On the Money with Secure Money: Episode 70

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Video Transcript

Rebecca Powers – 00:20

Welcome to On The Money with Secure Money. I’m Rebecca powers your host here with Pennsylvania’s most trusted fiduciaries. Brian Quaranta. And Neil Major, so good to see you.

Neil Major – 00:30

Good to see you see Rebecca.

Rebecca Powers – 00:32

So, some market volatility, we look at gas prices, we look at inflation, and we started to get worried. But with your group, I know there’s no need to worry. What do you tell your clients when they call and ask?

Brian Quaranta – 00:42

Well, they should be putting their head on the pillow and sleeping well at night, because we’ve been, you know, for 23 years now, I’ve been talking about the number one most important thing in retirement, and that’s safety and protection. And you know, the problem today that people have that they didn’t have 30 years ago was you got 85% of the people retiring. Without pensions, and they’re retiring with 401k plans and 403. B plans, tsp accounts, depending on you know, who your employer is, majority of people have a 401k. And that’s all-risk money. And the number one priority, if you ask people, you know, what is the number one thing this money needs to do for you in retirement, they’ll tell you that it needs to provide income. And I’m going to tell you, our clients are a lot happier receiving checks in the mail, then, than worrying about whether their account is up or down in the stock market.

Rebecca Powers – 01:33

Right, looking at a hypothetical piece of paper, you think, do I really have this money?

Neil Major – 01:38

I mean, that’s exactly it. You know, our clients, I feel like we deal with so many analytical type folks, the engineers, the accountants, and you said it perfectly. They just don’t want the hypotheticals of the plan. They really want more to base it on math. And that way they have a true written plan that’s really based on safety. I mean, any retiree? You know, that’s the number one thing that we see coming in the office safety is paramount.

Brian Quaranta – 02:06

Yeah, the guarantees are important in retirement. Yeah, you know, I mean, there’s always a portion of your money, that you should be considering taking long term risk with keyword long term risk. What people don’t realize, though, is that when you’re five years from retirement, or you’re retired, and you need to generate income from the money that you’ve accumulated over your lifetime, you don’t have the long term anymore, to recover from a market correction. So, your number one goal with that money is to actually take a little bit of it and set it aside to generate income. And we always talk in our office, the most important thing we do for the client is protect the first 10 to 20 years of the retirement with a guaranteed bucket, so that any money that is at risk in the market, we can absorb that volatility. And most people do the complete opposite, though, they keep 100% of their money that they’ve worked 30-40 years for at risk in the market, and everything needs to go right in order for that plan to work. So, it’s a gamble. It’s a gamble. It’s basically a gamble. And but you know, our industry has not done a good job and getting people to understand that they should not be rolling the dice 30 plus years’ worth of work.

Rebecca Powers – 03:20

So, the at risk, you say there’s lower risk, there’s higher risk. Can you explain for someone watching right now who’s thinking, oh, gosh, what, what’s mine?

Brian Quaranta – 03:27

Yeah, we’ll explain the difference, we have a three-bucket approach that we use. And you know, we always feel that that three-bucket approach is the way that you can really identify what money should be doing what at what period of time. So, we always have what we call our bank money. And everybody needs bank money, because that’s where you’re going to have emergency cash reserves, you might have a one to two years’ worth of cash in a bank bucket. And then you have what we call the pension bucket. So that bucket is designed to generate income, just like a pension would, but we can get a private pension on our own these days, through the use of fixed annuities. And that will provide an income stream for the rest of the client’s life if they die. If they’re married, it could provide an income for the rest of the spouse’s life. And then you do want a risk bucket. But it should be only the money that you can afford to take risk with. And it has to be a bucket that we’re willing to have at least a 10 to 20 year time horizon on and that’s why we say the most important thing is that middle bucket that guaranteed that pension bucket where we want to protect that first 1020 years of the retirement lifestyle so that when you have markets like we’ve had, you can put your head on your pillow at night and sleep well. Right.

Neil Major – 04:39

And going back to that second bucket, Brian, I mean, if you think about what we used to utilize and kind of the old outdated strategies of 15, 20, 25 years ago, you know, well, first of all, we used to be able to utilize the banks and buy bank CDs safe, protected FDIC insured and get reasonable rates of return on save money, right? And that that made the plan very mathematical once again, then we utilized bonds. And we were always taught go from equity positions, the bonds for safety and a lot of firms and a lot of people still utilize that strategy. Now, if you look at the start of 2022, the problem has been, you know, we’ve had the worst first start for bonds, first quarter, by more than triple the worst first quarter in history, the bonds were down over 3% year to date, they’re down over 9%. So that becomes a real challenge. When you’re looking to build cash flow and income, from those positions that are losing money as interest rates are going up. You know, how exactly do you truly build it out?

