On the Money with Secure Money: Episode 121

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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 00:25

Welcome to this week’s edition of On the Money with Secure Money with Brian Quaranta of Secure Money Advisors. I’m Rebecca powers. So happy to be with you all. Great to see you as always, Brian.


Brian Quaranta 00:36

Great to see you, Rebecca.


Rebecca Powers 00:37

All right. So, you know, I’ve read your book many, many times, it is so short and easy to read. And it really was a game changer for me. And we share this book with every single one of you. So, make sure you call the number we’re getting ready to put up 888-382-1298. No matter where you are in our beautiful city of Pittsburgh, we want to make sure every single one of you gets this book, Brian, you even paid for the shipping and handling. Because you know that it is so important for people to be empowered and educated.


Brian Quaranta 01:05

Yeah, that’s exactly right. They will get that shipped directly to their house; it’ll show up in the old-fashioned mail.


Rebecca Powers 01:12

Postage paid, and then another thing, when you call that number, we want you to get a complimentary meeting with Brian and his team. It’s that first review, it’s a Right Track Review. Are you on the right track? More importantly, have you had these conversations with your current advisor? You know, in my in my husband’s case, he’s from Sewickley. And I’m not from here. But you know, in our case, we never had these conversations.


Brian Quaranta 01:38

Right? Yeah, a lot of people don’t. A lot of people don’t, you know, I will say that the, the thing that we hear most in our conference room, because we really do roll up our sleeves and dive into strategy. And we’re not just using CAD software to do it. We’re really crunching numbers with people on the calculators in Excel spreadsheets, really getting the numbers, right, so that when we do finalize the plan, we have a plan that we can feel confident in one that also has been evaluated and tested. For worst case scenario, health events happening, big stock market drops. So, you really have to work with a fiduciary planning firm that’s willing to sit down and take the time, and really roll up their sleeves and get into the planning process and get into it in depth. Right. And that’s exactly what we’re doing there.


Rebecca Powers 02:31

and have those conversations, yes, because it’s not just you walk in, you give them your name, number age, and then boom, cookie cutter, this is the opposite. This takes many months. It’s not just a one-time thing.


Brian Quaranta 02:42

Yeah, it’s a process, you know, getting to know somebody and what their concerns are everybody’s concerns are different. However, they’re similar, right? Even though they’re different. They’re similar, because Secure Money Advisors is dedicated to working with people that are 55 and older. We do work with younger folks, but those are usually our clients, kids or even grandkids, so, but only we’re only working with younger folks when they’re referred to us. And so, for us, it really is about making sure that we spend the time to understand not only what their goals are with the money, but also understanding where they’re at. And in order to understand where somebody is currently at financially. It’s not just looking at their statements, it’s, it’s looking at their statements, but then taking those statements and evaluating it through the third-party software that we have. So, we can get the proper data points to be able to make recommendations to improve the overall strategy. And you know that software is looking for tax efficiency, it’s looking for risk, it’s looking for the fees. And fees are a big one, because fees will reduce your gains. And they will also compound your losses. So, we want to be very aware of what we’re paying, I don’t have a problem with somebody paying fees. Sure. What I have a problem with is what are you getting in return for the fees that you’re paying. And these are the things that we can uncover during that meeting.


Rebecca Powers 04:08

And there are also some fees like in our case, my husband and I that we weren’t even aware of and that happens to, and the law allows it in some ways. Yeah.


Brian Quaranta 04:15

You know, so if you want to know exactly what your fees are, especially if you’re working with like, let’s say a company sponsored plan, like a 401 K, you can request a statement of additional understanding. And that statement, a lot of people don’t even know that that exists. Usually, I’ve got to call the company to get it. But that’s where you’ll really be listed out all the fees. And we’re hoping that as time goes on, Congress changes the law so that people can actually see what they’re paying in fees in their 401 k’s and their employer sponsored plans because most people think that they’re not paying anything, right?


Rebecca Powers 04:51

They’ll say Oh, I’m paying 1%. Mmm, probably not.


Brian Quaranta 04:54

Right, Or they think my 401k doesn’t charge me anything because there’s not this disclosure on the 401k of where the fees are coming from until you read the fine print. Right?


Rebecca Powers 05:04

Yeah, that’s what I thought and boy, you know, you think you know things until you find out what you don’t. I know loyalty. And I love that about so many of you guys, everyone is so loyal. I’ve had my guy for 22 years; I don’t want to change. But how do what is the change process? Yeah. When you do want to go to a different advisor, right? Does it cost something you have to write a letter? I mean, how does that work?


