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Video Transcript
Rebecca Powers 00:23
Welcome to this week’s edition of on the money with secure money, brought to you by Brian Quaranta of secure money advisors. I’m Rebecca Powers. Welcome to our new viewers and hello to our longtime viewers. Good to see you Brian.
Brian Quaranta 00:36
Good to see you Rebecca, as always.
Rebecca Powers 00:39
Yes, all right, we have a lot to talk about.
Brian Quaranta 00:40
We do have a lot to talk about today.
Rebecca Powers 00:42
Let’s talk about how retirement has changed. I’m in my mid-50s. And so many of you in the retirement age or you can probably think of drastic changes in the world since you were a teenager. Retirement is no different. What are the big changes you’ve seen? And how are you adjusting?
Brian Quaranta 00:59
Do you remember Kirby vacuum cleaner?
Rebecca Powers 01:01
I do. We had one. We paid $100 a month? Yeah.
Brian Quaranta 01:05
Did you? Hahaha!
Rebecca Powers 01:06
They did like, like a mortgage on it?
Brian Quaranta 01:10
Right? Yeah, that was a big deal. Right? And the guy came to our door. Yes. Well, my grandfather had a Kirby store, really. And he would service those vacuums anywhere for Kirby for a long time. But when he retired, he retired my grandmother and him they did a lot. My grandfather always had a new car. Yeah, it would travel everywhere. But when he retired from Kirby, he had a pension. Yeah, he had a soul security between my grandmother and him. So, they had plenty of income coming in to enjoy retirement, there was a retirement party for him, right. But that’s not really happening today. You know, you look at retirement 30 40 50 years ago, that was the day of I knew when I was going to retire, you probably were going to get a gold watch or some type of gift, right?
Rebecca Powers 01:56
You knew what your income was going to be.
Brian Quaranta 02:00
You knew what your income was going to be, if you had some extra money that you saved, you probably were not rolling the dice and gambling with it in the stock market, you probably were going down to the local bank and buying a CD paying, you know, maybe 10 to 15%. So, things were easy, right? When it came to retirement because there were places to put money and tools that provided income and also additional interest without risk like a CD. I mean, my grandfather, I mean, could you imagine getting a CD paying 10 to 15% down. I mean, if you got an extra $200,000 laying around, and you get in 10%, that’s an extra $20,000 a year in income without ever touching your principal. Amazing. So, it was a lot simpler today, what’s happening is people obviously are working for multiple employers, you don’t see people working 30-40 years for one company anymore. You know, everybody’s still getting Social Security check. But I mean, in 2035, I believe, you know, says right on your Social Security statement, yeah, that Social Security will start paying more out in benefits than they receive in taxes. So, we know social security is going to be in the red come 2035. But the grand experiment, the grand experiment, nobody knows how this is gonna work out is that we replaced guaranteed sources of income, like a pension with 401 K plans, 403 B plans, 457 plans. These are plans that, you know, if you’re if you’re watching today, you probably have one, right? Every time you make a contribution, your employer probably makes a contribution on your behalf. And your goal is to try to build that pile of money up to the biggest pilot can get so that when you retire, you have enough money to retire. But what does that even mean? Right? What does it even mean to have enough money? Because if you’re going to need to draw income from that, how long is it going to last? Right? Are you going to run out of money? And these are the big concerns that we see from people and hear from people all the time? Can I retire? Am I going to run out of money? You know, can I afford to be taking this kind of risk? So, these are the things that we have to plan for. And we want to build a plan so that it gives us peace of mind and security?
Rebecca Powers 04:03
Why do you think Congress did that in the very late 70s, completely get rid of pensions, for most of us, about 5% of us still have pensions like state workers? Yeah. Why did they do that? What do you think they thought How Would it improve? Well, look,
Brian Quaranta 04:15
You know, pensions are not perfect, either. There’s a lot of people that had pensions that don’t have them anymore because,
Rebecca Powers 04:21
A company goes insolvent…
Brian Quaranta 04:22
Company goes insolvent, I mean, you know, you could go to the Pension Benefit Guaranty corporations website, which is the PBGC and you can see all the pensions that have been you know, that have failed that have become insolvent because the PBGC actually will take over those pensions and pay, you know, pennies on the dollar for what they were supposed to get. So, and also typically if you left a company, you couldn’t take the pension with you. So, if you were there for let’s say 20 years, and you wanted to switch jobs, it was the golden handcuffs.