Brian Quaranta – 05:43

Well, think about it, everyone that for the longest time, they would just say, you know, as you got older, put more money in bonds, right. And that’s not working. You know, you can look at the 20-year Treasury right now. What is it TLT. Tlt is the ETF for the 20-year Treasury down almost 20% on the year now, think about this, somebody would say to you, Hey, where’s a safe place I could put money, you would definitely think a 20 year United States Treasury bond would be a pretty darn safe place to Sure. That’s what my parents did, you would not think that it was down 20%. But it is, and this is what people don’t realize, bonds have is just as much risk as what stocks do. And the reason why we want to use fixed guaranteed annuities. And people just need to get over the fact that it’s an annuity, they are the most popular retirement product out there today solely due to the fact that they can do something that no other product can do. And that’s provide safety and protection, and also guaranteed income. And this is what most people need in retirement because they don’t have a pension. So they have to think about how am I going to get the cash flow first. So, what you have to think about is I, you know, number one is, when you retire, how much income are you going to need? Right? And how are you going to build that income, now you can try to pull it from a stock portfolio. But good luck, because when I think about it, the market you with a lot of people coming in right now that are down 15 20%. And their and their advisors are having them pull money out of their plans. So you know, compounding our loss, the loss locking into the losses. And this is where people start later on in life, when you don’t have the ability physical ability to go back to work. This is where people run out of money at the age of 85, 88, 90. Right when they can’t go back to work. And this is a problem that we need to fix. Because everybody’s going to be dealing with it because the pensions have gone away. And with

Rebecca Powers – 07:40

the baby boomers, as you know, we’re all they’re all acid we I didn’t mean that we’re getting to that age and my mother in law, she’s fine, thank God and has a new husband. But it’s hard when you think what if I do live to 100? When you have someone walk in your office, do you actually map out if to what age.

Brian Quaranta – 07:58

See, the really nice thing is when you come to our office and you sit down with us, you know, we really take the time to map out a real plan, right? We’re not We’re not here to sell you anything we’re not, we’re not showing you fancies sales brochures or, you know, stock brochures or mutual fund brochures, we’re really hitting the ground running with rolling up our sleeves and building a true plan. And when we talk about cash flow planning in our office, we build out the buckets and we figure out how much money needs to go into each of the buckets. Remember, we got bank money, pension money, risk money. And when we show the portfolio as being the designs of the portfolios, we will always run these cash flow models out till age 100. And of course, most people 90% of you will go out. Right? But you really have to do think what if you did,

Rebecca Powers – 08:51

and it’s nice to live maybe till 90 And leave a little for your children are great. That’s a great, you know,

Brian Quaranta – 08:56

that’s a great plan.

Neil Major – 08:58

I just had a guy come in, and he had been with his advisor for a long, long time. And we when they started to map out their game plan for retirement, the advisor’s advice was you’re going to be okay, you’ve saved enough you’re going to be okay. Well, the guy’s very analytically one of more than that. And he said you’re going to average eight and a half percent. And he said, I just don’t believe that over time, I’m going to be able to just average eight and a half percent be okay. And truthfully, I don’t even think I need to average eight and a half percent. I think if I just get very simple, reasonable rates of return, I’m going to be successful. But his plan was left to a lot of hypotheticals which brought him into our office.

Rebecca Powers – 09:34

Excellent. Well, we’re going to take a quick break time is flying already. And we come back, we’re going to talk about taxes, how you can keep more money in your pocket, stay with us.

Brian Quaranta – 09:44

So, 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 also tell you that they’re scared. And the reason they’re scared is because they’re afraid of running out of money.

Neil Major – 09:58

The last thing you want to do is have a really good job and you’re in your 60s retire, be looking for work again in the late 70s.

Brian Quaranta – 10:06

The average person might say, well, a good portfolio would be a good mix of stocks, bonds and mutual funds can have a good portfolio is all designed around the five key areas, income, taxes, investments, healthcare and legacy planning.

Neil Major – 10:20

Because we’re not just product pickers here, what we do best here as we build retirement plans,

Brian Quaranta – 10:26

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?

Neil Major – 10:37

Probably now, people you know, can actually see a vision once we start to really build out their plan.

