On this week’s episode of Retirement You Radio, Brian Quaranta outlines some ways to avoid costly mistakes in regards to your potential inheritance.

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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 Carranza 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.

Brian Quaranta 00:39

The rules of inheriting a 401 k or IRA have changed folks. And you better be fully aware because for most of you out there, the IRS is going to become your largest beneficiary. And on today’s show, we’re going to outline some ways to avoid costly mistakes regarding your potential inheritance when we come right back here on retirement, you radio.

Announcer 00:59

And now, Retirement You Radio

Brian Quaranta 01:02

A good retirement plan starts with the foundation,

Announcer 01:05

Asset protection, tax reduction, holistic planning.

Brian Quaranta 01:08

You think that’s the difficult part? That’s just started!

Announcer 01:11

Featuring Pittsburgh’s wealth financial and income coach: Brian Quaranta

Steve 01:19

Welcome everybody. This is Retirement You Radio, increasing your financial IQ with Brian Q. Brian Quaranta’s is who we’re talking about, of course, he’s president and CEO of Secure Money Advisors. He’s a fiduciary and independent and been helping folks for more than 20 years get to and through retirement. Brian, this is an important segment that we’re going to do here talking about the secure Act and what it is, what it isn’t, and how it has really reshaped a lot of retirement plans.

Brian Quaranta 01:44

We’ve been talking about it for the last two years, almost Steve, I mean, the rules of inheriting a 401 K, or IRA or based on your relationship to the person who died. If you make a mistake here, it might be near impossible to undo this. So, pay attention here, folks. Yeah, listen to this was probably one of the biggest tax grabs we’ve seen the biggest financial changes we’ve seen in history, at least in the last 20 years, I would say in the financial planning community. But in 2019, the Secure Act eliminated the ability of many beneficiaries to take distributions across their own lifetime, from inherited 401, K’s or individual retirement accounts if the original account owner died after December 31, 2019. So, here’s what you want to know. Number one is that, let’s just suppose that well, first off, let’s lay the groundwork here. So if you’re leaving your IRA to your spouse, we don’t have a concern here because we still have a spousal exemption on their current tax law, which means that your spouse can inherit your IRA, no taxes, no penalties, they will be required to take distributions, should you should they be in the age bracket that they would qualify to have to start taking those required minimum distributions, which again, have to be done correctly? Because remember, if you are required to take distributions out of an IRA account, and you fail to do it, it’s a 50% penalty. Oh, 50% 50%. That’s right. So, if you were required to take $10,000 out, and you didn’t do it, $5,000 mistake. So, let’s not do that. Let’s not especially now since you’ve heard that here on Retirement You Radio, you should never make that mistake. Or if you want to avoid the mistake completely call Secure Money Advisors, and it’s certainly something we can help you with. But with that being said, let’s talk about a child, maybe one of your kids inheriting your IRA 401 k 403. B, any retirement account that’s been in tax-deferred status. So, let’s suppose that you have two kids, and you want to leave the IRA to the kids, okay, that’s fine. So, you die, both you and your spouse are gone, you die, the kids get the IRA money under the tax law prior to the secure act being signed. And along, what we were able to do is allow those children to receive that IRA in the form of what we call an inherited IRA, and they wouldn’t have to pay any taxes. Now, they would be required to start taking a distribution immediately in the year that they receive it. Now, that distribution could be spread out over their lifetime under their life expectancy. And this is what we call the RMD. For inherited IRAs, you can find that on the IRS website. But ultimately, what would happen is that the child would be able to inherit, let’s say you had $500,000, and the child inherits $500,000, that child will be able to stretch those distributions out over the course of your life. So, let’s suppose $500,000, maybe your child’s 39-40 years old, when they inherited the IRS would say, hey, the only amount of money that you need to take out of this $500,000 IRA is about $13,000. And we’re going to require that you pay taxes on the 13,000. The rest of the money can stay in here and grow tax deferred, and then you need to do that every single year. What would happen is we would defer the tax bill for so long and stretch it out with these distributions. that we would actually win based on basic math alone, right. So, the advantage was in the beneficiary owners’ advantage, not the IRS has advantage well, they changed that. And they said, Look, if you inherit an IRA, now, we’re not going to let you distribute it over your lifetime, you’re going to need to either take it out immediately, or you can take distributions over 10 years, or you have to take it all out in 10 years, which creates a massive taxable event for the family. You know, these IRAs Steve, are so ugly, IRAs 401K’s for three days are so ugly, when we transfer them to the next generation because there was an article in Money magazine a few years ago about a son that inherited his father’s half a million-dollar retirement account. So, the son processes the death claim, sends it into the company, the company sends them a check. Two weeks later, he gets a 1099 in the mail, and he wound up owing the IRS on a half-a-million-dollar inheritance from his dad’s retirement account, he wants to bow in the IRS $240,000 Man, pretty tiny stuff here, pretty much half, almost half the IRA wiped out gets worse, even in Pennsylvania, because we still have the death tax to deal with in Pennsylvania. And that can be an additional 4% all the way up to 15%, depending on who you’re leaving that money to. So is it important to make sure that you have a good plan, and leaving your money to your family members, you better believe it. So, you always talked about the five key areas of planning, I talked about the fact that number one and most importantly, you need to have a good income strategy when you retire. Because your paychecks gonna stop. But Bill’s taxes and all the money that you need to do all the things you said you were going to do in retirement, that doesn’t stop number two, you need it better have a good tax strategy. And a tax strategy not only includes taxes now, but taxes later. And that’s what we’re talking about right now. This isn’t a tax now problem. It’s a tax a labor problem. But it’s a tax problem that can be fixed right now. And this is why it’s secure money advisors, we’ve created the right track retirement system to help you avoid these pitfalls. And we really encourage you to take advantage of the right track retirement system, because it’s going to help you understand things that most people don’t understand. Most people are not having these conversations with their financial advisors. Most people are talking about their performance returns about their asset allocation. But they’re not talking about actually how to avoid taxation now or later. So, the third area of planning is investments. Fourth is healthcare. And five is legacy planning and legacy planning and taxes tie in together, especially when it comes to inheriting rules for 401Ks and IRAs. So, folks, for the next 10 callers take advantage of our right track retirement system. It’s truly designed to help you determine whether or not you’re on the right track. Whether or not you can retire on time when you return to retire. If something were to happen, like the market were to drop, would you have to come out of retirement would you have to delay retirement? But more importantly, when the good Lord decides to take you home? Right? Are you going to make the IRS the largest beneficiary Are you going to make your family and your charities the largest beneficiaries for most people out there today? They haven’t even thought about this type of planning. But this is what the right track Retirement System is all about. So again, for the next 10 callers, that’s a right track retirement plan with a one-page plan that we’re going to give away. Complimentary I’ve seen other people charge $1,000 or more for these features; we’re going to do it at no cost. It truly is going to take the mystery out of financial planning. We’ll do a tax analysis for you; we’ll reveal how much you could reduce in taxation. I’ll show you how to create an income strategy utilizing proven strategies and techniques. So again, for the next 10 callers has a comprehensive financial review that we’re going to give away complimentary with no obligation

