*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.
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Video Transcript
Rebecca Powers 00:25
Welcome to this week’s edition of On the Money with Secure Money with Brian Quaranta. Of course, everyone knows Brian in the area. He created Secure Money Advisors. It is a holistic financial firm, the opposite of the big box experience. I’m Rebecca Powers. I was an investigative reporter and longtime news anchor for an ABC affiliate, and it is my pleasure to be a consumer advocate now for Brian, great to see you.
Brian Quaranta 00:52
Good to see you. It’s been a while too. It has been a while.
Rebecca Powers 00:56
It has been a while. Lots of new content. Of course, I always promote your wonderful book Right Track Your Retirement. The first question he always heard was, am I on the right track? Yeah. And if you feel that way, I was in that boat about five years ago, until I switched from the big box today. I love this. You wanted to do a show taking questions from our viewers.
Brian Quaranta 01:15
Yes, because if they have questions, I mean, it’s important that they get answered, you know? I mean, these are real people with real concerns, and I think it’s important that we give folks an idea of how everybody’s situation is different, and how there’s so many different solutions, and why it’s so important to work with a fiduciary firm that is going to customize a plan based on your unique situation. So-
Rebecca Powers 01:44
You started in the big box. So, you know, that cookie cutter approach.
Brian Quaranta 01:48
It’s a cookie cutter approach. And look, you know, the public’s not going to understand that unless you’re an insider and you understand what it’s like and what it’s like to be trained at these big box firms and this is where a lot of advisors acquire their beliefs about things and I’ve always been a very curious person, and I’ve always asked a lot of questions, and when I was at the big box firms, boy, did they hate the questions I was asked, you did not quite fit in there? No, because, you know, I, you know, I didn’t grow up in a wealthy family, and I knew how important it was for my parents to have, you know, peace of mind and protection with their own dollars. I saw my dad as a young kid giving money to stockbrokers and all I would hear, you know, bleep, bleep, bleep, bleep, bleep, bleep, you know, I’ve lost this money.
Rebecca Powers 02:38
You did grow up in Jersey.
Brian Quaranta 02:39
Yeah, I did grow up in Jersey, right.
Rebecca Powers 02:42
All right, we’re going to jump into these questions. Betty, thank you so much for watching, and I love this question. All right, Brian, I am Betty. I’m 62, years old. Just got divorced. My ex left me $400,000, getting half of his social security. She’s never managed money before. What should she do?
Brian Quaranta 02:59
Well, the first thing she should do is start by protecting some of that money from risk, right? If she’s divorced, she’s getting half of his social security. The question is, Is she going to go back to work part time or full time? Does she want to stay retired? You know, it’s hard, if Betty was a homemaker, you know, for all of her life, to enter back into the workforce. So, you know, I would start by saying, out of the money that she had left to her through the divorce, is there a way to take a portion of that money generate additional income above and beyond the Social Security she’s getting to give her enough money to maintain her lifestyle and stay retired and just go out and enjoy life rather than having to go back to work. And you know, we do that by, you know, when Betty, if Betty were to come into our office, what it would look like to her is we would spend time getting to know her. Lots of questions we ask, what’s her dream? What’s her goal? Yeah, and it’s even beyond that, right? Because, you know, most advisors typically go right into presenting product, right? And this is not about product. This is about solving human problems, right? It’s about removing the worry. It’s about removing the anxiety. It’s about the peace of mind, knowing that no matter what the market’s doing, you’re going to be okay, right?
Rebecca Powers 04:35
So, I mean, secure money, it’s, you know, the reason you named your business Secure Money Advisors. You’ve worked all these years. You’ve seen so many people risking when they shouldn’t be. You’ve won the game. Take a portion and secure it, and that’s a big part of what your strategy is. Think about this.