Rebecca Powers 04:58
So, you would just lose it?
Brian Quaranta 05:00
You would just lose your pension. So, if you weren’t here for 30 years, you lose your pension. So, the idea of the 401k, the form, you know, and these retirement accounts were to give people a lot more autonomy with their retirement. So, they weren’t handcuffed to one specific company. So, if they didn’t like their employer, they just leave and roll their 401k to another employer’s plan. So, I get it in theory, and I get in reason why we wanted to have those options, what I wish would have taken place is that we would have still had an option for a private pension, meaning maybe we didn’t have to do pensions directly through the company. But maybe there was a way that we could do private pensions on our own. So, that at least in your years of saving and accumulating money, you were putting money in a place that at least would generate some income without ever running out of money. The concern with the 401k is how long is it gonna last?
Rebecca Powers 05:53
And the other big concern? I think why we’re in the state we’re in now is because we never did a mass education about what to do with it. Right? Your pensions gone? Here’s your 401k. Good luck.
Brian Quaranta 06:02
Yeah, well, and that still is the problem. And speaking of it, why we do this? Well, and speaking of education, that’s one why we do the show. And it’s also why I wrote right track your retirement because I felt that in today’s marketplace, people are very confused about what to do. They’re not sure what action to take, they’re not sure what their plan should be made up of. In my book, right track your retirement, I write about five key areas to make your financial planning and your your your plan as simple as possible, which is your income strategy, your investment strategy, tax strategy, healthcare strategy, and your estate planning strategy. So, these are all the things that you need to know right here in this book, and if you go to onthemoneyoffer.com, onthemoneyoffer.com, you can get a copy of my book right there. But while you’re there, take advantage of our right track retirement review, it’s a 45-minute review, there’s no cost to you, it’s absolutely free for you to come in, nobody’s gonna sell you anything, nobody’s gonna pressure you to do anything. It’s there for you to get educated and to see where you are right now, if you’re on the right track. And if you’re not on the right track, what are the things that you can do to get on the right track, so that you can retire when you want to retire. But most importantly, when you do retire, stay retired. So again, go to onthemoneyoffer.com, get a copy of the book, we send it out to you, we ship it to you, I pay for the shipping and handling, call 1-888-382-1298. My team is standing by right now also to take your call and schedule a time for you to come in.
Rebecca Powers 07:33
Absolutely. And stay with us. When we come back, we’re going to talk about the five functions of a retirement plan. And if you say a retirement plan, what’s that, that means you don’t have one, you’re probably like most Americans, but that’s what we need to solve. You need a retirement plan. In writing no questions, you know exactly how much you’re going to be making. It is the way you have a peaceful and happy retirement. Stay with us. I’m Rebecca Powers here with Brian Quaranta. And this is on the money with secure money.
Brian Quaranta 08:01
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 08:15
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 your late 70s.
Brian Quaranta 08:23
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 08:37
Because we’re not just product pickers here, what we do best here as we build retirement plans.
Brian Quaranta 08:43
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 08:54
People, you know, can actually see a vision once we start to really build out their plan.
Brian Quaranta 08:59
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 you dream of.
Rebecca Powers 09:29
All right, welcome back. As promised, we’re going to talk about the five functions of a retirement plan. This is not your statement. This is not just a to do list. This is an in-writing plan of every aspect of your retirement the years the goals, what you can expect in a big, beautiful binder. You know exactly where it is mine sits up on my shelf. That’s Brian That’s right. It even says in the case of my demise, please call you know the numbers on there. Our 15-year-old daughter Mary knows exactly she’s even looked at it. Can I look at it? She knows how much money we have where it is. It’s an amazing liberating thing.
Brian Quaranta 10:06
Which is so important, by the way, your daughter’s 15. Yeah, she needs to know. The more families can communicate with each other about these things, the better. We’re going to be overall as a society, because this is the way we can educate. And this is where we can prevent mistakes being made.
Rebecca Powers 10:25
And family feuds
Brian Quaranta 10:27
And family feuds. Yes.