Brian Quaranta 05:27

How do you get out from where you are?


Rebecca Powers 05:28

Do you have to break up with them? I mean,


Brian Quaranta 05:30

Yeah, how do you fire somebody? Right? Well, that’s a great question, because I don’t think people understand that they can transfer their money from one financial institution to another financial institution, without incurring taxes or penalties on retirement accounts. Now, if you have accounts outside of retirement accounts, you definitely want to be careful that you don’t trigger a taxable event. But there’s ways of doing that, for example, the IRS gives us the ability to do something called transferring and kind, where we’re just taking the investments from this financial institution and moving them directly to this financial institution. So typically, when we’re moving money, there is no cost taxes or penalties to do it. Sometimes somebody might have a closeout fee on an account of maybe $50, or something along those lines, but really no big cost. And if there is going to be a big cost, we’re going to be fully aware of that before we would even execute transferring the money. I think the bigger thing, though, that you brought the attention to is how do you break up with the relationship, right? Because that can be really tough on people. And that’s the that’s the one that actually keeps people with a firm or an individual that’s actually not doing a good job. And that is a problem because the loyalty should be to your money and to your retirement. And I and people, unfortunately, like they don’t like conflict, right? Nobody really likes conflict. But what we always tell our clients as they’re getting ready to move is thank them for everything, they did thank them for, for taking care of you up to this point. But things have changed, we’ve had to make some additional decisions. And right now, we’re just going in a different planning direction. And if anything changes, that you would keep them at the top of their list. And that’s the best way to approach it. Yeah. But I will tell you one thing that really people get offended by sometimes, okay? That is, a lot of times you can electronically transfer from one financial institution to another. So, you can send a request that these assets be transferred to the new financial institution? Well, these folks are expecting, they’re going to get this call from the financial advisor that they’ve been with for 1520 years, and they don’t get one phone call. And they go, I can’t believe that they’re 1520. Here, this guy didn’t even call us. So that’s a real eye opening for people usually goes we should have moved 10 years ago. So, hey but moving from a financial planner is not a hard thing to do, it really is easy. Matter of fact, in the book, I write about how to fire your current financial advisor, if you’re unhappy with them, if you go to onthemoneyoffer.com, you can get a copy of the book. But while you’re there, schedule a Right Track Retirement Review. During that review, let me tell you a little bit about what you can expect. So first off, we’re gonna go through five key areas with you, we’re going to talk about your income, we’re gonna talk about your investment strategy, your tax strategy, your healthcare strategy and your estate planning strategy. We’re also going to determine what are your biggest concerns, a lot of people don’t know when the best time to collect social security, they’re scared to lose a large portion of their money because they just don’t have the time to recover. People want to learn how to create a stream of income by getting themselves their own private pension, they want to know about how to create tax free money in retirement, they want to know how to transfer the money from themselves to their beneficiaries without the IRS becoming the largest beneficiary which when we come back, I’m going to talk to you about how big tax hit you can take when you when your money transfers from you to your children, the day that you die, so but right now go to onthemoneyoffer.com, get a copy of the book schedule the appointment, or my team is standing by to take your call right now. And you can schedule it’s 1-888-382-1298.


Rebecca Powers 09:13

And we’ll be right back more with how you can retire on the right track right after this.


Brian Quaranta 09:18

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 will 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 09:32

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 09:39

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, health care and legacy planning.


Neil Major 09:54

Because we’re not just product pickers here. What we do best here as we build retirement plans That’s


Brian Quaranta 10:00

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 10:09

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


Brian Quaranta 10:15

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 the difference at secure money advisors, as a fiduciary firm, we help you managed to risk the old deal come and give you the retirement.


Rebecca Powers 10:46

All right, welcome back. I was on that spot. Brian, you were drawing on that whiteboard. And those were the different buckets that we’ve talked about. That’s right. And you were showing that nice family, your bucket strategy, let’s talk about and it was so eye opening, when I started doing this show the power of saving tax money, this isn’t 1020 30 $40. This is if you plan correctly, for instance, taxes on IRA, if you plan out 1020 30 years, you can save hundreds of 1000s of dollars. Yes, correct. It’s a big deal.


