On this week’s episode of On the Money with Secure Money, Neil Mager discusses the importance of understanding sequence of returns risk and how it can affect your retirement portfolio.

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Radio Show Transcript

Announcer 00:00

Investment advisory services are offered through foundation investment advisors, LLC. an SEC registered investment advisor Brian Quaranta and his guests provide general information not individually targeted, personalized advice and are not liable for the usage of information discussed. Exposure to ideas and financial vehicles should not be considered investment advice or recommendation to buy or sell any of these financial vehicles. This information should also not be considered tax or legal advice. As performance is not a guarantee of future results, investments will fluctuate and when redeemed may be worth more or less than when originally invested. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products, they do not refer in any way to securities or investment advisory products, fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company.

Steve 00:39

This is On the Money with Secure Money. I’m consumer advocate Steve. Neil Major is sitting in for Brian Quaranta today, if you’d like to get a head start, it’s 800-656-8616. Again, 800-656-8616. We kick it off right after this.

Announcer 00:58

And now On the Money.

Brian Quaranta 01:00

Any good retirement plans starts with the foundation,

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asset protection, tax reduction, holistic planning.

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These are the things that start to move you towards having a retirement plan.

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Retirement doesn’t have to be complicated.

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You think that’s the difficult part. That’s just getting started.

Announcer 01:19

And now On the Money with Secure Money.

Steve 01:26

Hey, welcome, everybody. This is on the money with secure money. I’m consumer advocate, Steve said all sitting in for Brian Quaranta. Today is Neil Major. Neil is a fiduciary Senior Advisor at secure money advisors, and so much more than that. Hi, Neil, what’s going on?

Neil Major 01:41

Hey, Steve, how you doing today?

Steve 01:42

Very, very well. And so, this is important, because I mean, people have people who are talking about the market. I mean, it’s had some pretty wild swings. It’s still you know, getting near record territory at times, and then all of a sudden it turns red all the time. So, let’s talk about that. Let’s figure out how we can really keep ourselves safe inside all of this when it comes to our retirement. What do you think?

Neil Major 02:08

Yeah, Steve, I’m happy to be joining you today on the show, because it seems like a really great focus on topics that we have to cover here today. I mean, there’s so many different things that, you know, that we outline for the show today. I mean, first up is, you know, something that we want to always talk about with folks that are retiring and are going to want to generate income. It’s sequence of returns risk, that’s a big deal, something it’s a huge deal. And not very many people understand, or you’ve never heard of it, as far as I’m concerned when I’m talking with people. And that’s just simply when you’re when you’re still years away from retirement, a diversified portfolio is the focal point of a smart investment strategy, right. On the other hand, those preparing to retire and those already retired, are exposed to the sequence of returns risk. Essentially, this occurs when a retiree withdraws too much money in early retirement during a market downturn in the portfolio’s ability to cover the intended lifespan is jeopardized. Okay, well, this is something you can’t control. It’s something that you can strategize against to protect your assets. Now, one of the things that you just opened with Steve was, you know, a lot of people are coming into the office, and they feel that maybe we’re at the peak of this market, right? Sure. And they’re coming in, they’re saying, you know, I’m either retired or maybe a year, away from retirement or five years away from retirement, how do I go about protecting my assets, and making sure that my retirement is not jeopardized? And it all starts with understanding and shifting from the accumulation model to the retirement model. I mean, you know, Brian talks about this each and every week on the shows, the keys and the focus. And I know you do a lot of other shows, and they talk about a lot, the advisors talk about how you have to really focus on shifting from that accumulation model to the retirement model, right. And the retirement model, it’s really going to focus on five key areas. And the first focus that we focus at Secure Money Advisors on is the income planning. So, if we’re going to be able to retire, and retire in the timeframe that we’re going to choose, income is first and foremost.

Steve 04:21

Got to be. And that’s what I think a lot of people lose sight of is that retirement is really all about the income and the cash flow.

Neil Major 04:28

It’s exactly it’s Steve, and when we talk about the sequence of returns risk, you know, folks just don’t understand that, you know, being early in retirement and the market reacting negatively, that entirely changes the projections for your retirement. So, you have to be very smart, and you have to be focused on income distribution, Cash Flow Planning, as you enter this phase of your life. And again,

Steve 04:57

in order to do that, you know, it takes stock adage, it takes planning, it takes, you know, it takes sitting down with someone like you a fiduciary, an independent advisor to really take a look at this and begin to lay out the options that make sense for us. You know, when it comes to sequence of returns, basically, you we just need to have some money that’s always safe. Right?

