On the Money with Secure Money: Episode 120

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*A Roth conversion may not be suitable for your situation. The primary goal in converting retirement assets into a Roth IRA is to reduce the future tax liability on the distributions you take in retirement, or on the distributions of your beneficiaries. The information provided is to help you determine whether or not a Roth IRA conversion may be appropriate for your particular circumstances. Please review your retirement savings, tax, and legacy planning strategies with your legal/tax advisor to be sure a Roth IRA conversion fits into your planning strategies. All rights reserved.

Video Transcript

Rebecca Powers 00:24

Welcome to this week’s edition of On the Money with Secure Money with Brian Quaranta. And I’m Rebecca powers. So happy to have you with us again this week. Of course, Brian, you created Secure Money Advisors, right? You use the word secure, because that is your passion to make sure that everyone’s money is protected.


Brian Quaranta 00:43

As much as we can protect. Right?


Rebecca Powers 00:47

Exactly. We’ve said a million times we don’t have a crystal ball. No one knows what the market is going to do. We only know what’s going to go up and down.


Brian Quaranta 00:52

That’s right. Yeah, that’s where we’re certain of that.


Rebecca Powers 00:56

So how do you position How do you love your bucket strategy? Let’s talk about the 401k. So, let’s use me as an example. 55. This week is my birthday.


Brian Quaranta 01:05

Oh, yes. Happy birthday.


Rebecca Powers 01:07

Thank you. I’ve moved most of my personal 401k from my anchor job 20 years and television, as you know, to a fixed indexed annuity, I didn’t want to take the risk. Yep, I wanted to know it was secure. My husband who works in at television for ESPN, he still has all of his money in the stock market. He is three years younger than me, almost four years, a little bit of a cougar. But you’ve kind of said You’re still young enough, let him keep. So, let’s talk about the different things and the timing of what you think is best to do with 401K’s in general?


Brian Quaranta 01:40

Well, first off, look at what you guys have done by moving your 401k to a protected, fixed indexed annuity, where you can still make money if the market goes up. You just don’t have to worry about losing money if the market goes down. Right now, what I like about what you and your husband did is you guys created a two-bucket approach. And


Rebecca Powers 02:03

I learned from the best.


Brian Quaranta 02:04

Yeah, no, no. And I want to take it one step further. Because for the viewing audience, this is really important for them to understand, because what Rebecca was talking about here is rolling over her 401k from her previous employer, correct. And so, one of the things that probably was not happening at your previous employer was at you had stopped making contributions, because you’re no longer working there, right? Where is your husband, he’s still active and contributing. So, the best place to start and getting some safety built into your plan is protecting the money that you’re no longer contributing to. So, because when the market goes down, you’re down, you’re not actually contributing to offset those losses whereas your husband, as he could, as he gets paid every week, or every two weeks, he gets to put money into the 401k. So, he’s buying sometimes when the market is up sometime when the markets down. And that’s called dollar cost averaging, okay, so the better money to keep at risk is the money that you’re still contributing to. And I’ve always said, if you have a 401k, that you’re no longer contributing to, that’s a great place to start to start getting some protection and some guarantees built into your plan and get a starting to get a foundation built for the overall retirement planning strategy.


Rebecca Powers 03:22

And because of that big market correction in 2022, the fixed indexed or annuity market in general has never ever been stronger. Explain competition, and why it’s when the market goes down. It’s actually a good thing for the insurance companies.


Brian Quaranta 03:36

Yeah. Well, first off, I mean, you know, I have never seen products as strong as what we’re seeing them today. Yeah. And that has a lot to do with the interest rate environment. With interest rates going up, the insurance companies have been able to build better and better products. And, you know, in my almost 25-year career, I have not seen products this strong and almost 25 years. So, it’s probably one of the best times that I’ve seen to consider potentially utilizing an annuity if it makes sense for you, but you first have to decide what type of investor Are you? What type of retiree Are you going to be? Because there’s people watching right now that some of you might be completely okay, with any amount of risk that you’re taking, and it doesn’t bother you at all. But that’s not everybody. A lot of people don’t want the risk. They’ve worked way too long and hard for their money. And they don’t want to have it all at risk gambling with it. So, you have to decide who you are as an investor. And then you have to decide who to align with as your advisor because you’re going to learn very quickly if you’re working with an advisor that advisors have different beliefs and how they approach the problem. It’s no different than going to a doctor one Doctor wants to do back surgery, the other doctor says let’s do physical therapy first. So, there’s you have to really align with somebody that shares in the same money beliefs that you have. And that makes things a little bit easier. Because it’s really easy if you’re if you’re one that wants to protect your money, and the person that you’re that you’ve hired to help you wants to, you know, risk your money. And it’s a problem. It’s a problem, because you’re relying on the professional, and they’re telling you every time it’s volatile, everything is going to be fine. You’re going to be a ride; it’ll all work out. It’s just a paper loss Hang in there, you’re in it for the long haul. Look, that’s really easy for them to set for them to say, because it’s not their money, right? So, align with somebody that has the same money beliefs that you do.


