On the Money with Secure Money: Episode 76

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Video Transcript

Rebecca Powers 00:20

Welcome to On the Money with Secure Money. I’m Rebecca Powers, your host. So happy to be here with President and Founder of Secure Money Advisors, Brian Quaranta and one of your senior advisors really your right-hand guy, Neil. Yes. Right hand guy. So, little insecurity, I think with people when you watch the news at night, I say don’t watch cable news because they have to feel 24 hours. Right. But anyway, it does kind of- Are you feeling that some of your clients are calling more than they usually would?


Brian Quaranta 00:51

Well, you know, fortunately for us, I mean, we do such a good job educating that I think people really put their head on the pillow and sleep well at night. I mean, what are your thoughts? Yeah,


Neil Mager 01:02

I think so, too. I mean, the way that we build and design plans is a little bit different than the common approach. Yeah. And so, you know, our clients aren’t living moment to moment based on how the stock market does right. Now, obviously, there’s a lot of concerns in general right now about the news. I mean, inflation is a major concern. And obviously, that’s going to be a concern to somebody who’s either in retirement or close to retirement, because typically retirees more on a fixed income. Yeah. But I mean, market volatility, I mean, we can’t expect the market to go up, straight up forever, right? It goes up, up and down, up and down. It’s been out for 12 years. So, it has to. And so, the way that we build out strategies in cash flow, is we protect a portion of money that’s designed to generate your income. And typically, that bucket there is designed to last 15-20 years. And so that enables your long-term bucket, which is in the stock market, to go up and down, up and down and deal with that volatility. Yeah, but what it’s not doing for our clients is changing their retirement date, or impacting their monthly cash flow,


Brian Quaranta 02:12

I think that’s an important thing to stress is that, you know, you always want to protect the retirement, right, because there’s too many people. And so many stories, which I’m sure you’ve heard of, in your lifetime to have people that retired maybe had to go back to work because the stock market didn’t cooperate. And they figured out that they weren’t gonna be able to continue to take the money out that they wanted to take out. And if they did, they were going to potentially run out. And those are the things that we don’t want to have happen, because conventional wisdom says to have a diversified portfolio of stocks, bonds and mutual funds. But in the world that we live in today, where you have most people retiring without a pension, the first step for any retiree is to protect the retirement lifestyle by creating their own private pension, it is the most important thing to do. And so understanding the proper ways to build cash flow, which a lot goes into that because when you’re building cashflow, you have to take into account the impact of taxes, you have to take into the account, where you’re going to start to withdraw the income from how you’re going to withdraw it, you have to figure out what investment is going to be best utilized to put that money into that can generate the best cash flow that you can get the most leverage on your money. So, there’s a number of things that goes into actually building a really good income plan. So, and that’s something that we work on very, very hard at secure money advisors,


Neil Mager 03:31

I mean, think about like the say, are 65 years old, and you want to retire over the course of the next year. And say, you’ve managed to save a million dollars. And maybe you need $45,000 of income that you’re going to need to generate from that portfolio. And you’re going to work one more year, you and your spouse and you’re projecting, you know, a 10% rate of return along with the additional contributions you put in and you’re thinking, we’re going to be at 1.1 million when we retire. And all of a sudden that last year, break before you retire, experience something like a 2008. And all of a sudden, you’re going into retirement with $600,000. Well, probably what’s happening, you’re not going into retirement, right? Yeah. Because that’s totally changed your game plan, there’s no way you’re going to be able to generate $45,000 off of 600,000. That’s right. So now where are you working till you work until 67-70? I mean, how far out and so that’s why, you know, just building it out in a very simple approach that Brian’s talking about where we just protect a portion and be able to generate our cash flow is very, very important.


Rebecca Powers 04:35

And it’s very refreshing, honestly, because your firm always educates and you hold their hands but you asked what they want. So, they know exactly what’s going on. Not like a big box that you might not hear from for two or three years. You said the key word that I love about you guys is protect,


Brian Quaranta 04:51

protect. Yeah, that is the most important thing is to plan, protect and preserve and that it all starts It’s there.


Rebecca Powers 05:00

And it all starts with another P word- plan. Yeah, you’ve got to get that Right Track Retirement Review. Let’s talk about that.