Brian Quaranta 11:14

It’s a big deal. Or you could wind up paying hundreds of 1000s of dollars. And, you know, there was a great article in Money Magazine about two years ago, about a son that inherited his father’s half $1,000,000.05 $100,000 retirement account, the son was the primary beneficiary of that account. So, the son gets notice that his dad dies that he’s the primary beneficiary of this $500,000 retirement account. So, he calls the company, he says my dad’s died, they tell him what to do, we need a copy of the death certificate. So, he does everything fills out the paperwork, sends everything in. And a couple of weeks later, he gets a check in the mail for $500,000. So, he puts in his bank account. And a couple of weeks later, he gets a 1099 for $500,000, which most of you know that a 1099 means that that is reportable income. So now he has reportable income of $500,000 on top of the income that him and his wife are currently making. So, they’re making a combined income of 150,000. So now their tax bill that year is gonna be paid on $650,000. The article went on to say that the son owed over $245,000 in taxes that year.


Rebecca Powers 12:38

That’s half of what his dad worked for.


Brian Quaranta 12:40

Of what his dad worked for. And these are the things that we have to be aware of, because there’s been some big changes to the IRA laws that cause us to pay a lot in taxes when it transfers to the next generation. So, there’s something called a stretch IRA that you can do, but there’s very specific rules that you have to follow when you do it. It’s also known as the inherited IRA. So, if this son would have known that this inherited IRA existed, yeah, he could have transferred the money from the dad’s retirement account, to an inherited IRA could not go into the sons, Ira has to go into a special inherited IRA. And then there’s a 10-year rule that needs to be followed on how that money is distributed. So, if his son would have done that all $500,000 could have went to an inherited IRA, he wouldn’t have had to pay a dime in taxes.


Rebecca Powers 13:33

He would not have lost a penny, but he lost $250,000, half of it.


Brian Quaranta 13:38

Half of it. But the IRS would require in the first year that he does that, that he has to start to take out money, right, called the required minimum distribution, just like the IRA owner would have to take out at age 73, an inherited IRA owner has to take that money out at whatever their age is at the point in which they inherited, but done correctly, you could save yourself hundreds of 1000s of dollars on taxes, because the money comes out a little bit over a 10 year period controlling the tax distribution on that money. So, these and many other strategies to save on taxes and even create tax free money. And that’s something that everybody should be working towards, because your largest partner in your retirement account is the IRS. And the sooner you can buy them out and get them out of the picture, the better it’s going to be. So, think about it. The IRS was a what 40-50% partner in his dad’s account, right? Had his dad known that was gonna happen would have done would have never done that ever, ever done that. So again, these are all things that I write about in the book, right? Track your retirement, get a copy, go to onthemoneyoffer.com and get a copy.


Rebecca Powers 14:45

Do you think that so many people think of tax planning as Oh, I’ve got a good CPA. They’re two very different things. Talk about the major difference. Tax Planning is not the guy that does your taxes from last year.


Brian Quaranta 14:57

Yeah, that’s right. So, tax planning is we’re saying okay, if you’re 60 years old, and you plan on retiring the next five years, we should maybe start to look at converting some of this money. Now, depending on how much you’re making it work and what your tax brackets are, there’s this calculation that you would want to do to determine whether or not doing this would be beneficial. But take somebody that’s got $500,000 in an IRA account, and over the next five years, let’s say we could convert $100,000 A year and go from a taxable account to a tax-free account. So, what does that mean? That means I’ve got to pay the taxes when I transfer the money, right, but I’m only paying it on the amount that I transfer. But now, this is very important folks to understand. Now, every dime of interest that you earn in that account, as that account grows, and it gets bigger and bigger, it goes from 500,000, to 600, to 800, to a million, all of that money is tax free. So now, if you take a withdrawal out to live off of all of that income is tax free to you. And if the income is tax free, that means you don’t have to worry about taxes going up on your social security, or your Medicare, Medicare premiums going up because you’re burning too much money, or your overall income tax bracket going up. And these are the things that you want to look at, to see how you can maximize your current situation going into retirement. And that’s what getting on the right track means.


Rebecca Powers 16:29

You make a good point because it’s also you’re paying the current tax rate. So, it’s like you’re paying on the seed instead of the harvest.


