On the Money with Secure Money: Episode 45

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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 Quaranta. He is president and founder of secure money advisors. Brian, how are you?

Brian Quaranta – 00:31

I’m doing good. Good to see you as always.

Cynthia de Fazio – 00:33

it’s great to see you as always, because I know that you’re so extremely busy. So I love the fact that we find the time to do the shows together. So thank you for always coming into the studio and having me be your host.

Brian Quaranta – 00:43

Well, we appreciate it very much.

Cynthia de Fazio – 00:45

Definitely. Let me ask you right out of the gate, what types of questions are you hearing a lot from people that are obviously watching the show? And they’re calling in? They’re booking the consultation with you? Is there one main thing that they’re asking more than anything else?

Brian Quaranta – 01:00

Am I on the right track? Okay, always ask that. And I think what they really mean is, you know, doing this for over 21 years here, here’s what I’ve learned, because, you know, on the right track means different things are different people, okay? But what they’re really asking is, we’re saying is, I’m at a point in my life, where I can’t afford to lose a lot of money. And I’m afraid that the market might go down. And I might lose a chunk of that money. And they don’t want to see that happen. Or they’ll say, you know, I’m getting ready to retire, I’m not sure when to collect my Social Security. They’ll say they don’t have a pension, and they want to learn how to generate income from their investments. So these are the things that you hear a lot of people also want to know about taxes. I mean, how do they pay less in taxes in retirement? So those are the pretty common things we hear because it always will revolve around the five key areas that I always talk about. And that is income, taxes, investments, health care and legacy plan. And I always say at our practice, if we’re making sure that every i is dotted, and every T is crossed on those five key areas, you will have a really good retirement. But I think people get confused as you and I always talk about Sure, they get confused that that pile of stuff or those investments that you have as a retirement plan. It’s just not. It goes beyond that. Yeah, absolutely.

Cynthia de Fazio 02:19

So I can envision a lot of people coming into the office, Brian, maybe a little nervous arms crossed a lot of stress and tension. But then after they meet with you, sigh of relief, would that be true?

Brian Quaranta – 02:30

Yeah. But you know, I think, you know, if people are, you know, they’re watching the TV show more often, we’ve got a lot of people that are fans of the radio show. And what you see is what you get with me and my team, because we have such a great culture at our office, that a lot of people come in, and they’re ready to be open and honest about where they’re at. And they really are saying, Please help me, right. You know, I’ve been watching your show for, you know, quite a few years. And, you know, I’ve been, I’ve been, you know, talking to my wife and saying we need to come up and we need to get together a plan. Sometimes, you know, people are intimidated by the process. But, you know, we make it so easy because we have such a good process to bring them through. See, I think what it is, is most people are afraid that they don’t know what to ask. Well, at our office, you don’t need to worry about what the ask because we’re going to ask you all the right questions around those five key areas that we talk about all the time.

Cynthia de Fazio – 03:25

Well, Brian, you said the magic word question. Question is we have so many questions, cuz yeah, if you don’t mind, I would love to tackle it. Let’s do it today. Is that Sound like a plan?

Brian Quaranta – 03:36

Let’s do it. Okay.

Cynthia de Fazio – 03:38

This is a great question says, Brian, I’m 67 years old, I intend to take Social Security benefits at age 70. My wife turns 65 years old in June of 2022. She does not have the minimum 40 credits of work to get her own social security retirement benefits. When she turns 65. Can she claim spousal benefits? How will they be calculated? And if she claimed spousal benefits? Will that have any effect on my benefits when I claim at age 70?

Brian Quaranta – 04:06

Well, first off, the unfortunate thing is you can’t you cannot collect your Social Security now until your spouse turns on their social security. So in this case, she doesn’t have 40 credits. So that means that she cannot turn her spousal benefit on until her husband does meaning that if she turns hers on, she might get a reduction but it’s going to be under her own benefit. Okay. But but this is the this is the really strange thing about Social Security. Let’s take somebody that has been divorced, okay. Well, they can turn their social security on before their ex spouse turns your Social Security on. But if you’re a married couple, you don’t have enough credits. You can’t turn it on until your spouse turns on. So they might be in a situation to where him waiting might not be in their best interest.