Brian Quaranta 05:08

Yeah, our strategy session that we do, really, we would like to keep and considered a clarity session is really designed around helping people get a better understanding of what retirement planning looks like, because most people are relatively confused. When you say retirement planning, they think retirement planning is their 401k. That’s an investment strategy designed for accumulation. You know, the idea, the 401k was, was a way to replace the pension. And the idea was you were going to put money in your employer was going to match. And the hope was that when you retired, you had a big pile of money. Yeah, well, once you have that pile of money, now, what do you do, you can’t keep doing the same things that you were doing? Through the first 30 years of building your wealth, the game changes, the strategies change. And that’s what we show folks. And it all starts with income, then we focus on taxes, then we focus on the proper investments and the mitigation of risk of those investments. And we’ll talk about that in a little bit. A program that we use called Riskalyze, it’s very, very powerful, that helps people really understand the risk that they’re taking the fees, and so on and so forth, we also have to have a plan for health care, right? For those of you that are retiring before the age of 65, you are going to have to get health insurance, we have to build that cost into the plan. When you turn 65, you’re gonna have to get onto Medicare, but you’re also going to be required to get a supplement and Medicare is it confusing to it is very confusing. And that’s why we made an investment in our firm, to have people at our firm that specialize in Medicare and Medicare Supplements. And so think about that, when you come in to secure money advisors, you have all of these resources accessible to you. You don’t have to go to this person and that person, that person where it’s all full service. And the last one, of course, is the estate planning, and the estate planning partnership that we have. They believe in education; they do as much education as we do. Because when you do go to sit down with an estate planner, you don’t even know if do you need a will? Do you need a trust? Like where do you start? Well, the first place to start is just getting a basic understanding of what all these documents are, how they’re going to protect you. And then you can decide, so many people go out, we see it all the time, they go out and they spend, you know, $10,000 on getting a trust and that that and that there’s they didn’t need it really. And you know, now we’re not attorneys. But you know, basic law says that, you know, if you have a trust, you actually should have things in that trust. See, what people don’t realize is that when they get a trust, it’s just a document that’s been created, in order to actually get assets into the trust, you have to retitle those assets in the name of the trust. So, let’s say you had a bank account, right? And the bank account was a joint account with you and your husband. All right, and you wanted that bank account to live in the trust? Well, if you don’t go to the bank, and make that now a trust account, and give the bank a copy of the trust documents, that money never gets into the trust. So, we meet people that have spent 1000s of dollars on a trust, and there’s nothing in it.


Rebecca Powers 08:07

Wow, see, every time we do this show, I learned something.


Brian Quaranta 08:12

That’s right, when that’s what


Rebecca Powers 08:15

I know. Right? Yeah, that’s really you go.


Brian Quaranta 08:17

through the retirement right track retirement strategy. Yeah, that’s even, that’s even better. Because, you know, it really is a system that we’ve developed to really help you decode and demystify this whole retirement planning thing. And really consider it a coffee chat with us really, because we’re just, we’re you’re coming in and you’re sitting down, you’re spending about 45 minutes to an hour with us. And we’re going through this strategy session where we roll up our sleeves, we got big screens in our conference rooms, and we start building out the plan right there, we start looking at what you have. And it’s really helpful when you bring your statements, because we can bring you through this Riskalyze program, we could start entering data in. And now what you’re getting is you’re getting black and white information to make informed decisions, not an opinion from me, or from Neil or from any of our other advisors, you’ve got black and white information with, which helps lead you in the right direction. So, for the next 10 callers to call on right now, again, that’s a right track retirement strategy that we’re giving away complimentary at no cost to you, no obligation, all you got to do is pick up the phone and call us today. It’s 1-888-382-1298.


Rebecca Powers 09:28

Pick up the phone and stay with us. We’ll be right back.


Brian Quaranta 09:31

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 Mager 09:45

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 your late 70s.


Brian Quaranta 09:53

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 It is all designed around the five key areas, income, taxes, investments, health care and legacy planning.


Neil Mager 10:07

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


Brian Quaranta 10:13

9 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,


Neil Mager 10:24

People can actually see a vision once we start to really build out their plan.


Brian Quaranta 10:29

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.


Rebecca Powers 10:59

Welcome back to On the money with secure money. So, I wanted to ask you normally you were saying that times have changed as we all can see. It used to be 60-40, stocks and bonds. How was that? Is that the same? Or is that changed too?