Rebecca Powers 10:28
We all know someone that it destroyed their family, and it ended up being over not even much money, but feelings were already…
Brian Quaranta 10:34
I’ve seen it in my 25-year career. I’ve seen it. Oh, we’ve got a great family. My sister and I, my sister and I are like best friends. Yep. And then there’s a death. And there’s arguments. It happens. There’s emotions involved. Yeah. But yes, you know, I will tell you, you know, you talk about your binder sitting up on your shelf. Yeah, right. In a world we live in today. Everything is digital, right? And point, everything is digital. And, folks, if there is one piece of advice that I can give you get your plan in writing, physical writing, I don’t care if it has a digital copy. But make sure you have a physical copy of the plan somewhere that your family knows exactly where it is. And in that binder should be instructions of how to inherit the money. There should be instructions on what life insurance you have, what retirement accounts you have, there should be clear beneficiary statements in there, your estate planning documents should be there, your healthcare directors, all these things should live right in there. So, if anything happened, all your kids or your spouse needs to do is pull that out. And we’re going to talk a little bit more about these five functions, and why it’s so important to do this.
Rebecca Powers 11:46
All right. Number one, of course, the foundation of any retirement is income. Yep, you’re retired, you’re not working, but you still have bills. Number one, identifying income.
Brian Quaranta 11:55
Yeah, I know, it sounds pretty easy when you say provide income, right? But it’s not, it’s actually the most challenging thing that a retiree will have to solve for. Right. And here’s why. Because there’s multiple ways to approach income, you know, you can withdraw money from your retirement accounts that are invested in the stock market. Well, that may work. It may not work. You could have real estate income, where you’re getting some additional money from but if you’re renting, those places need to need to stay rented. I have a client that was a big commercial real estate-
Rebecca Powers 12:32
Hmm, COVID crushed that I bet.
Brian Quaranta 12:34
-Investor, and who would ever thought that that portfolio, his real estate portfolio would be dealing with cashflow problems right now. He didn’t anticipate that huge companies that were renting from him, no longer rent from him. Wow. Because everyone was working from home. Yeah, everybody’s working from home, nobody renewed their leases. So, you have to have a diversified strategy for generating income. Yeah. And what studies have shown is that the more guaranteed income people have, right, and the less uncertain the income is, like, for example, what do I mean by uncertain? Well, uncertain would be if I’m investing in a stock market, and I’m withdrawing money, that’s uncertain income, because I have no idea how much I can continue to take without running out, right, unless I had some type of dividend strategy. But even dividends can change. So this is more complicated than just saying providing, right and this is why I encourage you to get with a good fiduciary planning firm that can help you build a plan, whether you come in and secure money advisors, or you’re currently working with an advisor, or you’re seeking out professional help get with a good fiduciary firm, and make sure that you are being provided with a written plan. And when it comes to your income strategy, make sure that you’re getting a written income strategy by year. So, if it’s 2023, what’s the income going to look like in 2023 2024 2025? And so on, right? Yes. And then of course, if you’re married, what happens if your spouse dies. So, you might be getting this much money together, but if your spouse dies, there’s going to be a drop in income. And according to AARP, the average drop in income, Rebecca, for a married couple 40%. Wow, that’s a lot of mindless. And then the other thing is that people don’t realize that you’re gonna go into a single file or tax bracket. So now not only you lost your spouse and lost income, but now you’re gonna go into a single filing tax bracket, which means your tax bracket is going to be higher. So, it’s a compounding effect and all of these things with a good written plan, you can make all of these bad things happen on paper before they do happen,
Rebecca Powers 14:38
Right? All right. So, number two, the most important five functions of your in writing retirement plan is to have written proof.
Brian Quaranta 14:45
Yeah, the written proof. That’s right. And the written proof is this, what does my income look like right now? What does my income look like when my spouse dies? And what does the withdrawals do to the balance of the account? How overtime. So, as I’m withdrawing money, what impact is that having on the balance of the portfolio. And that written proof needs to involve three very important interest rates, which I write about in the book. One is called the spend down rate, the preservation rate, and then the legacy rate. And you’ve got to figure out what these interest rates are. Because if you don’t figure out what these rates of returns are, then you’re going to probably over project the performance of the portfolio and be overly optimistic without baking in worst case scenarios. And now you find yourself 20 years into retirement, realizing that we’re gonna run out of money. And I will tell you, the worst day of retirement is not the day you run out. The worst day retirements today, you figure out, you’re gonna run out, and there’s nothing you can do to stop it. Unbelievable.
Rebecca Powers 15:47
Yeah. And a lot of people unfortunately, have been in that situation, especially think of years like 2008. Right? When markets correct or have such crashes. Alright, tax plan, that is something that it is not about what your CPA does. That’s kind of a history lesson of what happened in the last 12 months. A tax plan is forward tax planning. So, let’s explain the difference. And how do you put that in writing? Yeah.