Brian Quaranta 04:53
Everything we do in life; we always have things in life that need to be insured. It, our car, our home. You buy a boat; you put insurance on it. Heck, if you buy jewelry, you insure it. And one of the fundamental things that is missed most often, especially with the big box firms, is the protection of the money for future income, and that monthly income is what gives all of us peace of mind. There’s been studies done that show the people that are the happiest in retirement are those that have the most guaranteed income on a monthly basis and never have to worry about it going away. Think about the alternative. If Betty were to have all of that money she just inherited, or not inherited, but got through her divorce, if that was invested in the stock market, think about all of the variables, all of the things that could go wrong. You would need the market to cooperate 100% of the time in order for her to withdraw money on a monthly basis. And if she’s withdrawing money on a monthly basis, and the day that she withdraws, the markets down like it has been, she’s just going to compound those losses. So, I would tell Betty, if you have not sat down with a fiduciary firm. Yet, find a good fiduciary firm in your area that does full-service planning. There’s five key areas, there’s income, there’s taxes, there’s your investments, there’s your health care, and there’s your estate planning. So, you can go to OnTheMoneyOffer.com and you can get a copy of my book. It’s absolutely free. We pay for the shipping and handling, and it will show up at your house in a gold envelope. It’s like the Willy Wonka golden ticket. And the book is such a simple read, you can read it in a day, and it’s going to give you a road map of how to go about building a strategy and retirement that’s going to give you peace of mind and security. So go to OnTheMoneyOffer.com. You can order the book and at the same time, Betty, you can schedule an appointment to come in and sit down with the team. And my team has all been personally trained by me. My team is there to help you solve problems, not sell you product.
Rebecca Powers 07:22
That’s right, and that’s a big complaint, I think, of the big box experience, that’s right, they have quotas and they have to sell products, all right. Dave from Cranberry, thanks for your question. He says, I’m 65 and retiring next month. He says, I have no pension, like most Americans, just my 401(k) and Social Security. What do I need to do right now?
Brian Quaranta 07:43
So again, this is most of the Americans out there today, right? 85 to 90% of the people that are going to be going into retirement, they are not going to receive any other guaranteed income other than their Social Security.
Rebecca Powers 07:59
And that’s taxed.
Brian Quaranta 08:01
That’s taxed.
Rebecca Powers 08:02
That’s a whole ‘nother situation.
Brian Quaranta 08:03
It’s a whole another topic, right? We’ll talk about that on a later show. Yeah, but we have to now take this employer sponsored plan known as the 401(k), and we have to figure out, how are we going to turn this into a useful tool? Because, think about it, why are we putting money away every time we get paid? What’s the purpose of it? The purpose is to accumulate that money over time, so that you have a big pile of money when you’re ready to retire. But now what? What’s the next step? You can’t keep doing the things that you were doing in your working years, while you were accumulating your dollars, you can’t do the same strategies in retirement. It fundamentally changes. It flips it flips distribution, that’s right. And the biggest mistake people make is those typically sit down with an advisor, and the advisor will recommend that they roll over the 401(k), and they continue to diversify it in stocks, bonds and mutual funds and again. Now we’re dealing with volatility. We’re dealing with the unknown, and the biggest thing that will keep you up at night is uncertainty. So, if you want a plan that is going to give you certainty, I am telling you the book that I wrote is going to give you that road map to security. All you got to do is go to OnTheMoneyOffer.com get a copy of the book. Again, it shipped out to you absolutely free. And while you’re there, you can schedule an appointment with the team, my team standing by to take your call and get you scheduled to come into the office.
Rebecca Powers 09:41
And again, Brian’s promise is always you will never be pressured. You’ll never be you know, felt like you’re being sold something. It is absolutely free, complimentary review. Leave your checkbook at home, and like you said, there really is no obligation. All right, I’m Rebecca Powers here with Brian Quaranta. We’re taking your questions, Pittsburgh. We’ll be right back.
Brian Quaranta 10:00
See, 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 10:15
The last thing you want to do is have a really good job in your 60s, retire, be looking for work again in your late 70s.
Brian Quaranta 10:23
The average person might say, well, a good portfolio would be a good mix of stocks, bonds and mutual funds. None of them. A good portfolio is all designed around the five key areas, income taxes, investments, healthcare and legacy planning.
Neil Mager 10:38
Because we’re not just product pickers here. What we do best here is we build retirement plans.
Brian Quaranta 10:43
Nine out of 10 people, when they walk through the door, we 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 10:54
People, you know, can actually see a vision once we start to really build out their plan.