Neil Mager 11:12

Well, unfortunately, it stayed the same. And that’s the problem. You know, as we get closer and closer to retirement, obviously, the 60-40 was designed to get more conservative as you get closer to the retirement date. The problem with that split is one, the bond yields since really 2008 have decreased down to around 3%. Okay, prior to that they were closer to eight and a half percent. So that’s a big Delta right there. And so, you either are going to funds that are somewhat safer, more conservative, but not getting you hardly any upside, because keep in mind, you’re going to have an expense ratio, and potentially an advisor fee to take out of that percent. But the biggest problem, obviously, with bonds is what we’re experiencing here at the start of 2022 is as interest rates go up the inverse relationship with bonds or making your bonds go down. So now over the past 12 plus years, you’ve been averaging about a 3% yield on these bonds. But the real problem is year to date, you’re down 8, 12, 15, 20, 25% on your bond, so a safer, more conservative investment. And so, what’s changed is, one, a lot of advisors, what you’re seeing aren’t utilizing as many bonds, which making your portfolio more equity based, which is going to have more risk involved. So, what we’re just trying to tell you is that just doesn’t work anymore. There’s got to be better alternatives for safety.


Brian Quaranta 12:43

And there are better alternatives. Matter of fact, BlackRock, one of the biggest money managers in the world, trillions of dollars under management, just wrote a great paper on how to transfer that risk that you would assume in purchasing a bond. And when I say transferring risk, when you buy a bond, you have interest rate risks. So if you have a bond and interest rates go up, just like Neil said, the price of the bond goes down, you lose money. So how do you mitigate that? How do you transfer that risk? BlackRock wrote a great paper on the use of annuities in retirement as a way to transfer that risk. So, he looked at annuities. Now, I gotta be very specific here. What type of annuity I’m talking about, because not all annuities are created equal. There’s some really bad ones out there that you want to stay away from that are very high in fees. I truly believe in my opinion, that would be the variable annuity. Okay. The variable annuity keeps your money in the market. It’s got very, very high fees. Typically, we’ll see three and a half 4% in fees and a variable annuity. What we’re referring to here, and the paper that Blackrock wrote about was about the indexed annuity and the fixed annuity, okay. These products are designed to guarantee and protect your principal. If the market goes up, you can make some money if the market goes down, you don’t lose any money. A lot of people will say, Well, how did they do that? That sounds good to say that sounds too good to be true. Right? But it was that these actually were created back in 1995. And what they were designed to do was to track a stock market index and link your return to that index. So, let’s take the S&P 500 index, for example. So, let’s suppose that the S&P 500 index goes up 10%. Okay, well, when you have an indexed annuity, you’re not going to get 100% of that game, you’re going to participate in some of that game. All right. And let’s say you just get half of that game. So, let’s say it goes up 10, you get 50% of it. So, you’re gonna make you know, 5%. But now you’re let’s say you have $100,000, and it goes to 105,000. That now becomes your new guaranteed balance, meaning no matter what happens, you can never go backwards, right? That becomes your new guaranteed balance. So now if next year the market fell, the worst thing that could happen is that you still have $105,000, right? Secure That’s right. And so, you’re transferring risk and in retirement. It’s all about risk mitigation, and transferring risk, right and I’ve had this before many times, we insure everything. We insure our cars, we insure our house, we insure our health. But the number one most important thing that people need more than anything is monthly income. And they don’t take the time to ensure that. And you can do that through the purchase of an annuity, where it can guarantee you income for the rest of your life. And so many people, when we talk about annuities, will say, Well, I’ve heard such bad things about them. And it’s true, because if you Google “are annuities bad?” you’ll find about 2.5 million hits, that they’re bad, but you can also Google is Mother Teresa evil and you’ll get 2 billion people agree Mother Teresa’s evil. So, the point is,


Rebecca Powers 15:39

The problem with social media, everyone has an opinion.


Brian Quaranta 15:44

But there are very specific annuities that really do (not for everybody), but do make a good part of the plan to provide that safety and that protection.


Rebecca Powers 15:54

You hit the nail on the head, I, as again, just a normal person have heard annuities are bad, right. But you’ve explained the difference. There’s there are some bad ones, but there are some good and safe ones.


Neil Mager 16:04

That’s right.