Brian Quaranta – 10:42

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 the difference at secure money advisors, as a fiduciary firm, we help you manage the risk, build the income and give you the retirement withdrawal.

Rebecca Powers – 11:12

Welcome back to On the money with secure money. We were talking about taxes, Brian and Neil, we were saying how you need to make money. But isn’t it even as important to save money?

Brian Quaranta – 11:24

Yeah, as a matter of fact, if you want to know more about that it’s in my book, right? Tracking retirement awesome. As a matter of fact, what we’re going to do is for the next 10 callers who call in right now, we’re actually going to give you a complimentary no obligation, right track retirement meeting. And when you come in, I will hand you a copy of this book, and in this book, is our whole philosophy on how we do things. And it’s going to demystify and decode what retirement planning really should look like. So again, for the next 10 callers who call in right now, schedule a right track retirement review call 1-888-382-1298. But yes, taxes are a big deal. I think it’s chapter four or five in this book.

Rebecca Powers – 12:07

Well, you said de-mystify now. I haven’t read this yet. I just got it today. Great picture of you on the back. When you when you say demystify what do you mean?

Brian Quaranta – 12:15

Well, people are very confused. I mean, you know, they Retirement planning is actually relatively simple. It’s, our industry has created a lot of noise. And so, people are very confused about what to do. And they think there’s some magical approach, it’s actually much more simple than what people think, as a matter of fact, when we go through our buckets, with people in our conference room, they’ll always say to us, Boy, I wish I would have met you guys 10-15 years ago, because it’s the first time I actually understand is where you have people coming in. And they’ll say, well, we wanted to come see you because we’re not even sure if we’re on the right track. And we want to retire. And they say we don’t think we have enough money. And we show him that they actually do have enough money. So, they really love you even more. Yeah, because most people when they sit down with scary, a financial planner, you know, are usually not being taught how to approach to planning, we roll up our sleeves, and we teach you how to build the plan, we build it together, but we get you involved. And that’s important. Because the more simple it is, the easier it is to understand and the easier it is to execute. And that’s something that we’ve made our main priority at our office. And matter of fact, I always say, you know, when I come up with new concepts, I always call my mom. And I say, Mom, does this make sense? And she says, yes, it makes sense.

Rebecca Powers – 13:35

Do you have a personal story, Neil, I know you’re one of the senior advisors. Do you have a personal story where someone came in kind of just at the end of their rope, and you had a silver linings?

Neil Major – 13:45

Just recently, I just had somebody come in, they had been with their advisor for 35 years. Wow, think about that they had been with for that law, here, they come to the most important part of their life, the redzone when they’re going to need this money to last the rest of their life, because soon they’re no longer going to trade their time for money. Right. And you know, what they feel is they weren’t getting enough. So that brings them into our office. And you know, what they had said was we met with you for one hour. And in that hour, you showed us more than in 35 years with our previous relationship. So that says a lot about really how we approach things. One in the strategy sessions that we do with folks when they come in from the TV or the radio, but to it’s really about how we build the plan and how we focus on those five key areas. You know, we talked a lot about income. That’s always where we start, you know, income is the primary focus and getting someone retired. Then we talk about taxes. We talk about the investments, the health care and the legacy planning. And we really feel that those five areas are really what creates a true written retirement plan. And that’s why we call it our right track retirement.

Rebecca Powers – 14:56

And you’re more than just financial planning you also you mentioned So, social security, I think medical, you mentioned health. So it makes me think of medical you if they can ask you any questions about your whole life, right?

Brian Quaranta – 15:07

Secure Money Advisors is really been built around a full service model. So whether we need to do estate planning work, we need to do tax work, we need to do Medicare Supplements, right? Everybody, when they turn 65, you got to deal with this whole Medicare. So that’s another confusing, another confusing thing. And we’ve got a great person at the office, Lisa, who handles all of that, and makes it really simple for everybody to understand. And what’s happening is they’re leaving the office, we actually they get a financial planning binder. And in that binder, they’ve got their entire plan. Finally, you know, we always tell them, now you can go enjoy retirement, just make sure you remind your kids that that spirit is going to sit on a shelf in an office somewhere and you let them know that if anything happens to Dad night, while we’re on our trip, grab the binder and call secure money advisors. But that’s what our right track planning is all about. And we’ve worked so hard to develop the right track methodology, and really teach people how to properly build a plan through simplicity, right. And, folks, I really want you to take advantage of this plan, because it’s an opportunity for you to sit down with a fiduciary advisor at no cost, no obligation, right, and really go through some problem solving and help you understand how to build out a retirement plan. And as Neil said, we’re going to go through five key areas with you, when you come in, and you go through your right track retirement meeting with us. We’re going to talk about income, we’re going to talk about taxes, investments, healthcare and legacy planning. But you’ve got to do your part, you’ve got to pick up the phone today. And you’ve got to call us do that right now. 1-888-382-1298. Again, that’s 1-888-382-1298.