Steve 08:34

800-656-8616 You’ll get that comprehensive financial review plus all the extras that Brian just described. And when you walk out the door, you’ll have in your hand that roadmap, that guide that’s going to help get you to where you need to be when it comes to retirement 800-656-8616 again 800-656-8616

Brian Quaranta 08:55

We often talk about couples retiring in this segment, we’re going to talk to the four and 10 Americans who are unmarried and of that night 13 point 5 million are retiring single, that more will come right back

Announcer 09:17

do you ever feel like you’re fighting for financial knowledge? Don’t let bad advice be a punch in the gut your retirement and take advantage of a complimentary no-cost no obligation consultation with a local trusted financial coach. Call Brian 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 09:57

We are back on Retirement You Radio increasing your financial IQ with Brian Q, Brian Quaranta’s here President and CEO of Secure Money Advisors, and so much more. So, Brian, we always talk about couples and what you know, whether it’s social security or whether you know, whatever it is, we always talk about couples. So, I thought it might be interesting to sort of look at, you know, single people because there’s a bunch of them out there. And certainly, you know, with Gray Divorce what it is, there’s a lot more people single than we might think,

Brian Quaranta 10:21

yeah. And hey, listen, I’ve been down this road because I was married and divorced before. And so, for many years, I was actually planning my retirement as a single. Now, I did wind up finding somebody and wound of getting remarried. And so, things are back to planning as a couple. But I’ve been down this road, and I have many, many clients that are single, widowed, divorced, never married. And the process of planning is the same, but it’s different. Right? If you’re single first off, you’re certainly not alone, nearly half of US adults are unmarried. 45.2% to be exact. That percentage includes those who are never married or widowed or divorced. And according to Market Watch, many Americans are healthier and living longer divorce may be a possible consequence of this new longevity. I mean, regardless,

Steve 11:11

I can’t stand you for another day! Get Out!