Brian Quaranta 16:04

I recently had a client attend one of- an educational event that I presented at. And you know, we were talking about our bucketing approach. And he wanted to share his story. And his story was really, you know, I got into an annuity to protect my retirement. And the first year, the market was volatile because of COVID. Around 2020. He got to zero the first year protected his money got to zero. The next year, the market did really, really well for him in inside his annuity he got over a 28% which is just it’s an outlier, right. Yeah. The next year, this third year in the annuity got 5%. So, he said, you know, over three years, I’ve gotten 33% Return on my annuity. That’s an 11%. Average. Yeah, but more importantly, I’m not dealing with the stress of the market being volatile right now. Right, right. So, on my safe money I’ve protected. He’s going to start generating income here soon, because he’s retiring. So, it works. It really works. I don’t, I just don’t understand that,


Brian Quaranta 17:01

you know, unlike anything, right, I mean, past performance doesn’t guarantee future performance. But what we can guarantee with an annuity is that you will not lose money, right. So that’s the most important thing to understand. So, if I can make a little bit of money just like this individual did, without taking the risk of my money being in the stock market, that’s probably a better game plan short term for the money that I need to generate income from because remember, we want to protect or guarantee at least the first 15 to 20 years of retirement. And the annuity gives us a, you know, a potential good enough return, that we can generate that cash flow, while the money that we have in the market has a 15-to-20-year time horizon to grow. And we all know because we’ve been told since day one, that if we’re going to be investing in the market, the number one most important thing that we need when we invest our money in the market is time. So how are you going to create time, when you need to start generating income right now, when you retire, you create time by split splitting that money up into two separate buckets. So that money that you do have in the market, you don’t have to touch the mistake that people make is that when the market is going down, they continue to pull money out of those accounts. And what happens is they compound those losses; they lock into those losses. And this is where you hear about people running out of money. And that’s what we don’t want to have happened and our right track. retirement strategy is all designed to help you prevent yourself from making these mistakes. And so, for the next 10 callers who call in right now, we are going to give you a right track retirement review, where we’re going to go over five key areas with you. We’re going to show you the best practices and building income, the best practices in handling taxes. What’s the best approach in an investment strategy when you’re retired, how to handle your healthcare situation or even a health care event should one of you get sick? And then most importantly, is your estate plan and we want to make sure that your family becomes the largest beneficiary of your money and not Uncle Sam. So again, for the next 10 callers who call in right now. That’s a complimentary Right Track Retirement Review 1-888-382-1298 Call us today and schedule.


Rebecca Powers 19:08

Yes, and stay with us. We’ll be right back.


Announcer 19:12

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 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 20:46

All right, thanks for staying with us. We are talking about how to get more money for our children instead of Uncle Sam, which really resonates with a lot of people. You mentioned, Neil, a hidden tax. What would that be?


Neil Mager 20:59

Not so hidden. I mean, inflation is something that we’re all dealing with.


Rebecca Powers 21:04

We don’t think of that as a tax. Honestly, we just think of it as higher prices.


Neil Mager 21:07

Yeah, we got a little bit of government money last year during pandemic and all of a sudden, prices have skyrocketed. One year inflation rate close to 9%. Look at some of these numbers: flights 33% increase, gas at the pump: we’re paying 40% more, rental cars: 8.5%, used cars 35% the grocery store, you know, that’s a very common one where you’re just noticing the prices.


Rebecca Powers 21:36

Or with baby formula, you know, we had a problem with that. But even when they got them, it was still extremely expensive.


Neil Mager 21:42

Yes, exactly. So, you know, our challenges, retirement planners is typically people are on more of a fixed income, fixed budget in retirement. And it’s just making sure that we’ve built into the plan, bad things to happen, like inflation. And so, when we need more income, we have the ability to go in and generate some more cash flow for our clients that we hope this isn’t sustained. But you know, chances are, I don’t see it ending anytime soon. I don’t know about you, Brian.


Brian Quaranta 22:10

Yeah, I don’t know. I mean, we may be in for the long haul here with higher prices. And if we are, your plan has to be able to handle that. So, you got, you know, the potential for a stagflation now too, which is periods of high inflation and low growth, that’s a very dangerous period of time, because now, you got increased prices, right. So those that are on fixed income might need to start tapping more money from their retirement accounts. But they’re not getting the growth rates that they need to be getting to keep pace with that. So, it becomes a very, very anxious time for a lot of people. And this is why planning is so important. Because if I have to increase an income for a client, all right, we can model it into the customized portfolio that we built them. And what we do is when we plug those two numbers in, the whole plan will recalculate. And it will let us know, are we at risk based on the interest rates that we’re currently getting? of running out of money, right? Or will the money continue to last the rest of their lives. And this helps people sleep well at night, knowing what those numbers look like in the future. So, it’s no different than when we meet people. And you know, they’ve been wanting to buy a car, and they’re not sure, you know, if they can buy the car, because nobody’s ever taught them how to use their money or make those calculations. And really what we become is the family’s private CFO, Chief Financial Officer, to help them make these very important decisions. And when Neil and the rest of the planners and I do this, we’re really building this based around their dollar amounts, and their customized income that they’re taking so that we can actually get a real calculation of where they stand.


