On the Money with Secure Money: Episode 53

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Video Transcript

Randy Major – 00:20

Hello, and welcome to On The money with secure money. I’m your host, Randy Major. And joining me today is president and founder of secure money advisors, Brian Quaranta. Hi, Brian.

Brian Quaranta – 00:30

Hi, Randy, good to see you.

Randy Major – 00:32

How are you today? I’m

Brian Quaranta – 00:33

doing great as always

Randy Major – 00:34

awesome. Hey, I want to jump right in, you’re always talking about the five key elements of the right track Retirement System. Can we go through all of those today so we can understand each one? Yeah,

Brian Quaranta – 00:46

I think that’s a great place to start today. Yeah, so let’s talk. Let’s do it. Let’s start about number one. Let’s talk about income. Okay. Now, I will say that these are all equally important to a certain degree. But the reason why they’re an order from one through five, because number one is the most important, and that’s income,

Randy Major – 01:05

you’re gonna need an income, you’re gonna need an

Brian Quaranta – 01:07

income. So it used to be, it used to be so easy. You know, you go back 30-40 years ago, you know, retirement was just so simple, because when you retired, you got a Social Security check. And then on top of your company gave you a pension check. So for most people, that social security check and pension check, that was enough for them to live off of, they didn’t need any extra money. Now, if they if they had saved some extra money, you know, let’s say they save an extra 100 or $200,000. Use my grandfather, for example, right? So my grandfather retires from Kirby Kirby vacuum cleaner. Some of you watching here, might might remember Kirby, you might even have a Kirby in your house. Still, who knows? I know my parents do. But when he retired from Kirby, he got a pension. And my grandmother got a Social Security check. He used to always take me down to the bank, because I used to work at the Kirby shop with him. And he taught me very at a very young age, what it meant to service people, you know, he will, he would, I can remember him getting very upset at me one time when I rolled a Kirby out to a customer, and it wasn’t cleaned. And, you know, I think he took me back by my ear. Most of you probably know that hold, right Come here, we don’t ever bring this out to a customer not looking completely Berbick. But when he retired from Kirby, he had a pension and Social Security extra money that he had saved though, he would go down to the bank, and what he was buying at the bank used to always tell me, Brian, you’re going to work really hard for your money, invest your principal, all you got to do is invest your principal and live off the interest. And at that time, what he was doing was he was just my own bank CD’s. So the money that my grandmother and him used for vacations and, you know, things along those lines came from that extra interest that he was getting on his bank CDs. So, you know, I think at the time that my grandmother had passed, or was like, $200,000, sitting in bank CDs, but you know, could you imagine getting a CD 40 years ago, when it was paying 10 or 15%, and you had $200,000 invested, let’s just say it was a 10% interest rate. I mean, it’s $20,000 a year in interest that you’re earning, which means that you can take that 20,000 out each year, use it for whatever you want, and never touch your principal, right? Those were the good old days. Yeah, you don’t see that anymore. Number one, there’s no place to take money like that anymore, and keep it safe and get a high interest rate anymore. But the other problem is we got 85 to 90% of the people today retiring without pensions. So the reason why income is number one is because someday, you’re going to want to retire. Now, if you decide to come into secure money advisors, which I would encourage you to do, we can actually help you determine exactly what that date would be. And what we want to do is we want to make sure that when that paycheck stops, that we have a way of replacing that paycheck. And one of the ways that we’re going to do that is through Social Security, depending on when we would turn it on, right. Making your decision of when to turn Social Security on is different for everybody. Okay, some people it might be beneficial to turn on at 62. Some might be 66. Some might be beneficial, wait till 70. But everybody’s different. And you should figure out what your best date would be. But the idea is to figure out, okay, if that paycheck is going to stop, and, you know, this is what we’ll see a lot at the office, the husband wife come in, and they say, Hey, you know, we need about $80,000 a year in income to live off of, Okay. Well, when you look at their income, their only guaranteed sources are social security. Let’s say that adds up to 40,000. Well, if they need at where are we going to get it that we need means we need to get $40,000 from somewhere because they don’t have any pensions. So that means we’re going to have to generate cash flow from the retirement savings. Now, this is where big mistakes are made. And this is where people get themselves in trouble of potentially running out of money in retirement by building their income plan the wrong way, or what we call the distribution plan. And typically what happens, Randy is they’ll keep the money invested in a stock portfolio, okay. And they will pull the income that they need out of that stock portfolio. Now, that’s not a problem, as long as the markets are cooperating. But if you just look at the basic math of what happens, when the markets don’t cooperate, you can see very quickly how the problem could compound. So let me use this example. Let’s say that you’ve got, you know, a half a million dollars, or maybe a million dollars saved, and you need $40,000 A year in income. So you’re going to take your 40,000 out because you needed to live off of, you’re not going to stop taking it. But now let’s say the market goes down, and your portfolio loses 50,000. So now you took 40,000 out to live off of, but the market also went down and you lost 50,000. So now the portfolio’s down $90,000. That’s a problem. So what’s happening, there are people when they do that they’re compounding the loss, they’re locking into the loss. And now what happens is they wind up falling into the statistics that we see from all of the financial data out there, where if people try to build a plan this way, according to the Wall Street Journal, you have up to a 56% chance of running out of money before you die. So what we’ve done in secure money advisors, and folks, this isn’t anything that secure money advisors has invented. These are basic principles that have been around for a long time. But since we focus on the distribution phase, we’re going to show you how to build this model out the right way, so that you can get the income that you need, but also grow the money so that you can keep pace with inflation and taxes and everything else. And this is why income is so important, because we all need it to maintain our lifestyles. So

