it’s going to be simple, easy to understand. I’ll run a free report for you. We’ll look at a tax analysis we’ll run a customized income plan, utilizing proven strategies that can literally turbocharge your income retirement. More importantly, I want to help you take the guesswork out of financial planning. Let’s make this simple and easy to understand. You’ll have more peace of mind and confidence going into retirement, but you got to do your part. You’ve got to pick up the phone for the next 10 cars. That’s a comprehensive financial review that we’re going to give away complimentary at no obligation

Steve 25:57

800-656-8616 You heard Brian the next 10 callers are going to get that comprehensive financial review plus all the extras that he just talked about. And you will then have a roadmap a guide that can really help get you to where you need to be when it comes to retirement. 800-656-8616 Again 800-656-8616 or text Brian directly That’s BrianQ to 21000 text BrianQ to 21000. Brian, as always, a pleasure to be here. It’s one of my favorite hours of the week right here.

Brian Quaranta 26:29

Well thank you Steven. It’s always a pleasure being with you and folks, we will see you again next week right here on Retirement You Radio.

Announcer 26:39

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.

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