Brian Quaranta 11:14

If you think about, I mean, singles are really reinventing what it means to retire alone, staying active in their communities, and leading full meaningful lives. Whether you’re single by choice or by circumstance, the keys that you want to consider, though, to help you stay on the path, and how confident retirement are, number one, is singles may be able to save on life insurance if they don’t have any dependents and estate planning in general can be simpler. So that’s a big one. Because, you know, for my single clients, and we have a high percentage of single clients, we work really well with them. One, because we bring them through a process, but Two is because everybody needs to have a strategy or a plan to walk around and our right track retirement system works, whether you are a married couple, or you are a single, but when it does come to estate planning, things are a little bit simpler, because maybe when you pass on, maybe you want to leave money to your brother or your sister, maybe you have nieces and nephews, things along those lines that you want to leave money to. But I have a lot of single clients leaving monies to charity too and leaving monies to charity is actually a very simple and tax-free solution that doesn’t take a whole lot of complicated planning to avoid taxation. So, one, estate planning itself can just generally be simpler for those who have never been married and don’t have children. Other types of insurance could be more crucial for singles considering family assistance may not be available, if help is needed for daily activities.

Steve 12:35

Is this where the sort of hybrid insurance policies life insurance comes into play?

Brian Quaranta 12:39

Yeah, great question. So, when I asked everybody that comes to our door, you know, tell me a little bit about your concerns and retirement. You know, when we go through the five key areas, I always ask people, let’s talk about income for a moment, how are we going to generate the income we need in retirement for most people, 85% are going to have to generate income from their retirement accounts because they’re not getting pensions. Number two is when I talk to people about their tax strategy, most people don’t have a tax strategy or plan. Nobody’s ever talked to him about how to eliminate or reduce taxation, retirement. Number three is making sure the investments are appropriate for the time period in which they’re in because you’re going from an accumulation phase to a distribution phase. And then the fourth one is health care. Now, this comes into the question of, if something were to happen to you, if you were to get sick and have a health event, and you could no longer deal with your daily activities, tell me what the plan would be to take care of you. And most of my clients that are single, will say that they just don’t want to be a burden on anybody. You know, they’ve got nieces and nephews and brothers and sisters that are very loving, but the last thing they want is for any of those people to have to change their lifestyles to take care of them. So, a lot of my single clients want that level of planning. And yes, Steve, to answer your question. There are solutions out there today with product designs that can help take care of the cost of paying for care. One is through the hybrid insurance. This is where you can not only get a life insurance policy slash long-term care policy all combined into one. So, what’s nice about that is it doesn’t matter whether you get sick or die, there’s going to be money there that pays. And that’s very, very important. And sometimes even just looking at a basic, you know, long-term care policy. And if you asked my single clients, you know, what’s your biggest fear, they’d say, look, getting sick and not having a good plan for my care. And so most people just don’t want to be put up in any type. But you know, for my single clients, they just don’t want to be put anywhere. And they certainly don’t want family members coming in taking care of them. So, those are things that weigh on the minds of those that are single more than those that might have somebody in their life that they would say, hey, we’ll take care of each other or whatever. So, but engaging someone you trust to serve, also, as your power of attorney can be very important for a single person in lieu of a spouse to speak on your behalf if you encounter a health issue. So, who’s going to be your advocate for you if you do have a health event and You go into a facility, who’s going to be there to help take care of things on your behalf, speak with the doctors make arrangements, things along those lines, think carefully about that and choose the Choose properly. Because your power of attorney is very, very important.

Steve 15:15

Sure, I mean, those are all things to consider. And I mean, again, from a single standpoint, I mean, as a married guy doesn’t really occur to me, but boy, seeing it black and white, there are some pretty big decisions that single folks have to make.