Rebecca Powers 05:44

And you are independent fiduciaries. That’s another thing, I want consumers to really understand the difference.


Brian Quaranta 05:48

Yeah, yeah, at the independent fiduciary, this is a big movement right now in the financial space, you’re seeing a lot of financial advisors break away from the big box firms. Now, why is that? Well, because the big box firms tend to have a menu of products that they want their advisors to use. So, the advisor as much as they want to come to the table with a solution that is unbiased, they only have a narrow range of products that they can choose from. Whereas the independent fiduciary advisor has the ability to go out and really shop the market, and they’re not beholden to any specific company. And now you know that that advisor, the fiduciary advisor, that’s independent, is sitting on the same side of the table as you, it would be no different than me sitting down with my mom and dad, and me helping them with their financial situation, I want the very, very best for them. And every advisor that I know has moved to the independent space truly feels that way they want to give their clients the very best. So, whether you sit down with us at secure money advisors, or you sit down with somebody else, just find yourself a good fiduciary firm, to be part of that has the same money, beliefs, and shares in that same moral compass and guidance that you have.


Rebecca Powers 07:11

And that you actually have a relationship with and a one on one and they recognize you when you walk in the office. But to take a very short break. But we want to send every single one of you this wonderful book that Brian took a lot of time to write right track your retirement very simple, easy to understand. When you call the number on the screen, or you go to onthemoneyoffer.com He will mail you this book, his team and there will be no charge for postage. It’s really a great first step besides this show. And of course you do radio, you are passionate about making people feel that empowerment that your parents didn’t have when you were a kid. That’s right.


Brian Quaranta 07:44

And folks, by the way, you can listen to us every Saturday morning on Katie K at 8am. With Rob Pratt and I, where we do a live show, every Saturday talking about these types of things. I mean, everything from Social Security to Ira planning to 401k, planning, taxes, Medicare, you name it, it’s there. So, tune in every Saturday morning, when we come back, I want to talk to you about this very special age that you turn, which is 55. Why is 55 Such an important number. When we come back, I’m going to tell you all about it. But first go to onthemoneyoffer.com Get a copy of the book or call 1-888-382-1298 and schedule your Right Track Review with us today.


Rebecca Powers 08:27

All right, I never, I’m blank because I never even thought about the 55 and a half and six months, I get to do something very, very money saving. Yes. All right, thank you. We’ll be right back.


Brian Quaranta 08:37

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 08:51

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


Brian Quaranta 08:58

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


Neil Major 09:13

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


Brian Quaranta 09:19

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 Major 09:29

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


Brian Quaranta 09:34

This is about you. If you’re not getting what you need, and you feel that when you walk out of the advisor’s 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 of the difference at Secure Money Advisors. As a fiduciary firm. We help you manage the risk, build the income and give you the retirement drawdown.


Rebecca Powers 10:05

Welcome back to On the Money with Secure Money. That’s Brian Quaranta. And I’m Rebecca Powers. And we were just talking about how it is my 55th birthday this week.


Brian Quaranta 10:13



Rebecca Powers 10:14

Why is that a big deal? That number


Brian Quaranta 10:15

A big deal. There’s a couple big numbers, milestones when it comes to retirement planning 55-59 and a half 65. And right now, 73. So let’s start with 55. For okay, why is 55 a big a big number? Well, you know, let’s say you were downsized at your employer, right, and you’re maybe 55-56 years old, and you decide, I don’t know, if I want to go back to work, I might want to just retire right now. But in order for me to be able to do that, I’m going to need to have to start to take money out of my retirement savings. Okay? Now, this is a situation where you would not want to roll over your 401k. No, not roll over the 401 K, because everybody’s like, oh, when you retire or leave a job, rollover your 401 K, not so fast, because you could be eliminating a strategy from your future options when it comes to taking money. So, the 55 rule basically says this, if you retire at 55, and you want to start withdrawing money from your retirement account, and you don’t want to pay that 10% penalty that the IRS charges you, as long as that money stays in your 401k, you qualify for the 55 rule. And you can withdraw money from the 401k without incurring that 10% penalty, very important to know because if had you rolled it to the IRA, now you’d have to wait till 59 and a half to take that money out. Without that 10% penalty.