Randy Major – 07:11

we’ve only reached the very first ponent. And just that alone is enough reason to come in and meet with you. It absolutely is a great time to tell the viewer about the special offer you have today. So they can come on in and meet with you cost free.

Brian Quaranta – 07:26

Yeah, yep. So it’s completely complimentary folks. We’ve done that by design for anybody that calls in from our TV shows, from our radio shows and our educational events, we’ve built the right track retirement system to be very simple and easy to understand. Because what we want to do is we want to give you a plan that you can understand, because if you don’t have a plan that you understand, if you’re getting advice out there, that’s very confusing. What happens is a confused mind does nothing and the worst thing you can do right now is nothing, right? That’s the worst decision you can make. So for the next 10 callers who call in right now, we’re going to give you a complimentary right track retirement review, where we will bring you through these five key areas income taxes, investments, health care and legacy planning. We’re going to talk more about those areas when we come back on the next segment. But do your part right now pick up the phone and schedule with us today. It’s 888-382-1298. Again, 1-888-382-1298.

Randy Major – 08:28

Well, folks, we have to take a very short commercial break, but please stay with us. We’re going to talk more about the right track Retirement System and the five key components of having a retirement with peace of mind, give a give us a call the numbers on your screen 8883821298. And we will be right back.

Brian Quaranta – 08:47

Everybody can tell you how to invest your money. There’s not a lot of people out there and a lot of firms that can teach you how to use your money. Most people will also tell you that they’re scared. And the reason they’re scared is because they’re afraid of running out of money. The last thing you want to do is have a really good job and your 60s retire, be looking for work again in their late 70s. The average person might say, well, a good portfolio would be a good mix of stocks, bonds and mutual funds. A good portfolio is all designed around the five key areas income, taxes, investments, health care and legacy planning. There’s we’re not just product pickers here, what we do best here as we build retirement plans, nine out of 10 people when they walk through the door would ask us, we just want to know if we’re on the right track. And I always say if you’re not on the right track, when would be a good time to know it. Probably now, people you know can actually see a vision once we start to really build out their plan. This is about you. If you’re not getting what you need. And you feel that when you walk out of the advisors office, it’s time to get a second opinion. And you can’t get a second opinion from the person that gave you the first opinion The difference at secure money advisors, as a fiduciary firm, we help you manage the risk, build the income, and give you the retirement

Randy Major – 10:17

Welcome back to On the money with secure money. I’m your host, Randy major, and I’m chatting with Brian Quaranta of secure money advisors. And we were just going over the key components of the right track retirement system,

Brian Quaranta – 10:29

we only got to number one that we did.

Randy Major – 10:31

I want to encourage you if you’re watching at home and you have questions, the phone lines are now open. So please do give us a call the numbers on your screen. Brian, let’s get to the number two component,