Neil Major 05:17

Yeah, I mean, that’s the challenge with people that I’m seeing come into the office is the fact that, you know, I’m getting more and more people that are more focused on risk, because they’re looking for what are the right safe options available to me as someone that’s getting closer to retirement. And you know, a lot of people don’t want to utilize bonds anymore, just because there’s still some risk there, the yields are so low, that they just don’t want to, you know, be putting a lot of their assets in the bonds. So, what I’m seeing is that people are taking more and more risk, and it’s worked out over the past 1012 years here. But the concern is, you know, what, if it goes in the opposite direction, are you going to be forced to delay your retirement for, you know, three years, five years, or even longer? Because, you know, the challenge when we lose money, is how hard we have to work to recover that money?

Steve 06:11

Oh, of course, of course. So how do we hedge against that? What are some things that you that you recommend? Or what are the kinds of things that secure money advisors does to make sure that we’re, you know, protected?

Neil Major 06:22

Well, there’s a lot of different things that we can use here at secure money advisors, depending on your current situation and how we go about structuring your plan. But, you know, if you think about what’s available on safe money today, you know, the challenges are, you know, we can’t get much as far as yield at the banks, we have, you know, what we just talked about with the bonds, not giving us much as far as safety or return. So, a lot of our strategies have started to look at utilizing fixed annuities or fixed indexed annuities for, you know, making sure that we have a portion of the portfolio that’s safe and protected, and make sure that we’re able to accomplish what we want to accomplish with one bucket of money, making sure that we protect it. And that becomes our shorter-term money, Steve. So, if we’re able to utilize that money as more of our short term money, we’re able to just get a reasonable rate of return, put that money to the side, use it to generate our cash flow in our early years of retirement. And that enables us to still utilize some market risk for another part of the portfolio. Sure.

Steve 07:33

Well, and again, on that note, why don’t we invite folks to call and come on in and begin to have that kind of strategy session with you?

Neil Major 07:39

Yes, Steve, we’re offering the next 10 colors are right track Financial Review. It’s a true second opinion on what you’re currently doing. The focus of the right track Financial Review involves the five key areas of retirement planning. And those are income planning, tax planning, investments, health care planning and legacy planning. So many times, we see the people coming in, do not have a true Retirement Plan and are continuing to be focused on the accumulation phase. While accumulation is important, our Right Track Financial Review ensures that you focus on all five key areas to ensure retirement success. Our review is designed so you’re not making the little mistakes that cause big headaches down the line. If you weren’t on the right track. When exactly would you want to know call today and be one of the next 10 callers to receive our Right Track Financial Review, no costs, no obligation.

Steve 08:33

Go ahead and make that phone call folks. 800-656-8616. Just like Neil said, it’s an opportunity to sit down and get that financial roadmap put together, and it’s a phone call away. 800-656-8616 you heard Neil the next 10 callers are going to get that comprehensive financial review. You’ll see where you are today. But more importantly, you’ll 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

Neil Major 09:06

Some 60 million Americans are saving for retirement and a 401k. If you’re one of them, are you getting the most out of your contributions, we come back some ideas to optimize your 401k to make it even better. Do you ever feel

Announcer 09:27

like you’re fighting for financial knowledge? Don’t let bad advice be a punch in the gut your retirement to take advantage of a complimentary no cost no obligation consultation with a local trusted financial coach. Call Brian Quaranta, host of Retirement You Radio 800-656-8616 or text Brian Q to 800-656-8616 we’ve made it easy for you to take advantage of this fantastic offer. All you have to do is call or text Brian Q to 800-656-8616

Steve 10:03

We are back on the money with secure money. I’m consumer advocate, Steve, joining me today is Neil Major, Neil’s sitting in for Brian Quaranta. He is a senior advisor at Secure Money Advisors. He’s a fiduciary, independent. And again, with the rest of the team, you guys do a heck of a job putting together plans for folks helping them get to and through retirement.

Neil Major 10:23

Yeah, we think we think we do a great job. You know, we’re certainly focused on that retirement phase. And, you know, each and every individual here at the office really focuses in on, you know, helping those that are 55 and older and make sure that, you know, as they get closer and closer to retirement, that, you know, nothing’s going to change or be impacted by market volatility or anything else that could come up. Sure.