Brian Quaranta 16:35

That’s a great point. Or even better yet, look at it like this. When interest rates drop, okay, you know, if I have a mortgage, and it’s at 6%, and interest rates drop, and I now can refinance at 3%. Does it make sense to do that? Of course, of course it does. It also makes sense to refinance your tax situation like the when rates are low. And so, rates are low right now. And this is when you look to refinance or get the IRS out of the picture so that all future distributions and all future growth is tax free to you. And these are the things that you want to do in planning to make things a lot simpler. So now, if you did that, and now the money transfers to the kids, right, yeah, all that money transfer is tax free to the kids. So, there’s benefit beyond benefit by doing this type of tax planning structure. And there’s so many other tax planning strategies. There’s tax loss, harvesting and conversion strategies, and you know, all kinds of ways we can flatten out taxes on IRAs, and create a tax-free bucket even with a tax-free death benefit. But you don’t know what you don’t know. That’s the problem. You don’t know what you don’t know, your investments, your strategies. They’re only as good as the people that you’re getting the advice from? And if they’re not educated you and you’re not learning about these things, how are you going to implement any of these, that’s why we take the time to do the TV show, we take the time to do the radio show every week, we take the time to provide our clients with a weekly video, email on all the things that are changing in the tax laws or Congress changing things on IRAs or Medicare, or whatever it might be so that our clients are informed and informed people can make good informed decisions, go to onthemoneyoffer.com. Get a copy of the book there, but also schedule your right track review. During that review, we’ll find out what your biggest concerns are. And we’ll help you start to build out a plan that gives you clarity and peace of mind. I always promise this nobody from my team is going to tell you anything. We don’t sell anything at secure money advisors. We are a fiduciary firm that helps you solve problems and that’s what we want to help you do onthemoneyoffer.com Go there get a copy of the book and schedule your appointment or my team is standing by right now. You can call 1-888-382-1298 and schedule with us today.


Rebecca Powers 18:56

And even pay for the postage want to make sure you get that book also want to make sure you get that appointment that Brian mentioned. And by the way that appointment is zero cost to you and they will explain that how that’s possible when you come into the office. Stay with us more on how we’re getting your retirement on the right track.


Announcer 19:18

The work never seems to end until the day it finally does. After nearly a lifetime on the job. You should be rewarded for all the time you spent working. Whether that’s crossing off items on your bucket list, learning a new passion or rekindling the love of an old one. After all, life isn’t over when you stop working. It’s the start of an all-new chapter, the one where you’re the writer and you get to choose how your story will go. A way to achieve that is by having a clear financial plan to sustain your golden years. The biggest fear most retirees have is if they’ll have enough money to maintain the lifestyle they always enjoy. Having a plan to help protect you against the curveballs life often throws will help to maintain your lifestyle. Call today to get your free written financial Plan, see me live every day to the fullest and enjoy the retirement of your dreams.


Rebecca Powers 20:09

Welcome back. Okay, we’re talking about your retirement, how to make sure you have a plan in writing, take out the guesswork. With inflation, and so many uncertainties, we’re going to talk about purchasing power in this segment. What’s the importance, Brian of not compounding losses? Yep. To maintain your purchasing power? And how do you take inflation into that kind of risk? Factor? I guess?


Brian Quaranta 20:36

Yeah, well, good question. Because the two things are going to erode your wealth faster than anything is going to be taxes, and inflation, okay. So, the example I always give is, if you need $1,000, from your retirement account, and you’re in a 20% tax bracket, you withdraw the $1,000, you pay the 20% in taxes, and now you have $800 in your bank account. But we know that legislative risk is a risk that we deal with when we’re dealing with our retirement accounts. And that is Congress changes the law and increases the tax rate. So now taxes go to 30%. And now your $1,000, withdrawal doesn’t net, you $800, it only net, you 700. Because you got to pay a 30% tax rate now, now add inflation, and on top of that, so inflation now drives down the purchasing power that money. So just through taxes, and inflation, you lose purchasing power, and the thing you really have to protect is your purchasing power. And this is why tax planning is so important, because tax planning at least gets rid of one of the variables and that is the tax rate that you’d have to pay on the withdrawals for your income, if we have enough time in planning. And we have enough time to utilize a strategy where we’re converting to tax free money. Now, it doesn’t matter if we’re taking the $1,000 out if tax rates were at 20%, you’re gonna get $1,000. If they go to 30%, you’re gonna get $1,000, they go to 50%, you’re gonna get $1,000. Why? Because every withdrawal from a Roth IRA Roth 401 K is tax free. Very, very, very important for people to understand.


Rebecca Powers 22:16

And it’s so important for those of you at home that don’t know the current tax bills are about to sunset, when about a year. That’s the end of 2024 2025, I believe, yeah, okay, on that. But so, we’ve got about two years to do these major conversions that could literally save you hundreds of 1000s of dollars. Yeah, that’s right. And this is all I don’t know where it’s gonna go. You said 30%, they could also take away Roth conversions. I mean, we don’t know.