Cynthia de Fazio – 04:52

Okay. Yeah. And again, it’s a situation where someone has to come in and really talk to you to understand all these different things because obviously it can be very confusing when we’re talking about? Well,

Brian Quaranta – 05:01

I wish I would I, you know, I don’t know anybody, I don’t know anything about his situation. But I would say this, you know, I’m in a little bit of a disagreement and waiting till 70, you know, because you know, but again, this individual might be in really great health. And there might be some things about the situation that I don’t know about. But I believe in collecting Social Security sooner than later. Because remember, Social Security is a benefit that’s only guaranteed while you’re living, alright. And the average life expectancy, by the way for a male is 78 years old. So it doesn’t matter whether you collect at 62 or 66, let’s say that was your full retirement age, you’re going to collect the same amount of money up until age 78. Right? So it takes up until age 78, where you get your breakeven points. So it’s not until you live past age 78, that you actually start to benefit from waiting till that later year of 66. Now, if you wait till 70, to collect your breakevens, not to like it out until age 83, which is beyond the life expectancy for a male Oh, you know, according to AARP, so,

Cynthia de Fazio – 06:05

okay. Which is still the number one fear that we’ve talked about. Yes, a living your money.

Brian Quaranta – 06:12

They interview people every single year, and they say, Hey, what do you fear most running out of money, or death. And like 90% of them say, Hey, I fear running out of money more than I fear death alone. And I can understand I mean, I wouldn’t want to run out of money in retirement. So remember this. For every dollar you get in Social Security, it’s $1, that our investments don’t have to earn, or it’s $1 that we don’t have to take from our investments. So we’re leveraging something that you’re guaranteed to get as long as you’re living. But remember, when you die, Social Security goes away. So why not leverage it, to try to preserve the assets that you’ve accumulated over your lifetime? So that when things come up later on down the road, like inflation, or an emergency, you have a pot of money to go to? Because if you want to retire, right, and you want to delay taking Social Security? Well, where are you going to get the income from? You’re probably going to take it from your retirement accounts? Well, what’s that going to do to the balance over time, it might deplete it. So you know, when we run the math, a lot of times it shows better collecting Social Security sooner than later.

Cynthia de Fazio – 07:15

That makes sense. Well, Brian, I know that you have a very special offer for the viewers at home today, let’s spend a little bit of time diving into that before we open the phone lines.

Brian Quaranta – 07:24

Yeah, it’s all about being on the right track. And we developed the right track retirement system, because that’s the number one question we get. So I said, Well, what if we developed a system that gave people the peace of mind of whether or not they were on the right track? And I always say, if you’re not on the right track, when would be a good time to No, you know, think about that. If you’re getting to a point where you’re close to retirement or you’re retired, and you still have questions and concerns about what you’re doing, it’s a great opportunity for you to come in and get an analysis of your portfolio. Because when we sit down and walk through the five key areas with you, it’s going to start to become very clear of how to position these dollars in retirement. You know, we always talk in our office about buckets of money, okay? Because what people don’t realize is, as you get older, there has to be different buckets of money. There’s, there’s the, the now bucket, the soon bucket and the later bucket, right, or what we also call the blue bucket, the green bucket or red bucket. Okay, yeah. And when you come in, we’ll show you the strategy behind doing that. And there’s a design behind that. Because, remember, if you’ve got to build your own pension, like most people do, because they’re not getting one, meaning they’re going to have to generate income, you have to learn how to position your money for income. Well, if you think you’re just going to retire and take your 401k and roll it over to some IRA with some investment firm, and you’re going to start taking money out of there. Think again, because that’s where you run the risk of potentially running out of money. So the right track Retirement System is all been built around helping people to determine if they’re going to have enough money. What if another, what if another 2007 2008 came? Or what happens if we had another issue with a pandemic, but the market didn’t recover? And you lost 25 or 30% of your portfolio? What impact is that going to have? Sure, right. We’re what happens when you die? And the good Lord takes you home? Yeah, I know that most people will tell me, they would rather see the money go to their family, right and to their charities. They don’t want to see an unnecessary amount go to the IRS. And you know, when we come back, one of the things I wanted to talk about was the Cares Act and the secure act because most people don’t realize when they die, a lot of times the biggest beneficiary is the IRS.