Brian Quaranta – 10:42

which is taxes. Okay, the one everybody likes to talk about. But most people don’t do tax planning. This is a very overlooked area of financial planning, we’ve got a major problem because most people are putting money into tax deferred accounts like IRAs 401 K’s 403 B’s, they’re getting tax deductions, but all the growth on the money. And all the money they plan on taking out in the future is all going to be taxable. So if you believe as most people do, because I will typically ask at our educational events, and I will ask the viewers today, do you believe taxes are going up or down in the future? I think I just heard everybody say up. And you’re right. I believe that do. So if you believe taxes are going up in the future. Think about what that means if you need money from your retirement accounts. And let’s just use let’s use a very simple example. Let’s say you need $1,000 A month from your retirement accounts. So you start taking $1,000 a month out you got to pay taxes on it. Let’s say you’re in a 20% tax bracket in retirement, that means that $1,000 withdrawal is only going to net $800. Let’s say that tax rates continue to go up and now you’re in a 30% tax bracket down the road. Now that same $1,000 withdrawal is only going to net just $700. So just through taxation alone, you’ve lost purchasing power, and your net amount going into your bank account is much less add inflation to that, and now you’ve got a major purchasing power problem. So if we can eliminate taxes from the income plan, then we’re going to be better off and that requires proactive planning. Right? Most people are reactive when it comes to planning. Be proactive when it comes your planning, especially your tax plan, and work with a licensed fiduciary firm that walks you through these areas to make sure that you’re tax efficient, going into retirement. And some of you might be too late, some of you might not actually have the time to do proper tax planning. But that doesn’t mean you shouldn’t explore the idea of looking at it to make your situation more tax efficient. So

Randy Major – 12:43

such helpful information. Yes, taxes, tax planning is a completely different game than tax preparation.

Brian Quaranta – 12:50

A lot of people don’t know that. That is a great point, Randy. Preparation of taxes is different than the planning attacks, as she said that perfectly. And it’s so important to understand because your tax preparer is looking at your history and saying I’m trying to get you to pay less taxes based on what you have already done, right? We’re saying we were looking into the future and saying, We want to be proactive in the way that we build this, so you don’t have to owe taxes in the future.

Randy Major – 13:17

Okay, so let’s move on. So that was number three.

Brian Quaranta – 13:21

Number three is investments, right? So why is investments important? Because as you get older, and you move into the distribution phase, remember, income being number one, which means you’re going to have to generate income. Well, for most of you, your accounts are not set up to generate income and retirement, they’re mostly set up for growth, which is fine, you’re still going to need growth, but you cannot pull income out of a growth portfolio without subjecting yourself to something called sequencing risk, which again, is when we pull money out and the market goes down on top of it, and you compound the loss by pulling it out and you lock into the loss. It gets really ugly, really messy. And that’s what causes people to actually run out of money before they die. And these are the things that you want to avoid. So getting the proper investment mix is critical. Okay. And so for us, we believe in colors of money, right? There’s red money, there’s blue money, and there’s green money, right? We said the right track Retirement System was simple, right? So red, blue and green money, once you understand how to allocate your monies, to those three different colors of money, okay. And each of those colors do something very, very different. You’re gonna see a planning model come together. That gives you a real peace of mind insecurity in retirement.

Randy Major – 14:39

Oh, wow. I love that makes it so much simpler. That’s right.

Brian Quaranta – 14:43

Listen, Maddox can understand. Maddox is my little two year old So Max can understand colors of money. Right? And so when we talk about colors of money, we’re just breaking down very complex topics to very simple and easy to understand concepts so that people can wrap their minds around building the proper plan,

Randy Major – 15:02

right? Because it’s so confusing anymore. I

Brian Quaranta – 15:04

will have clients. Yeah, I will have clients literally tell other people, you need more green money, okay? And no, and they look around they go, What are you talking about any more green money, right? I have too much money in red, I need more green, I need more blue. That’s the way we talk at secure money advisors because again, this is all designed around the KISS principle. Keep it simple, stupid, right? And that’s what we want to do. Kiss it. Keep it simple.

Randy Major – 15:28

I love that. All right, let’s move on to key component number four. Number four

Brian Quaranta – 15:33

is what we call health care or insurances. All right. So for most people, when they retire, if they want to retire before the age of 65, they are going to need some type of health insurance. Well, where are we going to get it? How much is it going to cost? Number two is if you have a health event and retirement, most people are exposed. Did you know The average cost of a nursing home in western Pennsylvania is over $10,000 a month, over $10,000 a month. We recently are dealing we recently have dealt with it in our own family where we had grandma go into a nursing home because she fell and broke her hip. And you know that Medicare only pays for so long. And then you have to start to self pay. And it’s not cheap. Where grandma is it’s $300 a day, $300 a day. So most people have not looked at how they’re going to protect themselves there. And what happens a lot of times is if a health event does happen, they’ve got to go into their own monies and start to pay for that cost of care with their own monies. And again, now not only are you taking the income because you need to live, but now you’re paying for your health care out of your money. Do you see the compounding problem here? This is where people run out of money before they die. It’s the biggest fear of every American out there. According to AARP, they interviewed 1000 people and they said, What do you fear most running out of money or death 90% of the people interviewed and surveyed for that said, I fear running out of money more than I feared death alone. And I know most of you listening to the show right now probably feel the same way about that. So understanding your options when it comes to building out your healthcare strategy is very important to an overall well thought out retirement strategy.