Brian Quaranta 16:09
Well, you know, I’ve got a really smart friend, financial advisor, Stewart Willis, and Stewart Willis said something brilliant to me one time, he said, you know, Brian, we refinance our mortgages. Why don’t we refinance our taxes? Hmm. And he was trying to get people to understand that when you’re in a low tax rate environment, you should be looking to do all the tax planning that you can, right. And so, we are in the lowest tax environment we’ve seen in a very, very long time. Now, those are going to sunset, right, I believe in 2025, somewhere around there. So, if you ask most people, do you think taxes are gonna go up or down in the future, they think they’re gonna go up. So, if you could get money out of your retirement accounts right now and remove them from taxable accounts and get into tax free accounts. That’s the wonderful thing about our tax code right now is that you can move money from a taxable account to a tax-free account, and then all your future growth is tax free. And there’s not a lot of people taking advantage of this right now. But having a good tax plan is important because it does the most important thing for a retiree, it protects your purchasing power, because when the cost of living goes up, and you haven’t done tax planning, and now you’ve got to pay a higher tax rate on your withdrawals, you are compounding the purchasing power problem, and you’re going to rapidly decrease your purchasing power if you’re not looking at these effective tax planning strategies.
Rebecca Powers 17:43
So, inflation to that is another massive thing. How do you kind of put that into your formula of figuring out people’s purchasing power? And when you’re doing their plan?
Brian Quaranta 17:53
Yeah, well, look, the 100-year average on inflation is 3%. Okay. And that’s usually what people will use, most financial planners are taught use 3% inflation rate. But here’s what we have to realize. The question is going to be not what the 100-year average is for inflation. But what’s the 20-year average or 10-year average when you’re retired? This take somebody that’s retired right now, maybe they’ve been tired for, you know, maybe a year, maybe two years, maybe three years, their inflation rates been like eight 9%, maybe more? Yeah. So, you’ve got to really look at these scenarios, and really put a lot of pressure on the planning process, because you want to see how much it’s going to take to make the plan break.
Rebecca Powers 18:39
Absolutely. I’ll write the plan. organize everything in one place.
Brian Quaranta 18:44
Yeah. And this is the binder we talked about, right? Yes, your financial inventory binder. so important for you to have so simple, but so effective for your family to have this financial inventory binder. And again, this is just a simple way to organize everything from all of your income strategy, your withdrawal strategy, your tax strategy, then all of your important documents, all of your statements from your retirement account, your life insurance, your homeowner’s insurance, your mortgage statement, write all of your estate planning documents, This all needs to live in this tangible binder. Because for those of you that are going to leave your most responsible child as the primary beneficiary of your estate and make them the executor, and I know your smartest, most responsible child, but they are not going to like you because it is a curse to be the executor of the estate, ask anybody that has had to deal with it. So, we come back we’re going to talk about one more of the five functions but before we come back, don’t forget go to onthemoneyoffer.com Get a copy of my book right track your retirement. Everything Rebecca and I are talking about I talked about in depth in the book, but I want you to take one more step. I want you to sketch to an appointment, come in and take advantage of our right track retirement review the appointments absolutely free, there’s no cost, it’s just time out of your day. If you’re on the right track, my team will let you know. And the analysis that we’re going to do for you, we use very powerful software to do it. It’s a third-party software, it’s not biased. It’s looking at just specific data points to help you determine where you are. And if there’s any weaknesses in your current plan, your current income plan, your current tax strategy, plan, your current estate strategy. So, onthemoneyoffer.com, get a copy of the book, and you can schedule there or just call 1-888-382-1298 My team is standing by to get you scheduled to come into the office.
Rebecca Powers 20:42
And if you’re fancy, you can even use that QR code. Just point your camera to and it’ll take you to our landing page. Stay with us more on rate tracking your retirement with Brian Quaranta right after this.
Announcer 20:59
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’ve always enjoyed. 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 21:48
Welcome back to On the money with secure money. I’m Rebecca Powers here with Brian Quaranta of secure money advisors. The fifth thing on the list is instructing your heirs to carry out your wishes. Yes, it makes their lives easier. And everything you want is done you avoid probate. And you have to make sure your beneficiaries stay current.
Brian Quaranta 22:09
Yeah, it’s so important to make sure your beneficiary stay current because your beneficiaries are the most important part of your documents. See your beneficiaries are so important that they override everything really. So, people think that the will that they make is the one document that’s going to make everything happen. But it’s not.