Cynthia de Fazio – 09:41

Okay, we definitely want to talk a little bit more about that. So do you have an offer today for the first 10 callers the call folks

Brian Quaranta – 09:47

for the next 10 callers who call in right now we are going to give you the right track retirement review. This is a complimentary portfolio analysis of where you’re currently at. Wouldn’t it be nice to know whether or not you’re on the right track? This will help you determine where you are and where you need to go. And if you are on the right track, wouldn’t it be great to get that confirmation? So for the next 10 callers who call in right now, we are going to give us two complimentary no cost, but you got to do your part. You got to pick up the phone and you got to call us. It’s 1-888-382-1298. Again, 1-888-382-1298.

Cynthia de Fazio – 10:21

Brian, thank you so much to the viewers at home. The phone lines are now open that number to call is 888-382-1298. We know you have a lot of questions for Brian about how to plan your perfect retirement. Please stay tuned. As soon as we come back. I have more questions for Brian and one of those could be your very own. We’ll be back momentarily.

Commercial Break – 10:42

How confident are you in your current financial plan? Do you know with certainty how the recent market volatility will affect your future hopes and dreams? How much are you paying in taxes? And how much are you losing to unnecessary high fees? You didn’t work to save this money so that you could spend your time worried in retirement. Now is the time to take charge of your finances so you can feel confident about your future call in during the next 30 minutes of today’s show only to set up an absolutely complimentary no obligation, full blown financial review that will result in your own customized written plan. This is a $999 value that we’re giving away complimentary to the first 10 people who respond. We’ll start with a full blown analysis of what you already have, by running a report to untangle how much you are currently paying in fees, how you’re allocated for risk, and what it’s costing to work with your current advisor. Next, we’ll identify your goals. Where do you see yourself in the next five years? Where do you want to go? And who do you hope to go there with is your current financial plan set up to get you there without mishap? Let’s design a roadmap to create a financial plan you can follow with confidence, get the piece that so many people are missing from their retirement. Find out how having a written plan can make a difference to your retirement dreams. Call now to schedule your complimentary no obligation full blown financial review today.

Cynthia de Fazio – 12:15

And welcome back to on the money with secure money. My name is Cynthia De Fazio. I’m joined today by Brian Quaranta. He is president and founder of secure money advisors. Bryan, a great show that we’re having today, obviously talking a lot about viewer questions. And I love that. But in our first segment, you mentioned the Cares Act and the secure act. Let’s talk a little bit about those before we get back to viewer questions.