Brian Quaranta 10:59
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 opinion. 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 11:28
Welcome back to On the Money with Secure Money with Brian Quaranta and we’re going to jump right back into your questions. I love this. Maria and Joe bring up such an important topic, especially for those do it yourselfers, it’s about RMDs, Maria and Joe, right? And we’re confused about RMDs. When do we have to take them, and what happens if we don’t? Penalties?
Brian Quaranta 11:52
Yeah, great question. First off, for those folks out there that might not need to start withdrawing money from their retirement accounts immediately when they retire, because maybe they have a social security check and they have a pension and they’re able to live off of that, they usually will let their retirement accounts continue to defer and grow and not do anything other than let it defer and grow. What they don’t realize is that there’s a tax lien against those retirement dollars, and that tax lien is the IRS, your silent partner, your silent partner, and they’re going to own about 40% of that account. So, and a lot of people, once they hit that age, which right now is age 73 when you have to start taking that RMD, it’s going to spike their income because it’s a forced withdrawal. The IRS actually tells you, at 73, based on the amount of money you have invest in your retirement account, exactly how much you need to take out. And if you don’t take that much out, there is a 25% penalty, wow, on top of the tax. Imagine, on top of the taxes. So, imagine you’re paying, you know, 40% in taxes on top of your taxes. You got a penalty now at 65% poof, gone. Wow, just like that. Not only that, but if you don’t do any planning prior to age 73 when it spikes your income because of that forced withdrawal, it’s going to spike your taxes, because your taxes are going to go up, then you’re probably going to be taxed on your Social Security. Up to 85% of your Social Security can be taxed. Then the problem continues to compound, because it could affect your Irma, because if you make too much money, Irma, for those that you don’t know, is how they calculate how much premium you have to pay for your Medicare. If you make too much money, your Medicare premium goes up. So, think about the compounding effect here, if you hit from every angle, hit from every angle. Yeah, and did you know that you could absolutely eliminate your RMD by the time you’re 73 through proper planning? Okay, how? So, sitting down with a fiduciary, a fiduciary would work out a plan to where over time, a little by little each year. Okay, the reason why it’s done little by little each year is because you don’t want to spike your taxes. So, every year you can take a little bit of that money and you can convert it to a Roth IRA, which becomes tax free. All the money going into the Roth IRA grows tax free, and all the withdrawals are tax free. However, your RMDs are eliminated. Amazing. You don’t have to take RMDs from a Roth IRA. So again, this is why you have to sit down with a fiduciary firm that is comprehensive. Again, when I say comprehensive, we’re talking about a plan for income a. Plan for taxes, a strategy for your investments, a strategy for your health care and your estate plan. You know so many people have an estate plan, but because they’re not doing the work on the financial planning side, they might not even have an estate to leave, to leave, because all the money will be gone exactly, and that’s why the biggest fear for most people in retirement is running out of money, and it’s a serious fear, because look at how quickly the markets can drop, right? Look at this whole tariff situation going on right now, right? And the markets are uncertain. When markets are uncertain, they plummet, and the way they drop, how fast the markets drop these days, it’s so fast before you can even react to it. Your money is Poof! Gone!
Rebecca Powers 15:44
And if you have just retired yesterday, and the market dips and goes down tomorrow, my gosh, you’re in a bad spot because you didn’t have a plan.
Brian Quaranta 15:54
Rebecca, you bring up such an outstanding point, because the studies have shown that if you retire, and in your first year of retirement, the markets dropping, your probability of running out of money goes up greatly. It goes up greatly. And see, the big box firms are not talking about this.
Rebecca Powers 16:15
Because they want to invest. They want you to stay in the stock market, right? Yeah, for the most part.
Brian Quaranta 16:19
Yes. And you know the thing is, is that had I stayed with the big box firms, had I not been curious to start asking questions, my beliefs would have been probably that Sure, and a lot of these advisors working at the big box firms, they’re good people. They want to do the right thing, but when you’re indoctrinated with a belief system. That’s what you continue to do, and you don’t look at the alternatives. And the job of the financial advisor is to make sure that you get into retirement through retirement and leave the money to your family. The last thing you want is to go into retirement and your plans start to fail, and your advisor has to say to you, look, you’re going to have to go back to work. Imagine that, yeah, imagine having to come out of retirement. We- I’ve literally sit down. You got to remember, I’ve been doing this for 25 years, and I see the horror stories. You know, I remember meeting with a gentleman that had been retired for 15 years, and he came in, he sat down with me, and he said, I’ve calculated that I only have about five years’ worth of income left. Is there anything we can do? And you want to know the truth by that time, folks, there’s nothing you can do. You see that you can’t fix that problem when it’s so far been broken, very difficult, and this is why the math becomes so important in this game of financial planning. And I want you to know something when you’ve won the game, when you’ve accumulated enough money, you don’t need to play the game anymore. Your job is to protect what you have. And I know most of you listening to me right now, every time you sit down with your advisor, you probably have a feeling in your stomach, where you’re going, it sounds good, but there’s still too many things that are unknown. We want to take those unknowns out. We want to build certainty into your plan, because that’s what you deserve. That’s why we don’t believe in the check the box annual review. Because what are you going to do? Sit down once a year and go over performance and be told whether your account made money or lost money? What’s that do? That’s not financial planning. Financial Planning is an income strategy, a tax strategy, an investment strategy, which is much different the investment strategy we use and while you were accumulating your money, a healthcare strategy and an estate planning strategy that’s real retirement planning, and that’s why you have to get together with a good, comprehensive fiduciary firm, and that’s why I built Secure Money Advisors, because I want you not having to Go in and meeting your advisor on a quarterly basis, or twice a year, or once a year. You should never have to go see your advisor, if it’s done right, unless there’s a big life event, you should be out enjoying retirement. And when you come in from off the beach and you turn on the news and you see absolute pandemonium going on Wall Street, the first thing you’re going to have the feeling is, like most of my clients do, they say, Brian, you know, every time the market drops, I feel like I’m the only one out of my friends that’s not worried. So, folks, go to OnTheMoneyOffer.com right now. Don’t procrastinate on this. This is not the time to kick. The can down the road. You need to take action. Now, I know it can be scary to consider a change. I understand that. I go through that in my own personal life, but when you feel that uncomfortableness, that’s usually a sign that you’re on the right track, and you’ve got to go in that direction. So, go to OnTheMoneyOffer.com, get a copy of my book, and my team is standing by to get you scheduled to come to the office.
Rebecca Powers 20:25
And again, it is absolutely free. We can’t wait to meet you. And here’s Brian’s book. Right Track Your Retirement. A free copy can be mailed to you even before your complimentary appointment. All right, stay with us. I’m Rebecca Powers here with Brian Quaranta and we’re talking about how you can secure your money.
Speaker 3 20:42
We know the market is going to get worse from here. This is the biggest monthly decline in 10 years. People’s 401(k)s took a major hit.
Speaker 4 20:51
Well, my investments are tanking. My retirement isn’t going as planned. I can’t believe I let my kid talk me into buying crypto. I mean, what is that anyway?
Speaker 3 21:00
This was the fourth worst contraction in history.
Brian Quaranta 21:04
So, how are you two doing? Your financial future doesn’t have to be uncertain. I’m Brian Quaranta with Secure Money Advisors. If you have amassed a nest egg, it’s time for a financial advisor to help you reach your retirement goals. This is one of the greatest tax windows in history. Now is the time to take advantage of this tax discount while you can. We specialize in retirement planning, tax mitigation, estate planning and more. Plan your retirement right. Call now for your complimentary portfolio review and tax analysis.
Rebecca Powers 21:38
Welcome back. All right. Our next question today from Eric, and I love this. I think, like you do, Eric, he says, I’m 60 years old. I want to retire early. I would love to maybe even next year. Brian, how do you think I can pull it off?
Brian Quaranta 21:52
Well, the first thing you got to figure out is your income gap, right? What your needs are, yeah, what your needs are, right? And then we’ve got to figure out, how are we going to bridge the gap until you can collect social security? Because keep in mind, if you want to retire prior to age 62 that means you have no other income source other than your investments, unless you have a pension. But I’m going to assume that maybe Eric doesn’t have a pension, so we have to build a bridge. We call it a bridge because we got a bridge to that Social Security age, and then we’ve got to determine at what point does it make sense for Eric to turn his social security on? Is it going to be best to turn it on at 62 is it going to be best to turn it on at 63 or maybe 67 is full retirement age or 70, it depends on how much money Eric has saved. So, this is where everybody’s situation is unique, right? And once we figure that out, now we can, very easily, we do this all the time, getting people retired early. As a matter of fact, when people come in, a lot of them feel that they’re never going to be able to retire. And when we bring up their plan on our big 85 inch screens in our office, and those numbers are, you know, as big as your hands, and you start looking at the math, people start looking at it, and it’s very emotional, because for the first time, people are seeing all the sacrifice that they made of putting this money away, they start to see a real plan come to life and a real exit strategy fall right out in front of them to where they go. Wow, I’m really going to be able to do this and I go, you absolutely are. Those are some of the best days in our office.
Rebecca Powers 23:50
That’s your favorite types. You’ve always said that their body language even changes. You say when they walk out.
Brian Quaranta 23:56
They do, yeah. And one of my favorite things is when people go, when we show them that they can retire early, right? And they go, Well, I still have a lot left in me. I want to work for another five years. And you go, well, here’s the good news, you don’t have to. You don’t have to. But isn’t it nice to know that if you walk in the work and someone pisses you off, you can just say
Both 24:21
I’m out of here!
Brian Quaranta 24:23
That’s a great day. And that certainty of knowing that, boy, if people will tell me all the time, I go to work feeling completely different. I love because I want to be there, but I know I don’t have to be there. And I will tell you about 60% of the people that we usually build a plan for where we show them that they can retire now, and they say they’re going to work another five years.
Rebecca Powers 24:46
They don’t.
Brian Quaranta 24:46
In two years, they’re coming. Going, can we implement that plan now? And I go, absolutely, we can. And it’s a big thing. And, and this is, again, this is the type of planning we’re doing at Secure Money. We’re really- we- We’re looking at everything. We’re looking at, you know, how much money have you accumulated in your retirement accounts? Do you have any additional monies that you’ve accumulated outside of your employer response or plan? We’re looking at your life insurance. Another thing Eric would have to look at is, if he’s going to retire early, we have to think about health insurance; and at Secure Money Advisors, that’s why we’ve built a comprehensive office, so that, you know, he can walk right over to our Medicare specialist. And my Medicare specialist not only does Medicare, but she does regular health insurance. So, Eric can also, not only get a plan from us from the financial side, but we can also help him get his health insurance also. And it’s so nice for people to just have it all done under one roof, because the challenge when you start to have different people working on different parts of your plan and they’re not talking to each other, that’s where a lot of mistakes are made. It’s not cohesive. It’s not cohesive. And when you have it scattered that way is very difficult, and it’s a very, very the plan just becomes like, it’s just not as tight, it’s not solid, yeah, you know, I’m at a loss of words for what I really want to call it, you know, let’s just say it’s not as great as our plans.
Rebecca Powers 26:23
That’s right, need to optimize, maximize and really make sure you have efficiency. That’s a buzz word, lately, efficiency.
Brian Quaranta 26:30
That’s right. And retiring early, you can’t guess at this, right? It’s not a dress rehearsal, because we do not get a second chance. If I’m going to get you retired, if I’m going to get you retired, I’m going to keep you retired, period. Bottom line, you are not going back to work under my watch unless you screw it up. Okay? And people do screw up their own plans. You know, sometimes-
Rebecca Powers 26:55
I went to France for three months!
Brian Quaranta 26:59
Yeah: I three months, and I bought a Ferrari. What were you doing? You know, that was not part of the plan. You know, it could have been if you would have called. But no, that doesn’t happen very often, though.
Rebecca Powers 27:11
It all starts with the plan. I always say my dad was a US Marine fought in Korea, and every day to the six of us in our tiny house, he would say, remember, a failure to plan is a plan to fail. Yes, and absolutely always think about that when you talk about the power of a plan, yes.
Brian Quaranta 27:25
And look, every one of us will see people out there today that did not plan to fail. They failed to plan. And folks, that’s why I’m telling you, please pick up the phone, call the 800 number, go to OnTheMoneyOffer.com and get a copy of the book. The team’s standing by to get you scheduled. Don’t kick the can down the road. Don’t procrastinate. Come in now.
Rebecca Powers 27:49
And as we say, it is free, no obligation. We love you! We’ll see you next week. Thanks for joining us.