Brian Quaranta 15:27

Yeah, I mean, all of us. And sometimes you’re suddenly single, right? You know, if a divorce spouse’s death is, is a recent event, you may want to make the next 12 months to make no decision. That’s kind of what we call our No Decision Zone. You know, we feel that you need time. But a financial advisor can help you prioritize the items you need. Now that you are suddenly single, and you know, even though you were once married, now all of a sudden, you find yourself Suddenly Single, well, the planning and the strategy start to take change, because you need to start thinking about things differently now that it’s just you. But this is what our Right Track Retirement System is all about. And that’s why I’ve designed it because you have to focus on these five key areas. If you’re not focusing on income, taxes, investments, healthcare and your legacy planning, you just don’t have a retirement plan, you have an investment plan. Remember, there’s two phases to retirement, there’s an accumulation phase. And there’s the distribution phase, the distribution phases, where secure money advisors works, that’s what we specialize in, we help you not only generate the income you need in retirement, but also, God forbid anything ever happened to you, you had a premature health event, or you died, we want to make sure that the plan is complete from start to finish that includes the proper income strategies, the investments, the healthcare strategy, the legacy strategy, the tax strategy, but if for the next 10 callers who call in right now, we’re going to walk you through our right track retirement system, when you come in, it’s a one-page financial review that will help you indicate whether or not you’re in need of a full-blown financial plan. I’ve seen other people charge up to $1,000 or more for similar features or offers, we’re going to do this at no cost. It’s going to take the mystery out of financial planning, but you got to do your part. You’ve got to call us and schedule today. So again, for the next 10 callers. That’s a comprehensive financial review. We’re giving away complimentary with no obligation

Steve 17:15

800-656-8616 10 callers right now get that comprehensive financial review, you’ll see where you are today. Yes, of course. But more importantly, you find that 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, we’re gonna take a quick break, we’ll come back and continue the conversation right here on Retirement You Radio with Brian Quaranta.

Announcer 17:48

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 18:24

And we are back on Retirement You Radio increasing your financial IQ with Brian Q, Brian Quaranta courses here I’m consumer advocate Steve and this has been a really fun show Brian, and we’ve covered so much ground, but we’re not done yet. And so, I think it’s important that we just continue down this list. And I know we touched on a little bit earlier about beneficiary designations as part of estate planning. But again, having the incorrect transfer on death payable on death, the Tod pod designations. Boy, that’s a critical piece of the puzzle too. And it’s so easy to do it beforehand and impossible to do after something happens.

Brian Quaranta 19:00

Yeah, if you have a trust or estate plan, fidelity recommends double checking your transfer on death Tod and payable on death pod designations to ensure that they will match. Look, I don’t think people really realize how important the titling of your accounts are. I mean, the titling near your accounts could mean the difference between probate and no probate and who wants to go through probate that no that’s a process. Right? So yes, checking your account, titling, Steve are very, very, very important. And, you know, it’s just again, part of the process but with federal financial planning, these are the things you’re going to be talking about.

Steve 19:47

Right? And again, that estate planning and I know we’ve done a show on this in the past about estate planning and how important it is and boy, that’s so true. You know, and you talk about, you know, just getting that estate in order To make sure that you can get to where you need to be and not have any surprises when something happens, I’ll tell you, I just went through something with, you know, my wife ended up in the hospital, and we knew that she was going to go in for surgery. And so, we finally got off our butts and put the estate thing plan together. And I mean, it shouldn’t let it come to that. It shouldn’t be done before that.

Brian Quaranta 20:18

No. And you know what, and take Steve’s advice. Don’t do it, you know, during a crisis situation like that, because guess who else did it in a crisis situation? I did. Right? I had I had an emergency a personal emergency that I had to go in for. And this was probably I don’t know, maybe 10 years ago. And I didn’t have any of my estate planning documents done. Right. And I’ve been doing this for 21 years. It’s the shoemaker thing, right? Yeah, it’s the cobblers’ kids got no shoes, right. But it’s so important, because really, there’s just some basic documents, you know, financial powers of attorneys living wills, basic will, right, a lot of people don’t really need a trust. And depending on your situation, most likely your beneficiary documents are going to get the job done. Sure. That’s not for everybody. But yes, basic legal documents are very important. And they are part of that, those five key areas that we talked about, right, the fifth area that we talked about, and retirement planning here at secure money advisors is the legacy planning piece. And this is where we talk about how do we get this money to transfer to your loved ones, without the IRS getting a large portion of it or getting caught up in probate or getting taken from nursing homes. These are the processes that we go through to help you solve identify and solve these types of problems.

Steve 21:37

Sure. So, one of the things that you know there’s the Fire Movement that Financial Independence Retire early movement, if you will, but and I understand people want to retire early they work real hard they want to they want to have a fun retirement, but that can lead to problems, can’t it?