Brian Quaranta – 12:37

Yeah, I think that I think the best way we can walk the viewers through this is to talk about what things look like before the secure Act was signed in law. So let’s go back prior to December 31 2019, when it was signed into law. And if you had an IRA, and when I say IRA for the purpose of what I’m speaking about, we’re talking about any retirement account, right. So we’re talking about 401 K’s, 403, B’s, IRAs, anything that has a beneficiary attached to it that’s going to pass on if you die. So Money Magazine probably did the best article of how disastrous this can be to our heirs when we pass away and our our IRAs or our retirement accounts passed to our to their families. So there’s an article about a son inherited his father’s half a million dollar retirement account. Standing upset, of course that his father’s passed, he calls up the company says, hey, my dad’s passed away. What do we do? They said, let us look at the beneficiary document, they said you that you are the primary beneficiary, you need to send us a death certificate. So he sends all the documents and and a couple of weeks later, he gets a check in the mail for $500,000. Well, a few weeks later, he also gets a 1099 in the mail, which of course we all know what a 1099 means. That means that you now have $500,000 of income. So the IRS, I’m sorry, the article went on to say that the Son owed the IRS over $240,000 in taxes. Think about that for a moment, that man that died that worked probably 30 or 40 years for his money was not expecting to make that the IRS his largest beneficiary, nor was his son expecting to do that. But this is the important part of planning. Because if you think you’re just gonna write some people down as your primary beneficiaries and not instruct the things that can be done to reduce taxation, you’re going to have, you’re going to have a situation like that. Now, under the old rule, we were allowed to do something called an inherited IRA, where the son would actually been able to roll that money over to an inherited IRA. The IRS wouldn’t have taxed him on that, but they would have required that a little bit of money come out each year. I was the old way. Now. And by the way, he would be able to take that money out for the rest of his life. 35-40 years, however long he was gonna live. Now the IRS says, Wait a second. Yeah, no, no, no. We don’t want people being able to defer taxes that long when they die. So now we’re going to force you into either paying the taxes immediately. When you die, okay? Or we’re going to force your beneficiaries to pay in it over a 10 year period or at the end of 10 years, so they’ve shortened and compressed the timeframe. And this is why now, more than ever is so important to do tax planning, because we’re up against such different tax laws that are causing all of us to potentially pay way more in taxes than what we should I don’t have a problem, pay my fair share. I know you don’t either. But I would rather only pay my fair share, and not more than I need to. And it’s unfair, that if you don’t know about it, you get taxed. But if you do, you don’t get taxed. Right. Think about that for a moment. We live in a system where it’s like, Well, I’m sorry that you didn’t know that in this case, kids case. It’s not like he got to redo. You know, the IRS says, oh, sorry, you You took the money out, you shouldn’t have done that you could have rolled it to an inherited IRA. It’s not like he gets a redo. And we don’t want to see people make those mistakes.

Cynthia de Fazio – 15:54

Brian, thank you for sharing that story. That is very, it’s touching. And it’s very important to know, because obviously, people need that information. That’s right. So by coming into speaking with you, one of the team members, if you will, they’re going to leave with more information. So I’m going to jump into some viewer questions. Is that okay? Yeah, let’s do it. All right, excellent. Here’s a great, great question. It says, Brian, I’m 55 years old, I’ve been with the same company about 15 years, I’ve always had a 401k. And I’m taking advantage of the match. Now the company is offering a Roth 401k, should I be contributing to that as well? And are there any disadvantages?

Brian Quaranta – 16:28

Well, do you want to pay taxes? Or do you want to have tax free money? I don’t know what, which one would you choose? Oh, by

Cynthia de Fazio – 16:36

the way, just a trick question.

Brian Quaranta – 16:37

It’s not a trick question. Would you rather pay taxes or not pay taxes?

Cynthia de Fazio – 16:42

I’m gonna go with let’s not pay.

Brian Quaranta – 16:45

Now, here’s the deal, because that’s a little bit misleading what I just said, because in order for him to take advantage of the Roth IRA, or the Roth 401k, he is going to have to pay taxes on that money upfront, right? But let’s just use a simple example. Let’s say that that individual, because when we invest in a 401k, right, let’s say we put $15,000 in for the year that comes off of our gross income, okay, so it lowers our tax bill. But if I invest $15,000, into a Roth, I don’t get that deduction, I have got to count that money as income, pay the taxes, and then I can make the contribution. Right, okay. But let’s look at this scenario here. Let’s say we got $15,000, it goes into a 401k. And that grows to $100,000. And it grows to $100,000. In the Roth portion, the 401k. If I want to pull all $100,000 out, I can do that tax free, if that were to go in the traditional portion, right, if that were to go into the traditional 401k portion, that $15,000 grows to $100,000, I pulled out all of that $100,000 counts as the income tax. Wow. So who knows what income tax bracket you’d be in, you could be in 25 27 28%, somewhere around there, because we’re in a marginal marginal bracket. So you know, it’s always better not to pay taxes in the future. The other way we say it is would you rather pay taxes on the seed? Where the harvest is, I’d rather pay taxes on the seed?