Rebecca Powers 23:47

Absolutely. Yeah.


Neil Mager 23:48

I mean, the only good thing inflation has caused, yeah, is the one good thing for retirees. Yeah. Is that interest rates are going up to slow down inflation. Yeah. So, what that simply means is safe money is going to have better options and availability. You know, I think I’ve seen three-year fixed annuities paying three and a half percent rate. Yeah, you know, so over a short period of time, they will get three and a half percent on your money on a multiyear guaranteed annuity. That’s right. That’s okay. I mean, that’s a lot better than what we’ve seen over the past 10-12 years.


Brian Quaranta 24:24

Wouldn’t it be nice if we sold 10% CDs again, I mean, how many people would keep their money in the stock market if you could go get a 10% CD.


Rebecca Powers 24:32

and that’s the first thing I ever did at a college my dad brought me to the bank with my $1,000 and we got a CD.


Brian Quaranta 24:37

Did you get Tupperware or a toaster too? Yeah, I don’t even know. But you know, these high interest rates, these higher interest rates. You know, when Neil talks about it’s good for safe money, I want to be very clear the audience that does not mean bonds, okay? Because most people think of bonds as being safe money. Bonds are not safe money. We do not define bonds as safe money at Secure Money Advisors because they have risk, they have the potential for loss of principle. So, the way that we define risk is if it can go down, it’s risky. So, what we’re really talking about here are fixed annuities, guaranteed indexed annuities, and bank CD’s where you might see some higher interest rates, savings checking, and things along those lines. So that’s really maybe the plus side to it. Yeah. But again, we would all like the prices to come down a little bit, because I think everybody’s feeling it. I don’t care what your income level is. You know, I remember filling my gas tank, you know, last year, it was $55. And now it’s $105. So that’s a big jump, no matter how much money no matter how much money you make. That’s right.


Rebecca Powers 25:36

And with interest rates so low, it actually caused a little bit of a housing crisis, because so many people were trying to sell their house because they were getting big money. And many young people were trying to buy houses because of the low interest rates. So, something always has to give.


Brian Quaranta 25:49

That’s right. That’s right.


Neil Mager 25:51

Yeah. So, not so good if bank CD’s are at 10%. Not so good. If you’re if you’re a new homebuyer, because you’re looking at high interest rates on the home, maybe 10 plus percent.


Brian Quaranta 26:00

Yeah, because you can go back to the 80s, when you saw those rates, with CDs, but mortgage rates were at like 12 or 14, right? You know, so it always something always gives. That’s exactly right. And you


Rebecca Powers 26:10

mentioned in 1978, during the Carter administration, when the Congress did what they did, I remember my mom paying 18% interest rate and a little white Toyota Corolla right there, no, six of us had to share, we hear it


Neil Mager 26:23

all the time at the office, you know, people come in and say, you know, I bought that house in 1980 for $70,000. And we paid 15%.


Rebecca Powers 26:34

Right? It just, it’s amazing how much things can change. That’s right. And then the experts like you have to keep an eye on all of these factors.


Brian Quaranta 26:42

Yeah, and I’m glad you say keeping an eye on because that’s why people hire us to keep an eye on your plan on your money. Right. As a fiduciary, we have the responsibility to make sure that things are being done in your best interest at all times. And I really want you folks today to take advantage of our right track retirement review where we really sit down and go through a strategy session with you and help you map out a game plan of where you are and where you need to go so that you can maximize every dollar that you’ve earned in your retirement. But for the next 10 callers who call in right now, we are going to be giving away a complimentary no obligation, right track retirement review. You’ll need to do your part though you have to call us today at 1-888-382-1298. Folks don’t procrastinate on this. This stuff is very important. I know that it can be scary. But one thing I promise you when you come into secure money advisors is you will feel a very welcoming environment. We’re not there to criticize or judge anything you’ve done. We’re truly there to help. So again, the next 10 callers right track retirement review scheduled today. 1-888-382-1298.


Rebecca Powers 27:49

Do that today for your family. And thanks again for joining us. We’ll see you next time.