Rebecca Powers 11:55

I didn’t know that you just taught me something. So, 59 and a half. Let’s talk about that. What is it the conversion without penalty?


Brian Quaranta 12:01

Yeah, so 59 and a half basically, is now when you can start taking money out of your retirement accounts without incurring the 10% penalty. That’s a big day. But here’s why. It’s also a big day. Because at that point, you’re also probably going to qualify for something called an in-service rollover. What does that mean? Well, at 59 and a half, you’re closer to retirement than you’ve ever been before. So, Congress made it possible through the 59 and a half in service rollover rule for you to be able to roll over all or a portion of your 401k for 403, B 457. Plan, whatever type of employee sponsored plan you have to a qualified retirement plan, and still keep your retirement plan at your employer open, she’d still got to keep your 401k Open your four, three B, open your 457-plan open, and you would still be able to make contributions. Why is this important? Because most 401 K’s typically only have risk options. But what if you’re a couple of years out from retirement, and you’re going to need income, and you need to start building an income strategy. The 59 and a half in service rollover gives you the ability to roll some or all of that money to a strategy that would then produce income for you, rather than just having all your money in the market until the day that you retire. And that’s a risk because what happens in the last year that you get ready to retire in the market goes down 30%. So, this gives you flexibility to start planning through the 59 and a half in service rollover.


Rebecca Powers 13:37

Okay, what was the next age…


Brian Quaranta 13:38

65. 65 is just Medicare. Okay, so it’s Secure Money Advisors. We are a full-service firm. So, we do everything from your income tax strategies, investment strategies, Healthcare Strategies, and estate planning strategies. And when it comes to health care, one of the biggest decisions you’re going to have to make is your Medicare plan. And what are you going to do? Are you going to get a settlement? Are you going to get Original Medicare? What’s going to be best for you? And Lisa, at our office is so good at the Medicare process, that she makes it so easy on our clients. And that’s all complimentary when you become a client of Secure Money Advisors.


Rebecca Powers 14:14

And there are so many things. Of course, Social Security is another big piece.


Brian Quaranta 14:18

Well, yeah, we should, we should say yes, I forgot 62 Because that would be the age in which you first qualify for your social security.


Rebecca Powers 14:26

So, you’ve advised many, many people don’t turn it on yet. Here are all the different scenarios you can get 8% more if you wait a year to let talk about the difference in the importance of the timing of your Social Security.


Brian Quaranta 14:37

Yeah, so a lot of people just don’t know when is the best time for me to turn Social Security. And when you start to build out a plan and you start to look at all of your sources of income, and then you start to run some analysis, what you’ll find is that sometimes Delaine taking your sole security can benefit you because for every year that you wait, it goes up by 8% per year. That’s a pretty good return. So, what does that mean? It means depending on how long you live, I mean, that could be an extra three $400,000 Over your lifetime, depending on whether you collected at 62, 65, 67, 70. So, getting that, right, and understanding how it works is very important. And at Secure Money Advisors, part of that Right Track Review is helping you get that sole security planning strategy, right.


Rebecca Powers 15:28

And as you said, they could be three, four, or $500,000. That’s where a tax planning is so crucial, because you can literally position them to keep more of the money than paying in taxes.


Brian Quaranta 15:39

Yeah. And what we have to understand is that the big age that affects everybody is the required minimum distribution age, which is currently at the age of 73. So, what’s required minimum distribution mean? That means that the IRS says, you now have to start taking money out of your retirement accounts, whether you want to or not. So, if you’re one of the lucky few out there that don’t need to touch your IRA money at all, for your 401k, because you’ve got plenty of money coming in from Social Security and pensions, the IRS says timeout at 73. Right, now, you have to start taking money out, we’re going to tell you exactly what you need to take out. And that becomes a problem for people later on in life because they get that extra money, which counts as income. And now, they could pay extra on their Social Security taxes, they could pay extra on their Medicare premium, they can, they can knock them into a higher tax bracket. And this is where tax planning comes in. So, you can use a strategy. So rather than letting the money compound, because remember, if you’re letting your money grow in your IRA account, because you don’t need it, you’re compounding that value over time. But you’re also compounding the tax problem.