Cynthia de Fazio – 18:04

Because most people do feel, Brian, that taxes are going to go up? Yeah. What do you think?

Brian Quaranta – 18:09

I do? Yeah, I do. It’s hard to believe that they won’t, yeah. But we always want to make sure that we’re making good decisions, so that if they do go up, we’re not stuck in a situation where we’re impacted by it. Maybe we can mitigate that a little bit by doing some good tax planning.

Cynthia de Fazio – 18:23

Sure. That makes sense. Well, Brian, I know you have a special offer to the viewers at home today. Let’s talk a little bit about what that is again, and then reopen the phone lines. Yeah,

Brian Quaranta – 18:32

our right track retirement system, something I’m very, very proud of, that really will help you determine whether or not you’re on the right track. So many people ask us every single week at our office, are we on the right track? Are we doing the right things? Let me ask it if you weren’t on the right track? When would you want to know that? And if you are on the right track, how good would it feel that you actually know that you’re on the right track? So when you come in, we’re going to help you go through the five carriers that I always talk about on this show. We’re going to go over your income, we’ll go over taxes, we’ll go over investments, we’ll go over health care, we’ll go over legacy planning, we’ll get a lot done in about a 45 minute to an hour meeting. So but you’ve got to do your part. You’ve got to call us. You got to get up off the couch, put that cup of coffee down, call us 18883821298 and schedule your complimentary right track retirement meeting with us today.

Cynthia de Fazio – 19:22

Brian, thank you so much to the viewers at home. The phone number to call is once again on your screen. That number is 888-382-1298 We know you have a lot of questions about how to plan your perfect retirement Brian has the answers for you. All you have to do is take advantage of picking up the phone and calling in today. At 883821298. We have to take a very short commercial break when we come back. We’re gonna have time for more viewer questions. Please stay tuned.

Commercial Break – 19:49

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Cynthia de Fazio – 21:15

And welcome back to on the money with secure money. My name is Cynthia De Fazio. I’m joined today by Brian Quaranta. He is president and founder of secure money advisors. Brian a great show that we’re having. And I love this specific spot. If you will all viewer questions. I just want to jump right back in now that I got that out in English. This is a great question. 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? We sometimes need extra income for home maintenance.

Brian Quaranta – 21:50

Yeah, that’s a great question. Here’s the thing. Annuities are really, really great for income. That’s what they’re designed to do. Now there’s three types, there’s variable, there’s fixed, and there’s indexed. Quite frankly, I like to have them write two or three, I like fixed and I like index because they do something very important. They guarantee and protect the principal. Okay. And as you get older, you want to focus more on principal protection and income versus growth and income because growth in income comes with potential loss, right. So variable annuities, also, because, again, the name variable, meaning there can go up and down, right, they can tend to be very high in fees. And we’ve got to remember that fees will reduce your gains, and they will compound your losses. So let’s just use an example. You know, the average variable annuity fee that we typically see is about three to 4%. So let me just go on the low end and say it’s 3%. So let’s say that somebody gets a 10% rate of return in the market, but they got to pay a 3% fee. That means their real rate of return is only seven. But if the market goes down 10%, right, that means it’s going to compound the loss. So their loss isn’t just 10. It’s 10 Minus the fee of three, and now they’re down 13%. Wow. So when we’re looking to build income in retirement, you can do it with no fees, or very low fees and protect the principal in a fixed or index type of annuity. Yeah,

Cynthia de Fazio – 23:22

okay, Brian, thank you. That was an excellent response to that question. I didn’t expect anything different, though, from always spot on. This is a great question to Brian and IRA as being will to me, if I inherited before the age of 59 and a half, can I have it sent directly to my own IRA? And what are the tax implications?