Steve 10:47

Well, then again, those that that’s the kind of confidence that we need to get into retirement, Neil, I mean, it’s, it’s, it’s paramount. I mean, it’s key to making that happen. It took Yeah, that confidence.

Neil Major 10:58

Absolutely. I mean, this is not something that you should just be winging, right? I don’t think so. We always joke that we see people spend more time planning their summer vacation than they do their retirement, you know, the retirement, which is going to last, you know, potentially 2530 plus years, the last thing that you want to be doing is realizing and understanding it maybe 7580 years old, that you’re going to run out of money. You know, AARP did a study, and they say What do you fear more death or running out of money. And believe it or not, the majority of people say running out of money. So, you want to make sure that you have a well-designed plan. And you know, when you work with secure money advisors, we want to help such set up that plan to make sure that we accomplish all of our goals. But it also means that we’re not setting that plan in stone, right? I mean, we want to make adjustments as time goes on. And, you know, there’s changes that occur. And we have to be willing and able to make the necessary adjustments. I mean, tax law changes, estate law changes. And so, we just have to make sure that we’re, you know, able to make adjustments at the right time. Sure.

Steve 12:14

And again, you know, part of that plan for a lot of us, you know, like you said, what, about 60 60 million Americans have a 401 K. So, I mean, that’s a bunch of folks. And that really is our main tool for saving for retirement. But the question then becomes, am I getting the most out of my 401? K? And how do I know if I am? Well, again, that consultation with you can help sort of steer us in the right direction. And so, let’s offer some tips on how to maximize that. 401k. What are some things that we can do?

Neil Major 12:44

Yes, Steve, I mean, it sure was a heck of a lot easier when our employers offered us pension plans. We didn’t have to think about, you know, saving all these funds in our 401 K’s. And that then in turn, when we get closer to retirement, making sure that we’re protecting it and making sure that when we do retire, it becomes our pension. Right, because that’s the way that we have to look at these retirement accounts. They are our pensions. And you know, one of the things that’s that we’ve been talking a lot about with and a lot of people have questions are paying taxes when it makes sense, you know, employers are increasingly offering their employees the choice between a traditional 401 K and a Roth 401 K contributions to a traditional 401k Ready to reduce your taxable income this year. But you pay taxes on your withdrawals in retirement. Roth 401 K cod contributions don’t earn you a tax break this year. But then you get tax free withdrawals later on, like the sound of that. Yeah. So, you know, as a lot of people are being more and more concerned about increased tax rates in the future, one of the decisions that people are sometimes making are, you know, I’d rather deal with the known tax rate right now and pay tax on the seed and allow the harvest to be entirely tax free. You know, that might be an advantage for you. It might not, you know, I mean, but that’s the type of planning that I would hope that you would be looking for and getting the guidance from, if you’re going to work with an advisor.

Steve 14:21

Sure. And again, let’s talk about catch up contributions. And, you know, once you turn 50 years old, that sort of opens the door. And I think for a lot of folks, that that opens the door to Holy cow, we’ve got to talk about retirement and oh, wait, I can contribute more now. Yeah,

Neil Major 14:35

absolutely. Adults 50 and older are permitted to contribute an extra $6,000 to their 401 K’s each year. This brings their annual contribution limit to 26,000 for 2021 and 27,000. For 2022. You know, it’s often times that I hear people come into the office and they say, you know, Neil, I never started saving until I was 50 years old. 50 Five years old, and they have a significant nest egg built. But it took some time for them to establish their careers, get the kids out of the house, you know, the expenses to go down, but then they really needed to turbocharge the retirement to make sure that they were able. And, you know, they took that, you know, 1518 years or whatever it took them to really be able to stockpile that money away and make sure that they were taking advantage of catch-up contributions and things like that. Sure.

Steve 15:30

And again, so within a 401k, we have limited choices. But the fact is, is that we do have choices, and a lot of folks don’t realize that, and a lot of folks don’t realize that, you know, you could help us make some better choices than a target date fund.