Rebecca Powers 16:51



Brian Quaranta 16:52

So, you can use a strategy where you can flatten out that tax problem and create a strategy where rather than that bucket of money growing and the compounding of the tax problem becoming bigger, you can actually create a majority of that money being tax free by just carving off three to 4% a year through a strategy that allows you to do that. And those are the things that we teach people how to do and a lot of times people say, I had no idea I could do this. Nobody ever said that we could do these things. And you just don’t know what you don’t know. And that’s the biggest part you have to understand about financial planning. Your plan is only as good as the person that’s advising you, if they’re not given the information, or you don’t know what to ask, how are you going to find out about all of these different things I can remember as my company grew, and I was working with an accountant. And I realized at some point that that accountant wasn’t giving me the advice that I needed, then I went to the next account, and I started getting better advice. But then I had to go to another accountant because my company got bigger. And they were actively guiding me through a process and a system, bringing me the ideas rather than me bringing the ideas to them. And that’s our goal at Secure Money Advisors is always inform you of everything that’s available to you so that you can make really well-informed decisions I want you to go to onthemoneyoffer.com Get a copy of my book because I write about everything Rebecca and I are talking about in the book, I lay it all out for you. It’s a simple guide to help you build a strategy around income protection, but most importantly, a strategy that will give you peace of mind. You can also call 1-888-382-1298 My team standing by to take your call and schedule your appointment today. Don’t kick the can down the road, don’t procrastinate come into our office. As always, I promise nobody from my team ever is going to press you to do anything. Nobody’s going to sell you anything. So come on in and take advantage of the Right Track Review we’ll see at the office.


Rebecca Powers 18:49

That’s right there’s no cost and no obligation for that appointment as well. There’s the book Right Track Retirement he will mail it to you as soon as you call that number and or you can go to onthemoneyoffer.com We’ll be right back more about right tracking your retirement after this.


Announcer 19:09

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Rebecca Powers 20:01

Hi, welcome back. I’m Rebecca powers here with Brian Quaranta. We always have a wonderful time talking about everything financial, do you have a written plan? Do you know what tax bracket you are? What taxes you should be paying? That’s where planning comes in. So, let’s talk about I know that I love our fixed indexed annuity you use some of these products for some of your clients, depending on their situation. How do you use annuity bonuses to offset taxes? Convert?


Brian Quaranta 20:28

Yeah, that’s, that’s a great question. So first off, there are such things as what we call bonus annuities. Okay. They come in all different shapes and sizes. All right, but let’s just use one that might be offering a 10% bonus, as in some of these bonuses can go up to 25 or 30%. But remember, when you see things like that, you always have to ask what’s the catch? Right? So, if somebody’s willing to give me something, right, that probably means I need to give something up in return. And what are they getting? That’s right, right. So, and sometimes it’s a good trade off. Other times, it’s not, but we’re talking about strategy. And this is how you leverage financial products to actually to benefit from financial strategy. So, let’s use something as simple as maybe a Roth conversion. Okay. So, let’s suppose that we were going to convert, I don’t know $100,000. Okay. And, and that $100,000, we had to pay 10% and tax to convert that money. Okay. So that means if we converted the 100,000 and paid the 10% in taxes, that means 100,000 minus 10%, it’s going to put me at about 90,000. Okay, well, if I can then take that money, and redirect it to a bonus annuity, which then I could structure as a Roth IRA, and I could get a 10% bonus on the deposit amount that I put in, so I put in 90,000, and I get a 10%. Bonus on 90,000. That brings me to 99,000. So just through the bonus alone, it paid for almost all of my taxes that I had to pay, because the bonus paid the money back. So, these are very simple strategies that you can use to really put these Roth conversion strategies at a whole nother level when it comes to utilizing bonuses to offset taxes. Does it work 100% of the time? No. But these are the ideas I love sharing. Because yeah. Wouldn’t you like to know that they’re out there? Right? It doesn’t mean that it’s the right thing for you or, or it’s the right thing. But in some cases, these things can really work well.