Brian Quaranta 21:52

Well, yeah, retiring early has two main disadvantages first, the earlier you retire, obviously the less time you have to save for retirement and to your point that that Fire Movement, right, Financially Independent Retire Early. I think it’s Mister Money Mustache, right? If anybody wants to look him up.

Steve 22:11


Brian Quaranta 22:12

You know, Mister Money Mustache is, is the is kind of the pack leader in that whole movement. But you know, it’s- they’re basically teaching you how to retire early. So, there’s disadvantages because you’re not paying into Social Security anymore. And so, your Social Security benefit, you know, is not going to grow, because they’re making the assumption that you’re going to continue to pay into Social Security. So, there are disadvantages and retiring too early to Steve.

Steve 22:36

Well, and again, absolutely. And, you know, I know we’re kind of running out of time here again, already, holy cow. But let’s talk about medical expenses. Because you’ve got to plan for those, even though you don’t want to the numbers for 2021 are startling.

Brian Quaranta 22:50

Yeah. I mean, you know, not planning for medical expenses. I mean, according to Fidelity, a 65-year-old opposite-gender couple retiring this year 2021, can expect to spend $300,000, in health care and medical expenses throughout retirement. Wow, holy cow. Those are big numbers. Those are big numbers. And again, this is why it’s so important to sit down with a fiduciary planner that’s truly held to a standard of providing you with a plan because these are the exact discussions that you need to be having of how you’re going to handle not only the cash flow that you need to maintain your lifestyle, but how are we going to handle the cash flow that we need for medical expenses and things along those lines. Now, for single retirees in 2021, the estimate is $157,000. For women, and $143,000, for men now here in Pittsburgh, you can understand why everywhere you look, there’s a new medical facility being built. That’s how much money is in this per person, right?

Steve 23:46

Right? That’s right. Oh, yeah. Well, you make a good point, because that’s very true,

Brian Quaranta 23:50

right? They know the numbers. They know, they know what’s coming down the pipeline, they wouldn’t be spending these millions, hundreds of millions of dollars building up these facilities that they didn’t know, this was the opportunity of a lifetime. Look, we have the largest wave of baby boomers coming into retirement and through retirement, and we have an aging population. It’s just the reality of the situation. And there’s a lot of money in medicine right now. And these numbers prove it. Right. Absolutely.

Steve 24:15

So again, just look at the big takeaway here is what we just have to know what we’re looking for and what we want in retirement, right. And the best way to do that is to sit down with you.

Brian Quaranta 24:23

Yeah, look, retirement really is about planning folks. It’s about understanding that you’re going to be going from an accumulation phase to a distribution phase. And that distribution phase has five key areas that you have to focus on its income, taxes, investments, health care and legacy planning. If you make sure that you have every i dotted every T crossed and those specific areas, you will have a solid retirement plan, your retirement plan will be on track. If you want to find out if your retirements on track, call us schedule an appointment and schedule a right track retirement meeting with us so that we can help you determine whether or not you’re on the right We track and we can give you advice on the best moves to make to make sure that your retirement gives you peace of mind, happiness, and the life that you deserve. So, but you’ve got to do your part, you’ve got to pick up the phone, you’ve got to call us for the next 10 callers at the right track retirement meaning no cost, no obligation, it truly is going to take the mystery out of financial planning. We’re really going to take the guesswork out of it all. But you have to do your part for the next 10 callers. That’s a complimentary financial review, no cost, no obligation.

Steve 25:27

800-656-8616. You heard Brian, you’re going to get that comprehensive financial review. There’s no cost, there’s no obligation. And you’re going to see where you are today. Yes, of course. But more importantly, you’ll find that you’ve got a roadmap, a guide that’s going to help get you to where you need to be when it comes to retirement. Brian and the team at secure money advisors are there to help that happen. help make that happen for you. 800-656-8616 again, 800-656-8616 Brian, as always, a pleasure and what a great, just a ton of great information today.

Brian Quaranta 26:02

Steve, what a great show, folks, we look forward to seeing you again next week. Keep your retirement on track. Right here on Retirement You Radio

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 use of drip information. Discuss exposure to ideas and financial vehicles should not be considered investment advice or recommendations, buy or sell any of these financial vehicles. This information should also not be considered tax or legal advice. Past performance is not a guarantee of future results. investments will fluctuate and when redeemed may be worth more or less than when originally invested. Any comments regarding safe and secure investments and guaranteed income stream for only two fixed insurance products did not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company

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