Rebecca Powers – 16:46

And that’s a perfect time, we need to take a quick break. And when we come back, we really will talk about taxes. I want to know how to cheat Uncle Sam, and I hope you do too. We’ll be right back.

Commercial Break – 16:56

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 it’s 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 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.

Rebecca Powers – 18:30

Welcome back to On The Money with secure money, we were talking about how to earn money. But a penny saved is a penny earned. And the best way is to keep your money from the government. How do you do your tech? What is your tax philosophy?

Brian Quaranta – 18:44

Yeah, well, tax free is always good, right. And you’re seeing more and more that available. I mean, most people don’t. Most people today realize that they’re you know, there’s a difference between a traditional IRA and a Roth IRA or a traditional 401 K and a Roth 401k. younger, younger folks definitely should be considering putting the majority of their money into the Roth component of their company sponsored retirement plan. And the reason is, is because we’re going to have to pay taxes on the money now, right? So if I if I, let’s say I’m going to deposit, you know, $15,000 into this 401 K plan, but it’s going to be a Roth component. I’m not going to get a tax deduction, when I put that money in that $15,000 I’m not going to get a tax deduction. But if that $15,000 grows to 100,000 $500,000 a million dollars, when I pull that money out, it’s all tax free. So think about the other option you have. The other option is you could get a tax deduction on that 15,000. And it’s good to do the same thing. It could grow from you know, 15,000 to 100,000 to 500,000 to a million and when you pull that million dollars or out whatever amount it is, now you owe taxes on 100% of that million. So, you know we always like to say Would you rather pay taxes on the seed or where the harvest, right. And that’s one of the most simple ways that you can actually build tax free retirement in in retirement is utilizing the Roth. But there’s a lot of other ways to I mean, you’ve got the 7702 plan, you know, where you can utilize cash value life insurance as a way to generate tax free income. But tax planning is extremely important, because taxes will erode your wealth, along with inflation. So now you have a combination of two of them. Right now we’ve got the highest inflation rate we’ve seen since the 80s. And we potentially may have taxes going up. So now let’s say somebody needs to take $1,000 out of their retirement plan. And let’s suppose that they’re in a 20% tax bracket. And they didn’t use the Roth, they use the traditional, okay, so that means when $1,000 comes out, they owe 20%. And taxes on that means they’re only going to net $800. Wow, what happens when tax rates go to 30%. Now, they only net $700. But now you add in inflation. And you can see how quickly this starts to bring down the purchasing power of your money. And it’s the one thing Neil and I talk about all the time retirement, we are more concerned about the purchasing power of your money more than anything else in retirement, because the most important thing that you will need in retirement, the thing that will make you the happiest, is the money that shows up every month in your mailbox to be able to go do the things that you’ve always wanted to do, that you couldn’t do, because you were working.

Rebecca Powers – 21:23

And I want to remind people, the numbers 1-888-382-1298, and there really is no pressure. I think you have earned so much trust, I think that’s the biggest thing I hear about you guys is that you have the trust factor, because you really do care. You’re not one of the big boxes trying to sell products, basically, you’re an independent group.

Neil Major – 21:43

Well, I mean, we’re licensed fiduciaries. I mean, our goal is to build you a plan, right? And you’re right, I mean, I think it can be a little bit of an intimidating. Coming into an office of financial advisor, you’re kind of going to lay out, you know, everything that you’ve have and saved. I feel the same way when I go into a doctor’s office. But our first meeting, all we’re really there to do is learn more about you and understand your situation, understand the things that are concerning you about moving into retirement, and seeing if we can help. And once we can help, we’ll talk about the next steps. But we’re not asking you to make any decisions in that meeting. We’re just there to listen,

Brian Quaranta – 22:22

Good. And if we can’t help, we’ll let you know too. Because there are situations where we’re just not going to be able to help that particular person. And then we shake hands and we part as friends.

Rebecca Powers – 22:33

And they’ve always and they’ve learned something and they’ve gotten a book from you, Brian.