Randy Major – 17:14

And Brian, thanks. So really good health care, we are living much longer. But you know, health care costs are also going up so much, it’s really feel a little overwhelming when we start to think about our later years.

Brian Quaranta – 17:25

Well, you may be you make a great point, because retirement planning has been challenged these days, because of life expectancy. We you know, and it’s a great thing that we’re all living longer, but it comes with challenges. And that means our money needs to last longer, we have more of a we have a higher probability of a health event taking place. So and these are very, very overlooked areas. And too many people are, you know, they they’re too dismissive of the topic, right? I just had my kids take me out back and shoot me. You know, this is not a game, folks. I mean, until it happens to you, it’s all fun and games until it happens to you trust me, then when it happens, you’re really upset with yourself that you didn’t put together a plan and I’m encouraging you put together a real retirement plan, right put together a strategy that covers the five key areas. And the last one, Randy, which I think we’ll talk about on the next segment is going to be our legacy planning or estate planning. But what I want to do is offer to the viewers right now the opportunity to come in, take advantage of our right track retirement review. We talked about it on every show, the review is complimentary to you. When you come into our office, the meeting takes about 45 minutes to an hour. We know the process of meeting with a financial advisor can be intimidating, but it’s not. It’s secure money advisors, you’re going to find that it’s a very easy and simple process to go through with us. And it’s so helpful because it’s going to give you so much clarity, so much peace of mind about what you’re currently doing. And I’ve always I’ve always said, if you’re not on the right track, when would you want to know right now would be a good time. But you’ve got to do your part. This is not a time in your life. to procrastinate and kick the can down the road. This is the time to pick up the phone. Call us schedule the time today. Come in, meet with myself and my team and get some clarity and peace of mind when it comes to your planning but you got to do your part. Call us today. 1883821298 for your complimentary right track retirement review.

Randy Major – 19:29

Thank you, Brian. Folks, just a phone call today and an hour of your time is going to lift a huge weight off your shoulders, retire with peace of mind and get the ball rolling today the numbers on your screen 888-382-1298 We’re gonna take a quick break. We’ll be right back.

Brian Quaranta – 19:46

If I could help you increase your income. If I could help you pay less taxes if I could help you potentially maximize the returns of your investments while reducing risk reducing fees if I could help you prepare for a health event or more importantly when the good Lord decides to take you home to make sure that the money you’ve accumulated over your lifetime goes to your family and to your charities rather than the IRS. Would that be worth the time to come in and get a second opinion?

Randy Major – 20:15

Welcome back to On the money with secure money. Brian Quaranta and I are chatting about the five key components of a peaceful retirement. Right, we’ve got to get to number five, before we run out of time

Brian Quaranta – 20:27

peaceful retirement. Yes. Nice. Yes,

Randy Major – 20:30

I know what it should be. Well,

Brian Quaranta – 20:31

I get so many people that say, you know, I just, I just want to have peace of mind going in, you know, and could you imagine not taking the time to put together a plan and the markets going up, and it’s going crazy, and you’re worried whether or not your plan is going to work if it’s not going to work. And you know, most people understand that if the markets go down, you know that they will come back. But let me tell you something, when you’re in retirement, and you’re taking money out of your accounts, when the markets go down, you’re not going to have the guts to hold in there. If the market goes down, 30 40%, you’re going to panic, and you’re going to get out. And that’s when you’re going to do all the damage. And this is why I’ve always said the mitigation of risk is so important. And that’s something we do really, really well. But let’s talk about estate planning or legacy planning. And that’s the last part of it. So the reason why this is so big is because the IRS, unfortunately, for a lot of us becomes our largest beneficiaries. There was an article in Money Magazine that really illustrates how much of a problem this is. So there was an article about a son, his name was John Baron, and he finds out that he’s the sole beneficiary to his father’s retirement account when he died. He’s the primary beneficiary for everybody in, you know, for everybody today that’s listening to the show, you probably have your loved ones on as a primary beneficiary or contingent beneficiary, thinking that you’re doing the right thing. So John’s a primary beneficiary. The dad passes away, John contacts the company, the company sends him the death claim paperwork, and John sends everything in. And the company sends John a check for $500,000. So he receives his inheritance. Unfortunately, a few weeks later, he gets a 1099 Saying that he owes $230,000 in taxes to the IRS. So imagine this, he inherits a half a million dollars from his dad’s retirement account, but has to pay the IRS $230,000. Now, why is that? Well, because when John received the money, remember, he had to pay taxes on that money at his income tax rate. So if John was already making a good amount of money, let’s say $100,000 A year and on top of it, he receives dad’s Ira of 500,000. Now he’s paying taxes on 600,000. And in Pennsylvania, we still have the inheritance tax here, which can be anywhere from four and a half, all the way up to about 12 and a half percent, maybe even higher, don’t quote me on that top number, but it’s up there, depending on who you leave that to. So it gets really ugly. So we want to make sure that when we’re building out your plan, that we focus on what happens at death, okay? Because we want to make sure that your spouse, your kids, your grandkids, your charities receive that money with the least amount of taxes owed, and sometimes that might be changing the beneficiaries to a trust or, or redesigning where the money goes and how it goes. And these are the things that can help in a situation to not make the IRS the largest beneficiary. Nobody wants to do that we all pay enough taxes over our lifetime, that putting ourselves in a situation at death to owe a large amount is just not responsible planning and secure money advisors. We want to make sure that when it comes to that for that fifth area, we handle that correctly.