Brian Quaranta – 23:42

So this is what we just talked about earlier, right. This is the example that I gave of Money Magazine, the pain all that tax on that money. So this is a big mistake right here. So can I will it and put it into my IRA? No, that’s the roadblock. And if you do try to do that, guess what you’re going to get taxed. But you could put it into a special inherited IRA, which the IRS allows, and you can move that money to your inherited IRA for the benefit of you. And you would now not have to pay taxes when it transfers from whoever’s Ira they’re inheriting to, to the, to the inherited IRA, you won’t have to pay taxes when that money goes in. But you will be required to get all of that money out now, within 10 years. So you can either start to withdraw a little bit over a 10 year period, and make sure that that account balance is zero in 10 years, or you can defer all that money, right until the 10th year and take it all out at once. Here’s my concern with that. How old was that person that they say?

Cynthia de Fazio – 24:45

They didn’t say that if I inherited before the age of 59 and a half

Brian Quaranta – 24:48

59 and a half? Well, so So but but let’s say she did. If she waited till 10 years to take that money, right? She could be 70 years old, so she’s got a big amount of money and they’re like $200,000 And she’s got to cash it all in 10 years. Well, that’s a big tax bite to take 10 years into retirement. So there’s just better ways to do it. Yeah,

Cynthia de Fazio – 25:06

absolutely. This is a great question to Brian, Brian, is it ever too late to start on a retirement plan ever too late,

Brian Quaranta – 25:14

ever too late, never, ever, ever too late. You know, there’s many situations that we’ve run into over the years where you get somebody that comes in and because life, right, we all know, life gets in the way, sure, whether it’s, you know, a spouse dying, and you didn’t have and you were taking care of kids on your own. And there just wasn’t enough money there to build a retirement savings account. There’s many situations over my career where somebody come in, and they don’t have a ton of money saved. Well, you shouldn’t panic, because there’s still opportunity to grow a retirement portfolio. And one of the ways that you can do that is actually leveraging social security. See, most people don’t realize that when you turn your full retirement age, Social Security will allow you to collect 100% of your Social Security and still work and not penalize you. So let’s suppose that you have are a little bit behind and you’re not on the right track, right? Well, I had a lady that came in, single went through a divorce, and didn’t have a whole lot of money saved. And when she told me what her need was going to be in retirement, I’d say need, I’m talking about what she was going to need for income to live off of her Social Security was definitely not going to be enough. And we knew we needed another source to generate income from. So here’s what we did. We had her turn on our social security, she still worked. And within eight years, because of the social security that we are getting, right, we’re taking the Social Security, and we are investing that along with some contributions on our own, we were able to build up over a half a million dollar portfolio for her in that very short period of time. So a lot of progress can be made very, very quickly. And we’re able to get her retired and she’s got enough income to be able to retire.

Cynthia de Fazio – 26:53

That is fantastic. I love that. Well, Brian, I know we only have about a minute left in the show this week. Let’s talk about what you would like to offer the viewers at home,

Brian Quaranta – 27:01

the right track retirements and the right. It’s always about being on the right track. And that’s because you always come to the office, you interviewer always come to the office and say, Hey, are we on the right track? Are we doing the right things, and we designed it so that you know what the right track looks like? We want to give you a roadmap we want to give you turn by turn directions of how to get from point A to point B. And in retirement. There’s a very specific way to do that. It’s not about the pile of investments. It’s about a strategy. It’s about a written plan. So when you come in, but you got to do your part you got to call us you got to schedule it’s 1-888-382-1298. We’re going to walk you through that right track Retirement System and give you the peace of mind and security you deserve going into retirement.

Cynthia de Fazio – 27:43

Brian, thank you for another amazing show this week to the viewers at home most specifically thank you for spending time with us. That number to call is 888-382-1298 Be safe. Be happy be blessed. We look forward to seeing you back one week from today.