Brian Quaranta – 22:38

You come in. Come in. Word when you

Rebecca Powers – 22:46

By the way, everyone. So you’re never too old. Are you ever too young to start to come to see someone like you?

Neil Major – 22:55

No, I don’t think there’s never an age right. Now, obviously, there’s going to be certain things that we may or may not be able to apply to your situation based on your age. But yeah, I don’t think it’s ever too late to start planning, especially if you’re uncomfortable. I mean, can you imagine if you’re 70, 75, 80 years old, and you’re uncomfortable with the situation, we were talking about longevity here a little bit ago, right? If you live another 25 years Saginaw Bay in that, that state of being uneasy, right, make some changes.

Rebecca Powers – 23:26

And I guess it’s never too late. Some people could, like I’ve said this before, my sister was hitting 59 and a half. And one of you told me, you know, that shit for dinner and a half, she can take out everything from a 401k. And that changed her life?

Brian Quaranta – 23:40

Yeah. And it does for a lot of people. A lot of people don’t understand that you turn 59 and a half, you have something accessible to you called the in-service withdrawal, which allows you to take the money that you’ve accumulated in your employer plan and actually move it into a retirement plan outside of the employer is to plan and not pay tax and not pay tax. Amazing. Get it set up properly. Yeah, what you need to do, because, again, why would that be a benefit, it’s a benefit, because typically, an employer plan only has about 15 to 20 options that you can invest your money in. And if you’re 59 and a half, you’re getting close to retirement, those options may not be the best options for retirement and we say retirement, especially at secure money advisors, we think income, okay, we think income, because I’m going to tell you, the people that are the happiest are those that get money in the mailbox every single month. Now in today’s right, because look, the paycheck is going to stop. And that’s what you’ve got to think about when you build your plan, the paycheck will stop. The question is how are you going to replace that Social Security was only meant to replace about 40% of an individual salary. So where are you going to get the rest of the money? Right? And you can’t put yourself at risk of thinking that you’re just going to start withdrawing money from a diversified portfolio of stocks, bonds and mutual funds and have that money last the rest of your life because it may not, I mean, look at the market volatility right now has caused a lot of anxiety for people. I had a gentleman come in the other day. I’d met him two years ago, okay. He’s been an avid listener of my radio show you listen to this, he watches the TV show, he attends my educational events. And a few years ago, he was roughly at about 1.7 $1.8 million. Okay. And, and I told him at that point in time that he had won the game, he had more than enough money, that if we would just carve off about 800,000, and get it into that protected bucket, right, where we could generate the cash flow that him and his wife needed. Right. So now the cash flow that we’re generating from that pension bucket along with the sole security has given them more than enough money to live off of, we could still keep a million at risk for long term growth, right 10 years or longer growth there to keep pace with inflation, everything else perfect. He goes, but Brian, I’m making so much money in the market right now. Why would I take $800,000 out and put it into an account that maybe can only earn three to 6%? I said, because you’ve won the game. Right? When you’ve won the game, you’ve got to protect it,

Rebecca Powers – 26:09

take your money and leave the casino. That’s right.

Brian Quaranta – 26:13

Did he listen? No. And his portfolios back down to under a million? Okay. So this is life changing for him now, because two years ago, he had more than enough money to retire. Now, the good news is this, you know, people are losing money right now, because the markets are down. Alright. But with that being said, you still may have won the game? And if you have, wouldn’t you want to know. And if you if you’re if you’re not even if you’re if you haven’t won the game, you should know that too.

Rebecca Powers – 26:41

Right? And so this really is just kind of a total look at their situation and no pressure. And you get a free book that Brian will hand to hand you when you come in a complimentary book, I should say. Just about a minute left in the show. So, want to remind everyone, there’s the number 888-382-1298 closing thoughts.

Brian Quaranta – 27:00

Yeah, well, folks, I really want you to take advantage of our right track retirement review. It’s complimentary. There’s no obligation, okay. When you come in, as Neil mentioned, we will sit down, we will roll up our sleeves and go to work right away building a plan right there in front of you. And we have so much technology that we use to help understand what the probability of success of your plan is going to look like. We’ll go through five key areas with you. We’ll talk about income most importantly, because that is the driving force behind your retirement. We’ll talk about taxes, investments, health care and legacy planning. So again, for the next 10 callers who call in right now. That’s a complimentary no obligation right track retirement review. Call us today 1-888-382-1298 and schedule today.

Rebecca Powers – 27:47

Fantastic. So good to see both of you. Thank you for all your wonderful information. Thanks for joining us.