Brian Quaranta 22:39

We don’t know, it’s, it’s been one concern I’ve had for a long time. And when you’re allowed to do something as great as converting to an IRA. And here’s the other thing to see, for higher income earners out there that don’t qualify to do a Roth IRA, because you make too much money, you do qualify for a conversion. So, it doesn’t matter how much income you’re earning, you can still convert taxable money to tax free money. And that’s one thing that’s missed by higher net worth individuals is not taking advantage of that conversion, because they think they can’t do it because they make too much money. And that’s just not the case. On conversions. It’s only the case on contributing to a Roth but not converting.


Rebecca Powers 23:22

Oh, wow, standing to write that down. You always teach me something. That’s the whole goal. Exactly. And by the way, if you’re just joining us, make sure you call the number on the screen because we want to mail you this book even pays for the postage, it’s a great way to get started to right track your retirement very simple, easy to use. And one of the chapters my favorite chapter is chapter two, will you say? Will you have enough to stay retired? That is 100% of Americans who are surveyed about their biggest fear of retirement is running out of money. But the name of the chapter is Think like a pensioner, not a gambler, will you have enough to stay retired? This is not rocket science. You don’t have to live in fear. You have figured out a formula and you walk us through it.


Brian Quaranta 24:01

Yeah. And look, my formula is decades old. Right? It’s just that most of the planning firms out there and I know because I was with the big box firms, and we were taught to put together diversified portfolios in the stock market. And if people lost money, we were told to tell them not to worry about anything, that everything is gonna be okay. And that they’re in it for the long haul. And that’s just not that’s not true. That’s managing someone’s emotions. You’re not telling somebody the truth. Because, you know, financial advisors that recommend risk are the same people that tell you we don’t have a crystal ball, we don’t know what’s going to happen. But when they when your account value goes down, they’re the same ones that’ll tell you Don’t worry, everything’s gonna be fine. Well, how can you tell me everything’s gonna be fine when you don’t have a crystal ball? Right? It gives you the future which is it? Yeah. So, what it what it is, is we need a better we need to better diversification and so thinking like a pensioner and not a gambler, me means that we need to set aside monies that are non-correlated to the stock market, that just means that they’re not going to do with what the stock market money does, right? They’re protected, they do completely opposite of what the stock market does. And this is why I believe that the 10 best secrets to buying an annuity are this and I wrote them down. So, number one, you relish in serenity, because imagine the tranquility that comes from knowing that your future is protected, right, knowing that you’ve got peace of mind that your income, the thing that people are most concerned about, right, running out of money and not having enough money to pay their bills, that’s taken care of, right? That’s taken care of, because you’ve taken the time to do something really smart that smart people do, and that’s ensure their income. Look, if your stockbroker was that great. Why do they need your money? Why wouldn’t they just be trading their own money and buying an island sipping martinis all day? That’s a good point. So why do they need your money. So, if they’re risking 100% of your money, you really need to think twice about that, because it’s really easy to risk somebody else’s money, especially if you get paid a fee or commission to do it. Now, I don’t care that you have money at risk. What I care is that people are risking too much of their money. Right, right. And even my clients, I had a guy come in, you know, over $3 million. And you know, he’s got plenty of money that if he wanted to take money out of his account each year, he could do it. But he wanted about $100,000 a year in income. And so, I said, Look, if we just carve off a 30 year money, a million dollars, you know, in in a couple years, we could generate over $100,000 A year from this annuity, alone with data loan guaranteed for his life if he dies, guaranteed for his wife’s life. And if they both were to die prematurely, the money in the account pays out to the kids so you never lose control of the money. This is smart planning, right? And then the $2 million can stay invested in the market. But these are the things that you want to know about folks go to onthemoneyoffer.com Schedule your right track review with us today, you won’t regret it, you’ll get a lot out of the meeting. My promise to you is that nobody from my team is going to tell you anything. We’re going to help you solve problems. We’re going to help you understand. We’re going to understand your concerns and help you solve those concerns. So, schedule your appointment there onthemoneyoffer.com. But also, just pick up the phone and call us the team standing by right now to get you scheduled 1-888-382-1298.


Rebecca Powers 27:35

And so many of the points that Brian is making today, if your advisors have not asked you and not had these conversations with you, that is you’re the prime person to call and remember you cannot get a second opinion from the person who gave you the first it is no cost, no obligation, and we really want to mail your book. Thanks for being with us. We’ll see you again next time.