Rebecca Powers 22:36

Yeah, absolutely. And we’ve said many times that not all annuities are created equally. But because of the downturn of the 2022 market annuities business exploded 300 billion were sold in this past year. So that makes the insurance companies even stronger. That’s how they’re able to offer these bonuses.


Brian Quaranta 22:55

Yeah, the interest rate, well, the interest rate environment has also helped with that.


Rebecca Powers 22:59

So, with our interest rates going up, their power goes up.


Brian Quaranta 23:02

So, you go back 20 You go back 20 years ago, there was a lot of companies out there offering bonus annuities, 10% bonuses, 15% bonuses, then the interest rate environment got so bad, we were at near zero interest rates, and you weren’t really seeing them as much. But with the rate hikes that we’ve seen so aggressively, they’re coming back, I mean, you’re seeing bonuses up to 30%, out there, so. And they all again, they all come in different shapes and sizes. But imagine you got to pay 30% in taxes, and you could use a bonus product giving you 30%. And then that bonus, that bonus, money can offset the taxation that you had to pay out to the IRS. So again, these are things that when you’re putting together a plan can be a part of the strategy. But whether you work with Secure Money Advisors, or you work with somebody else, just make sure you get with a good fiduciary firm that can help you first and most importantly, understand your goals and objectives, what you’re trying to accomplish, get with a firm that is proactive in giving you ideas of how to solve the bigger problems in retirement, like taxation. And the thing is, sometimes when I present an idea to a client, right, we may not follow through with it. But at least I’m gonna mark it off that we talked about it so that they were least made aware that it existed.


Rebecca Powers 24:25

Absolutely. So many people don’t know about the bucket strategy. And we’re almost out of time today. But that is one of the chapters in the book, talk about the power of giving your money a job, this dollar is going to do this for me this dollar is going to do that very important.


Brian Quaranta 24:41

Yeah. And this is really where the, the investment strategy and the retirement strategy are completely different. So, there’s a priority that your money needs to take on, or is it what you’re referring to as what is it what’s its job? And so not all money is created equal? Meaning when we have a sum of money, some money needs to stay in the bank for liquidity and emergency cash reserves. Some money needs to create a pension stream of income so that you have guaranteed income for your life if you’re married for your spouse’s life. And then some money needs to be long term growth money, which is going to be in the market. And the best way to approach the market strategy is just by buying the broad base market, we don’t have to make this complicated. And we can use very low-cost ETFs, we don’t need to get into big expensive, you know, portfolios, we can use very low-cost ETFs. And follow the basic fundamentals of just diversifying across the broad sectors, mostly in domestic companies, S&P 500, Dow thing things along those lines, maybe a little bit of international, but that money can very easily be reallocated. And then we should look to rebalance at least once a year with that money. So again, I write about it all in the book, folks, Right Track Your Retirement, it really is a simple planning guide to help you build income and provide you with peace of mind. The other thing that I talk about in this book is the three interest rates. So, when you’re planning, there’s three very important interest rates that you need to determine. So, if you’re watching, write these down or take a mental note of them. Because these are very important. And if you’re working with an advisor, I’d highly recommend that you talk to them and find out what your numbers are. So, the first interest rate is what we call your spend down rate. So, this is the rate of return that you’re going to need in order to take the money out that you need from your accounts and maybe spend that money down to zero by the age of 95, or 100. So that rate is going to be different for anybody, but maybe your rates only 1% or 2%. So that means essentially, you could tuck your money on your mattress, pull it out, you’d have enough money for retirement, your preservation rates. The big one, though, if you’re if you need a sum of money out of your accounts every year, let’s say $40,000 a year, what rate of return do you need to do to preserve your principal, so it never goes down below that amount. And then your legacy rate is if you want to take money out, let’s say $40,000 a year, but you still want to grow the balance of your retirement account. What rate of return is that going to take? Why is this a good exercise? Because once you understand your range of return that helps you identify what level of risk you need to take and what type of financial products you can start to use. So go to onthemoneyoffer.com Get a copy of the book schedule your Right Track Review today, call 1-888-382-1298. We’re gonna go over five key areas when you come in your income, your tax strategy, your investment strategy, your healthcare strategy and your estate planning strategy. So, folks take advantage of it. We’ll see at the office until next week,


Rebecca Powers 27:45

Absolutely. Thank you so much, Brian, thank you all at home for joining us. There’s the book one more time give us a call and we can’t wait to see you.