Rebecca Powers 22:31
It’s not?
Brian Quaranta 22:32
It’s the beneficiary forms.
Rebecca Powers 22:33
So, the beneficiary forms would override a will?
Brian Quaranta 22:37
Correct.
Rebecca Powers 22:38
Wow. See, you teach me something every week, and I thought I’d heard it all from you. But no.
Brian Quaranta 22:43
Yes. So…
Rebecca Powers 22:45
My mind is spinning. That’s shocking, because we paid a lot of money to an attorney to do our will.
Brian Quaranta 22:50
Your will. So, whatever your beneficiary document says, that’s where the money is gonna go. Okay. So, here’s how important that says. So, we’ve all known somebody that has lost their spouse. And sometimes they’ll get remarried. And when they get remarried to their new wife or husband, typically now that new spouse becomes the primary beneficiary of the retirement account, okay? Kids still stay on as contingents. Right, right. But the spouse, the new spouse, usually sometimes will go on as the primary. Well, here’s what people do not realize, if that money is left to that new spouse, that is legally now that new spouse’s money, which means that new spouse can change the beneficiaries at any time they want. And they could say, I’m not giving it to his
Rebecca Powers 23:51
His children, I’m giving it to my children.
Brian Quaranta 23:56
Which has happened. It’s happened twice in my career, to not clients of mine, but people that I consulted with, and they were disinherited. Wow. And this is how easy a big mistake like that can happen. Because the beneficiary document is the most important document you own, it will override the will, so, in this case, if the beneficiary form said give the money to my new spouse, but the willl said give all my money to my kids, the courts are going to say, well, what’s the beneficiary form say? It says new spouse and they say the courts gonna say well, then the money needs to go to the new spouse. And this is where you’ll read all the time about people getting disinherited. And this is very important for you folks to know because, again, we talk a lot on this show about income and investments and taxes and health care and estate planning. But some of the most important part of your plan will be taken care of in documents like your beneficiary forms and there’s so many other things like that that need to be handled. And that’s why I tell folks get with a good fiduciary firm that believes in providing you with a comprehensive, written plan. Because if all you’re doing with your advisor is speaking about the performance of your investments, and you’re not looking at other things like the beneficiary documents, right, or how you’re going to protect your family, even from being wiped out from taxation, then we don’t really have a plan in place. Because again, remember, a plan involves not only taking care of the income, but making sure you own the right investments at this point in your life, making sure you have a good tax strategy, a health care strategy, and an estate planning strategy. And if your advisor is not talking about all five of those key areas, I would highly recommend you get a second opinion, I don’t care if it’s from us or somebody else. But you definitely need to go get a second opinion. And again, go to onthemoneyoffer.com, get a copy of the book, and you can schedule to get a second opinion right there.
Rebecca Powers 26:05
And you must set the word fiduciary. So, in the last few minutes of the show, we’re gonna talk about the difference between a fiduciary and someone who may just be an agent or may be a broker, which is all fine. But people need to understand the difference.
Brian Quaranta 26:17
Yeah, well, look, I mean, I believe in my heart that anybody working in finance today, whether you’re an agent, or a broker or fiduciary, should be doing what’s in the client’s best interest. Should be. As with any industry, you have bad apples. I mean, you mean you can look at doctors and you can, you know, see many stories out there of, you know, bad situations with doctors, lawyers, you know, all professions, contractors, I mean, you can go on and on. But the difference between the fiduciary standard and the eight are an agent or a broker is that the fiduciary actually is held to that higher standard by law and higher education, and they’re provided a higher education to understand a more in-depth planning process. That’s right. So, I’m not saying that your broker agent doesn’t know what they’re doing. I’m just telling you how it works, right. That’s what we want people to know to understand. And that’s a reason just to get a second opinion, right there. It’s a reason to get a second opinion. So go to onthemoneyoffer.com, get a copy of the book, come in schedule, your right track review. Again, it’s absolutely free. We’ll go over the five key areas with you come in, and you’ll get a lot out of the meeting. And my promise to you is nobody from my team is ever going to try to sell you anything, but he’s going to push you to do anything. You can also call 1-888-382-1298. My team is standing by to take your call and get you scheduled for your right track review.
Rebecca Powers 27:43
Yep. And here’s the right track your retirement book. I’ll mail that to you as soon as you make that call even pay for the shipping and handling. Thank you so much for joining us keep those emails and questions coming in. We love you. We’ll see you next week.