Neil Major 15:44

Yeah, absolutely. Steve, I mean, we want to make sure that we’re choosing low-cost investments. You know, a lot of times they give us several different mutual funds to choose from, you know, sometimes these mutual funds come at really high expense ratios. You know, a lot of times people don’t understand what they’re paying, and what they should be paying. So, we want to make sure that, you know, let’s pick the right funds to make sure that we’re, you know, Turbo driving that accumulation if that’s what we’re in, or if we need to start to make it more conservative because we’re nearing retirement, we have the ability to do that as well. Absolutely. Well,

Steve 16:19

Neil, once again, the clock is knocking on the door here, too. We got to take a quick break, but let’s go ahead and invite folks to call and come in and answer all your questions on a 401k.

Neil Major 16:29

Steve, the next 10 callers we’re offering our right track financial review, this is a true second opinion on what you’re currently doing. The focus of this right track Financial Review involves the five key areas of retirement planning, income planning, tax planning, investment planning, health care planning, and legacy planning. Often too many people are focused on the accumulation phase, and do not have a true Retirement Plan. While accumulation is definitely important, our right track Financial Review ensures that you focus on all five key areas to ensure retirement success. The review is designed so you’re not making the little mistakes that are going to cause you the big headaches down the line. If you weren’t on the right track. When exactly would you want to know call today be one of the next 10 callers and receive our right track financial review at absolutely no cost or obligation.

Steve 17:23

800-656-8616 you heard Neil 10 callers right now get that comprehensive financial review; you’ll see where you are today. But more importantly, you’ll walk out with 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

Neil Major 17:44

planning for retirement forces us to make a lot of decisions, making the wrong ones can make or break your retirement. When we come back, we’ll outline some factors affecting your income and cost of living.

Announcer 18:04

He’s letting the clock run out on his social security to age 70 For maximum benefits. And here comes the Roth conversion. He’s got some outstanding coaching with that lifetime income plan. He’s created his own pension as well. And it looks like he’s going to go All! The! Way!

Play your best retirement game call Brian Q 800-656-8616. Or text Brian Q to 800-656-8616. Call or text Brian Q to 800-656-8616.

Steve 18:40

Hey, we’re back. Oh, no, on the money was secure money. And I’m consumer advocate Steve. Neil Major is here for Brian Quaranta this week, as always, Neil is a fiduciary and a senior advisor at secure money advisors and he’s independent. He’s all of those things and so much more

Neil Major 18:54

right now. Yes, sir. Yes, sir. Not to sound so good. Yeah. Well, you

Steve 18:58

are Yeah, no, that’s the thing. You know, and again, you talk about the seminars that you do, and I know, the folks are kind of really warming up to that again. And I think that’s important, don’t you?

Neil Major 19:10

Yeah, they’re really important. I mean, we’ve been educating the public out there doing seminars for over 15 years now. And, you know, we think that people get a lot of great information out of them. We try and be as interactive as possible with our educational events, meaning, we don’t just stand up there and give a canned presentation, trying to sell you something. Really all we’re trying to do is educate you, and get you understanding what retirements like we do offer complimentary consultations at those educational events for people to come into the office. Now, when you come into the office, I mean, all we’re really trying to do is get an understanding and a feel for your situation. And how we can help if we can help. You know, if we can help, we can talk about what the next steps would be on trying to figure out you know, how do we go about a call Pushing a remedy the concerns that you’re having. So, you know, educational events always a great way to start, we get a ton of people that call in from the radio shows and television programs to schedule these right track financial reviews. But if you prefer to attend an educational, they’re always a good time.

Steve 20:17

Absolutely. 800-656-8616 is the number you can call, or just visit the website, secure money advisors.com and learn more there? Well, let’s jump into a couple of these questions. Neal waters tell us and Tyler, Kathy is wondering, she says, I have to start taking required minimum distributions this year. And I have three different IRAs. Should I take some money from each account? Or take it all from one? I guess you

Neil Major 20:42

comment? You know, all these different IRAs out there? You know, I’ve seen people come in before Steve with 20. Different IRA. Oh, my God, what a what a headache. Yeah. So, consolidation is always, you know, something that a lot of folks are interested in, especially as you get to RMD. Age, you want to make sure that you know, that you’re making sure you’re dotting all your I’s and crossing your T’s. But make sure to that your family doesn’t have a headache, if something were to happen to you. But to answer Kathy’s question, she can do it. However she chooses, as long as she satisfies the distribution amount that the IRS is requiring her to take. And if she does not, for some reason, she will face a 50% penalty, Steve. So, if she’s to take out $12,000, and she does not, for whatever reason, she will face a $6,000 penalty. Wow. Right? That’s pretty harsh. Significant. It’s very harsh, I believe. So, you know, a lot of times, talked a little bit about this at the beginning of the show. But a lot of times what we do is we start to put buckets of money together. And we call them now soon and later. Okay, so typically, now money is bank money. Soon, money is what we’re generating our cash flow from, which is going to be safe, more protected accounts, and later is going to be more geared towards growth. And, you know, bout 10 to 15 years down the line. So, I like to take the money all from typically one account, but you have to make sure that you satisfy the entire distribution amount.

