*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.
To see a full schedule of our TV airtimes, please click here.
Video Transcript
Rebecca Powers 00:00
Welcome to this week’s edition of On the Money with Secure Money with Brian Quaranta. Brian is the president of Secure Money Advisors. Of course, he’s the fiduciary that so many of us trust to do financial plans, but securing your money is the number one most important thing OntheMoneyOffer.com is where we want you to go throughout the show to get a copy of his book. And if you don’t mind, can we just talk about your book this week?
Brian Quaranta 00:50
Let’s do it. Let’s do it. I love talking about the book.
Rebecca Powers 00:55
All right, chapter one. And by the way, this is absolutely free. It’s so important for and he’s writing a second book.
Brian Quaranta 01:01
And within the next, within the next 30 days, there will be, when we send you the physical book, you’re going to get an audio version too.
Rebecca Powers 01:08
For free?
Brian Quaranta 01:08
For free.
Rebecca Powers 01:09
Okay, yeah, awesome. Yeah, like I said, very short, easy to read. All right, chapter one. