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Video Transcript
Rebecca Powers 00:20
Welcome to this week’s edition of On the Money with Secure Money with Brian Quaranta. I’m Rebecca Powers, the host each week, and it is my honor to be here. I’ve learned, just along with all of you, I’ve learned so much about what a true retirement plan means, and I was in news since 1996, so I’ve done it all. A TV reporter, investigative reporter, news anchor, and it’s all about storytelling, but really searching for the truth. And that’s what we have in common, don’t we?
Brian Quaranta 00:52
Yeah, we sure do. We sure do is the truth. Exactly. And you know, I think with your investigative reporting, when you’re wired that way as a human being, it doesn’t go away. It doesn’t go away. You want to get to the core of, why do we do this? Why is this happening? And I don’t ever think I stop asking questions.
Rebecca Powers 01:11
And you told me once a few years ago, it’s not the what. Like, I have these pieces. I have the what’s but what’s the why? Yeah, why do I have these things today? We want to do a deep dive on the mistakes and the missteps. You see it over and over and little bitty holes in your ship can sink that ship when you’re ready for retirement.
Brian Quaranta 01:32
Yes, yeah, and let me start with one, and Greg from our studio here is always finding in fantastic articles, but I want to show this, and this is about the amount of hardship withdrawals from 401(k)s.
Rebecca Powers 01:48
Hold it still, and I’m going to read it.
Brian Quaranta 01:50
So yeah, can you read it?
Rebecca Powers 01:51
Yes. So, keep it real still. More Americans are breaking into their 401(k)s, to help make ends meet. And that makes you very, very sad. You can see, gosh, in the last what, eight years? Is that 1, 2, 3, 4, 6, years, it’s more than doubled. People just withdrawing from 401(k)s
Brian Quaranta 02:13
In six years, 100% increase on hardship withdrawals and look-
Rebecca Powers 02:17
Sad.
Brian Quaranta 02:18
-You know, I can remember as a kid, my dad had a Montgomery Ward’s catalog store and
Rebecca Powers 02:26
The original Amazon!
Brian Quaranta 02:27
The original Amazon.
Rebecca Powers 02:29
If only they had stayed the course.
Brian Quaranta 02:30
That’s right, that’s right. And this was in the 80s, and in the 80s we still had the corporate raiders, and Mobil Gas came in and bought Montgomery Wards and I can remember as a little kid, you know, things being really, really good for my parents. And one day, my dad gets a phone call from a friend of his, and he said, Hey, Bob, have you seen the news yet today? And he said, No. Why? He says, Well, you should turn it on. He says, Montgomery Wards is filing for bankruptcy, and they’re going to start with the catalog stores first. And that’s where your dad worked. And my dad had that catalog store. It was his store. He had always been an entrepreneur. That store was so good, it was so busy. It was in Bloomingdale, New Jersey. I can remember when Cabbage Patch dolls came onto the scene, and my dad was getting truckloads of Cabbage Patch dolls, and there’d be a line out the door of people coming in to get these dolls. And of course, I wanted one. My sister wanted one, and believe it or not, we didn’t get one. He gave them all the customers. But that’s how good of a- we got to take care of the customers first.
Rebecca Powers 03:41
Cobbler’s son has no shoes.
Brian Quaranta 03:43
That’s right. But you know this hardship here? I know what that’s like to live through. That’s right. And I think one of the things that really motivated me as a child, and I think where the seed got planted about this whole money thing was watching my parents go through this, and as a kid, going to sleep at night, and hearing those arguments through my door. And as a kid, that- it scares you. It affects you deeply. It affects you deeply. And it never went away. And, you know, I can remember my mom always going, well, what’s the plan? What’s the plan? And here I am. That’s all I talk about-
Rebecca Powers 04:26
Exactly!
Brian Quaranta 04:27
-Is the plan, the plan, the plan. Because, look, when we build a retirement plan, we’ve got to build it with the expectation that bad things are going to happen, and if we can make those bad things happen on paper, then if they do happen, we know we’ve already prepared for it, and that’s what we’re doing every day at Secure Money Advisors. We’re making sure that we put so much pressure on the plan- in a fictitious way. Actually running out scenarios that could happen, so that we know with a high degree of certainty that these plans are going to hold up no matter what storm moves in. I always like to say, if you’re looking to make big returns, we’re not the firm for you, but if you’re looking to have a plan that’s going to be reliable, that’s going to get you through the economic storms, please go to OnTheMoneyOffer.com and get a copy of my book. Schedule a time to come into the office and sit down with the team and let us help map out a game plan, a road map that as we’re taking that journey together, if a storm moves in and we have to take a detour, we know that we’re going to be okay. You can also call 888-382-1298.
Rebecca Powers 06:04
And there is no charge. We truly mean that leave your checkbook at home. We just want to get to know you when we come back, we’re going to talk about mistakes made in income planning. We’ll be right back.
Speaker 2 06:15
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 3 06:24
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 2 06:30
This was the fourth worst contraction in history.
Brian Quaranta 06:38
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 07:11
All right, welcome back! Today, we’re taking a deep dive into the biggest mistakes that people make in retirement planning now the number one mistake is they failed to plan right? I’ve said it before. My dad was a US Marine. He said a failure to plan is a plan to fail. So, if you don’t have an income plan, of course, that’s a big red flag. But what do you see in income and spending, Brian that people are doing in a wrong way?
Brian Quaranta 07:34
Well, you know, retirement isn’t just about savings. It’s about strategy, and it’s about first mapping out a plan. And there’s a lot of people out there that do not have a plan, probably most that come into your office, huh? Yeah, nobody can produce a written plan, yeah. And when I say a written plan, we talk about it a lot on the show, but our clients get a tangible binder, and in that binder, there’s a section for their whole income plan, which we give them. We show all of their sources of income, how much they’re getting, what they’re paying in taxes and what’s left over. And then we have the- all of their beneficiary documents laid out. We have their life insurance, their health insurance, their estate planning documents, their tax documents, and that’s all in one place. And you can open that up, and you can see the whole plan right there. We summarize the plan, so they know what’s going on. We give them checklists of all the life events that are going to be coming up that they need to be prepared for. And the great thing about working with us is that big life events like Social Security, right? 62, 67 70, if you’re not at the point where you’re collecting yet, you know, those are times that are life events where we’re going to reach out and have conversations, the RMDs, the tax planning, that’s where we’re actively reaching out, and that’s why we don’t believe in the check the box annual review. I just don’t get the whole annual review thing. I go, What do you talk about when you go into your annual review? Oh, he just tells us how we did. You got to, you got to go in for an hour for him to tell you that your plan made 2% or, your plan did minus five?
Rebecca Powers 09:24
And they’re only looking or talking about your portfolio, and that’s not a plan. That’s a piece of the plan.
Brian Quaranta 09:29
Yes, performance is not a plan, and performance should not be a annual review. An annual review should be- it’s a planning review, it’s an account review, right? Because if you’re working with a fiduciary, keep in mind the fiduciary has the responsibility to rotate any funds or stocks that you have to improve the plan, because you and the fiduciary are in it together. You’re part. Your team, because the fiduciary benefits from the account going up, so they have a vested interest for doing well. You know, when I was a broker at the big box firms, you know, the only way we made money is if you moved a client from one mutual fund to another. So, how would you know, under that model, if I was calling you because this move was truly your best interest or was just being done to generate a commission?
Rebecca Powers 10:31
It feels a little bit like an inherent conflict. And if they haven’t talked to you about the income plan, it means you could be, and I used to be one of these people, and not understand it, you could be withdrawing from the wrong accounts at the wrong time? Yes, you have to be counseled. These are the mistakes that you make if you don’t have a solid income plan.
Brian Quaranta 10:47
The order in which you withdraw from your plans is very important, right? All because all different monies have different tax liabilities against them. They’re taxed differently. Some are taxed at income tax levels. Some are at capital gains. Some are tax free. So, the order in which you withdraw is very, very important. And you know, the other mistakes that people make is they- people will overspend early because people are not mapping out their cash flow, right? They’re-
Rebecca Powers 11:20
So, how could you know?
Brian Quaranta 11:21
They’re just going in and taking money when they want to take money? That’s the worst thing you can do. The best thing you can do is build a systematic withdrawal plan that comes to you every single month, just like your paycheck used to. Now you might think to yourself, well, I don’t need to do that. I just take money when I need it. The problem with that is, if you’re sporadically taking money, you’re out of control of knowing when your plan may fail. But if you’re systematically taking it out, and even if you’re not using it, and some of it’s building up your cash reserves at the bank, then when you have more emergency cash reserves, you take it from there, right? Yeah. The other thing is, they, they, a lot of people ignore inflation, you know, they don’t take into account the fact that your electric bill may cost you 30% more. Dollar shrinking, yeah, at the same time, look at groceries right now, still, yeah, gas, we’ve seen gas prices jump all over the place. So, people have to take that into account. And another big one is we’re living longer.
Rebecca Powers 12:23
Longevity risk.
Brian Quaranta 12:27
Longevity risk, and this is so big because this is going to cause a tremendous amount of problems for people. It’s great that we’re living longer, but with that becomes even more of an importance and a responsibility to make sure you build out a really good plan.
Rebecca Powers 12:45
Okay, so let’s talk more about the mistakes that people make, investment related mistakes. Yes, too risky? Don’t know their risk?
Brian Quaranta 12:53
Yeah, usually people are taking too much risk. They’re risking money that they cannot afford to lose. So, most people that come to our office, typically, this is what we’re going to hear. I’m not sure when is the best time for me to take my Social Security. I’m afraid that I’m taking too much risk, because I just don’t have the time to recover if the markets go down, I don’t have a pension, and I don’t know how to create one. I’m not sure how Medicare works and when I need to sign up for it. I’m not sure how to withdraw money from my retirement account. What do you even do? Is there a piece of paperwork you fill out? How do you get a direct deposit? But people are risking money they cannot afford to lose. And I say it all the time. If you have won the game, if you’ve accumulated enough money, why are you going to keep playing it? Risk is for those that are trying to get to where you are, all you have to do is protect your money and not lose and you will be okay. The game changes. When you go from your working years to your retirement years, you cannot keep playing the same game that you were playing while you were working in retirement. Rebecca gave a beautiful analogy on a few shows ago, right? It’s offense and defense. Imagine trying to play a football game with two offenses, right? That’s all you had. You got an offense and an offense. How are you going to win? Right? You in order to win, you got to have offense, and you got to have defense. And in my book, right, track your retirement. I talk about how to have offensive defense, and that makes for a championship team. That makes for a championship plan. And that’s why I want you to go to OnTheMoneyOffer.com and please get a copy of the book. It’s absolutely free. I make this so easy. I pay for the shipping and handling. I pay for the postage. I pay for the envelope. I pay for the people at my office to ship it to you. And on top of it, when I wrote the book, Rebecca, what was very important to me was it was a simple read, yes, and I always call it an airplane read. And I always have books with me. I’m constantly reading. And for those of us that read, you’ll probably agree with me on this, but a lot of authors can say things in, like, 100 pages less, right? Exactly. They just drove on and on and on and on, and that is not what this book is about. It’s the opposite. It’s the opposite. It’s getting right to the facts, so that you know how to build this road map and look, even if you don’t work with Secure Money Advisors, let me tell you what this book is going to do for you. It is going to give you the tools and the ammunition that you need so that when you do your next review with your advisor, you’re going to be prepared to have really good questions to ask them, and the better questions you have, the more you’re going to understand what they’re doing, whether it be right or it be wrong. And your job is to figure out, do you have the right plan? Now, if you come into Secure Money Advisors, we’re going to roll up our sleeves. You’re going to be in front of our big, 85-inch screen. We’re going to be going through this stuff together, working things together. You’re going to get the keyboard, you’re going to punch your numbers in. It’s going to be very interactive, because you need to be part of that planning process. We don’t just talk with you and then hide behind a curtain and come back and go Ta-Da! Here’s your plan. And you’re like, how did you get there?
Rebecca Powers 16:47
Where’d that guy come from?
Brian Quaranta 16:49
Yeah, like, how did you arrive at that solution? We want to point out the problem and we want to show the solution at the same time, right? Yeah. And this is what planning is all about, folks.
Rebecca Powers 17:00
It’s so refreshing. All right, give us a call during this quick break. There’s the QR code right there on the screen to make it easy. Stay with us.
Brian Quaranta 17:07
Most people worry they’ll run out of money in retirement. Are you one of them? After decades of working, you deserve peace of mind knowing your money will last 2030, even 40 years. Maybe you want to leave some for your family after you’re gone. I’m Brian Quaranta, president of Secure Money Advisors, after getting to know you and hearing your goals, we build you a customized principal protection plan based on your unique needs, focusing on five key areas of retirement. Secure Money Advisors helps you with things like income, investments, taxes, health care and legacy planning, we can right track your retirement. Let us show you how. Visit our website or call us to schedule a free meeting today.
Rebecca Powers 17:56
All right, how do we avoid these costly mistakes that so many of us have made trying to get to retirement, because we were never taught these things in school. So, Brian, let’s continue. What are the missteps, biggest mistakes you see with investments?
Brian Quaranta 18:10
Well, one is staying too aggressive and not adjusting the risk tolerance. One is being too conservative, because if you’re too conservative and you’re avoiding growth, you’re going to run the risk of inflation eroding your wealth. Okay? You got market timing, right? People try to time the market. Market starts to go down. What do they do?
Rebecca Powers 18:29
Jump out because they get scared
Brian Quaranta 18:30
They jump out because they get scared. They go to cash, and then they wait until the market starts to go back up, and then they get back in, and they’ve missed all those gains going in.
Rebecca Powers 18:41
It’s the basic “don’t buy high and sell low.” That’s right. Buy low and sell high. But you can’t know, because there’s no crystal ball.
Brian Quaranta 18:47
That’s right. The other one is neglecting diversification and not understanding diversification. So, in your accumulation years, diversification is very simple. You buy, you know, in your 401, K, you choose a few different mutual funds, right? Maybe some growth, maybe some, you know, sector funds like pharmaceutical technology, maybe you buy a NASDAQ index or an S and P index, and that’s it, and that’s diversification, but that diversification is all risk diversification. They misunderstand diversification retirement, because diversification retirement is not about diversifying a bunch of mutual funds and stocks. It’s about how much of your money is diversified between safe assets and risk assets. That’s your diversification mix. Now, because you have to have protection on the money, you’ve got to draw a line in the sand and say, This is the money that I need to set aside to do the work to build the cash flow and then the stock market money. Now, because we’ve created safety and income over. Here, the stock market money has the time to grow. It can go up; it can go down. It doesn’t matter, because we’ve created a 10-to-15-year runway with that risk money now. And you know, those are probably some of the biggest mistakes that people make. But when you come to Secure Money Advisors, we’re not going to let you make those mistakes, because we’re going to show you the right way to build a plan so that you can do what you promised yourself you were going to do, go enjoy retirement, because I don’t want you worrying about retirement. I want you out there doing things. I- you’re going to probably watch the news. You’ll get worried. You’ll see the market, and you’re going to get a video from me, because our clients get videos from me every single week. And I’m going to say, Don’t worry about anything. Remember, your plan is built for times like these. We always build our plans to mitigate and absorb even the riskiest markets.
Rebecca Powers 20:59
All right, holistic planner, when you talk about the five things we need, you always say taxes first. And that’s very interesting to me, because I think you’ve seen a lot of the biggest mistakes they make in taxes and the withdrawal sequence. Yeah. What’s your advice on that?
Brian Quaranta 21:14
Yeah, well, first off, ignoring tax strategies is a big mistake, because not planning withdrawals properly from the right accounts. It really just messes up the plan later on down the road. I mean, think about this, if I’m going to be forced to take distributions from my retirement account, whether I want to or not, okay, why wouldn’t I start taking those earlier and not compounding my tax problem? So, at 73 I now have these big distributions. Coming out, jumping up my income tax rate, jumping up my taxes on Social Security, my IRMA, on my Medicare. We don’t want that happening, but money that we should really consider taking risk with and touching later on down the road is money like Roth money. Let’s take the risk with the Roth money, because when it grows, it grows all tax-free, and later on down the road, 15 years from now, 20 years from now, what bucket of money would you rather have? A big bucket of taxable money, no, or a big bucket of tax-free money, right? And this, even seasoned planners get this wrong. They get it wrong. We look at people who come in, we’ll look where they’re withdraw from, and we’ll go. So, who decided to withdraw things was this? Now again, look, we don’t judge you. We’re, we are- We are not there to criticize anything you’re doing. Guys, I think that’s one of the things why people are resistant to coming in.
Rebecca Powers 22:43
100%
Brian Quaranta 22:43
Afraid that they’re going to be criticized, right, right? And that’s not what we do. We just want to understand what you’re doing so we can show you why you need to do it this way instead of that way. And you’ll have moments in our office, like most people do, where you’ll go, Gosh, I wish I would have met you guys 10 years ago, because it would have saved us such headaches. RMD oversights is another big one. You know, people that are turning 73 and having to take RMDs. Do you know how many RMDs are forgotten about, people don’t take them? And they wind up with a 25% penalty. I mean, that should never happen. If
Rebecca Powers 23:25
If you had a plan, you’d know the exact age of when you need to start, or you would have preemptively started converting or doing all the things could be 5, 10 years before that’s
Brian Quaranta 23:34
That’s right.
Rebecca Powers 23:35
63 is a great place to start.
Brian Quaranta 23:36
Every one of our clients has a reminder on our calendar, whether it’s two years from now, five years, 15 years from now, we know it pops up. Bob’s turning 73 right? I mean, nobody in my office is missing it. All right.
Rebecca Powers 23:53
Let’s talk about more mistakes that people make. And again, do not be embarrassed if you haven’t done the right things, because we were never taught these things in school, health care and Long Term Care oversights. Long Term Care has been extremely expensive. How do you help someone decide or do you get a rider, maybe on an insurance policy?
Brian Quaranta 24:12
That’s a great question, and I love the fact that you know about the rider on the insurance policy.
Rebecca Powers 24:18
You taught me well.
Brian Quaranta 24:20
So first off, look, the people that should be buying Long Term Care Insurance are the people that can actually afford it. Yeah, right. So, for those of you that are sitting on a couple million dollars, shame on you if you don’t have long term care insurance, yeah, do it. Why would you use your own assets when you can leverage a long-term care policy for very cheap? Now I should have a disclosure here, because it might not be cheap for you, because everybody’s health is different, so your premium is going to be based around your health, but if you’re not healthy, there’s lots of other ways that we’re solving the long term care issue these days, such as riders, for example, a new. Annuities, the income annuities that we work with will have a feature on them where you can add a long-term care benefit rider, and you don’t have to go through underwriting. And here is all it does. So, let’s suppose that I’m generating income from my client from an annuity, they’re getting $50,000 a year in income from their annuity. All of a sudden, there’s a health event. Doesn’t matter whether it’s husband or wife, okay, the annuity company will double the income. So, their income now will go from $50,000 a year to $100,000 a year while that person’s in the nursing home, or if they need home health care.
Rebecca Powers 25:46
What if you don’t use it, do you lose it? If you don’t need the long-term care, do you get money back?
Brian Quaranta 25:51
No, yeah. Well, basically, what would happen is you wouldn’t have that doubler, right? So, it wouldn’t, you know, your annuity would spend down at a lesser rate. So most likely now, when you die, there’s going to be a good chunk of money left over that could pass to your kids. Okay, so, but you don’t lose it, and that’s a great question, because with regular long-term care insurance, it’s a use it or lose it. Exactly. Right? It’s kind of like car insurance. When you buy car insurance, it’s like, well, it’s great to have it, but if I don’t ever get an accident, I really don’t ever benefit from it?
Rebecca Powers 26:21
Yeah, do I get my money back if I have perfect driving? Yeah, no, it doesn’t work that way.
Brian Quaranta 26:24
The annuity products have become so friendly these days, because even if you’re in an annuity product and, let’s say, an emergency pops up and you’ve got to exit the annuity, you can exit it, right? I mean, now there’s going to be a small exit charge, just like there would be if you had to break a CD early, right, right? But that, but that’s the cost of safe money, right, is the fact that the tradeoff is the insurance company is going to do all these great things for you, benefit you and protecting your money, and give you this guaranteed income for the rest of your life. But if you’ve got to get out of it, they’re going to hit you with a little exit charge, because they got to go sell their positions, and they’re going to pass a little bit of that on to you, and it’s such a small amount that it’s not a big deal. This is why, every year I buy annuities for Kate and I, because I’m building the foundation year after year with multiple annuities, so that when we retire, we turn it on, all that income’s coming in, we never have to worry about the markets.
Rebecca Powers 27:23
Fantastic. All right, we’re out of time already. Thank you so much for joining us. There is the number 888-382-1298, you can get a complimentary review of what’s going on, giving you the final say today. Brian, 20 seconds, take it away.
Brian Quaranta 27:36
Yes, folks OntheMoneyOffer.com. Please get a copy of the book, you will not regret it. All the answers you’re looking for are in this book. And call 1-888-382-1298, the team is standing by to take your call. Get you scheduled, come in and meet with the team, and I promise you, you will have a great experience. We’ll see you again next week.