Steve 22:25

Okay, that’s I mean, again, so that makes sense. Kathy, if you’re interested, 800-656-8616. Yeah, you don’t want to mess that up. But that’s the nice thing about what you do. It’s 60% penalty. It’s just crazy. But one of the things that you do at secure money advisors is, you know, once you’re managing that, we don’t have to worry, as a client, I don’t have to worry, I know my RMD is going to come out when I want it to it’s not going to be late. It’s going to be on time, you know what I mean? It’s really what a relief,

Neil Major 22:52

we always run through a list in October of any clients that have not pulled any income. And just let them know that we have to satisfy our requirement distributions from the accounts, the amounts that we need to take and just go about structuring it the proper way for folks.

Steve 23:07

Sure. All right, let’s see, Larry is wondering, he says, I’m no longer employed, Can I roll over a 403 B plan to an IRA, or even do a Roth conversion?

Neil Major 23:17

Hey, Larry, yeah, I mean, a lot of folks are interested in doing exactly what you just said, once they are separated from employment, or they hit that magical age of 59 and a half, they like to move their funds into an IRA. And the reason that we do that is just a heck of a lot more options available to us in an IRA. And, you know, that’s what we really specialize here at secure money advisors and doing is picking and finding the right investment options. And, you know, rolling them over to an IRA, because we have so many more investment choices. Now, obviously, you can also do a Roth conversion, if that would make sense for your situation. I would recommend sitting down with a fiduciary and kind of walking through, you know, what that would look like and also, you know, bringing along your accountant. Sure.

Steve 24:09

And again, what I mean, again, Larry, it’s 800-656-8616. And Neil, once again, we have run out of time. Let’s go ahead and invite folks to call one last time today.

Neil Major 24:20

You know, these shows go quick, Steve, for the next 10 callers. We’re offering our Right Track Financial Review; this is a true second opinion on what you’re currently doing. The focus of this right track Financial Review involves the five key areas of retirement planning, and the focus is income, taxes, investments, health care and legacy planning. So many times, we see people they’re still focused on the accumulation phase and do not have a true Retirement Plan. While accumulation is definitely important, our right track Financial Review ensures that you focus on all five key areas to ensure retirement success. The review is designed so we’re not making these little mistakes that You’re gonna cause significant headaches on down the line. If you weren’t on the right track. When exactly would you want to know, call today be one of the next 10 callers come into the office, sit down with one of our advisors receive our financial rate track review at no costs and no obligation.

Steve 25:15

Hey, that sounds great. Neil, folks take advantage of what they’re offering here today. This is great. It’s a phone call away at 800-656-8616. Yeah, the right track retirement review, take advantage of it. There is no cost. There’s no obligation. And it’s available for you right now. And it’s a chance to get that financial review. With a phone call 800-656-8616 10 callers right now, we’ll get that comprehensive financial review. You’ll see where you are today. But more importantly, you’ll wind up with a roadmap that can help get you to where you need to be 800-656-8616 again, 800-656-8616. Neil, as always, a pleasure to work with you and I look forward to doing it the next time.

Neil Major 25:58

Hey, Steve, great show today. Thanks so much.

Steve 26:01

And we want to thank everybody for listening. We really do appreciate it and we’re going to be back again next week with new topics and questions and more right here on the money with secure money.

Announcer 26:17

Investment Advisory services are offered through foundation investment advisors, LLC, an SEC registered investment advisor Brian Quaranta and his guests provide general information not individually targeted, personalized advice and are not liable for the usage of information discussed. Exposure to ideas and financial vehicles should not be considered investment advice or recommendations, buy or sell any of these financial vehicles. This information should also not be considered tax or legal advice. Past performance is not a guarantee of future results. investments will fluctuate and when redeemed may be worth more or less than when originally invested. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products did not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company.

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