Randy Major – 23:57

How do you determine if somebody should have a trust?

Brian Quaranta – 24:00

It’s complicated, you know, depending on their situation, not everybody should. Right. But again, that’s financial planning. It’s so unique to everybody’s situation, depending on what types of monies they have, who they’re leaving the money to. So there’s a lot that goes into determining whether or not that should happen.

Randy Major – 24:20

Okay, Brian, well, we have time for a viewer questions. I’d like to take one I have skipped in Pittsburgh, and he wants to know, next year in 2022. I am required to take required minimum distributions. RMDs. Yep, from an IRA 401. A and 457 plans, I don’t need the money and I don’t want to deal with the tax obligations. Should I consider a Roth IRA?

Brian Quaranta – 24:45

Well, so there’s a few things you could do there. The answer to that is probably Yeah. Because if he had converted that money to a Roth IRA, he wouldn’t have to worry about taking those RMDs and you know, how nice is that? You know that when you do tax Planning, like going from taxable accounts to tax free accounts that when you turn 72, the IRS doesn’t require you to do a distribution skips a great example of what happens to everybody without proper planning. All of a sudden, they go, Well, I don’t need any of this money. But the IRS says I don’t care if you don’t need any at 72 years going to start to take it whether you want it or not. Now, your income taxes go up, your Social Security taxes go up, your Medicare premium goes up, and people don’t realize the mess that it creates for them later on down the road. There’s also things that he could do there. If he was charitable, he could do what we call QC DS, which are quasi qualified charitable distributions. But these are these are the things that people don’t know about. Unfortunately, a lot of people we’re working with advisors that just don’t understand this more advanced level of planning to where they can eliminate some of these things through some simple strategies that are available to all of us.

Randy Major – 25:53

Okay, well, we have two minutes left in the show. Let’s take one more quick question. Let’s do it. Jane. And Wexford says, I called the Social Security office and they want to argue that I cannot suspend my social security retirement benefits. I started taking benefits at 62. And I have already reached my full retirement age at 66. And two months, what should I do?

Brian Quaranta – 26:12

Yeah. I feel like everybody’s got problems with Social Security anymore. Yeah, I mean, you just got I mean, that’s a tough situation. You know, Social Security is one of those things that number one, you need to have a plan for. Because it does get messy. Some of the strategies like file and suspend and some of these other spousal benefits and things along those lines, that a lot of them have gone away, they’ve taken strategies away. So it gets very, very complicated. Unfortunately, you know, what she’s experiencing is what I hear most people experience and that is when they call Social Security, they get resistance, or they get conflicting information. You know, at secure money advisors, we’ve taken a lot of time to educate ourselves around social security. And that’s helpful to our clients. But at the end of the day, getting the right person at Social Security does matter. Fortunately for us, we’ve got a few people on speed dial that actually work at the Social Security Administration that help us so that’s a little bit of an advantage that we have in our back pocket, but in her situation, it’s tough and I understand her frustrations.

Randy Major – 27:17

Okay, Brian, we’re at the end of the show. Let’s quickly

Brian Quaranta – 27:19

review folks. That’s it. Call us today. Next 10 callers 18883821298 Don’t kick the can down the road schedule with us right now. Come on into the office, visit us take the walk down the retirement road and see what the right track retirement review is all about. Scheduled say it’s complimentary 18883821298

Randy Major – 27:43

Thank you so much, Brian, and thank you at home for joining us you have a beautiful rest of your day.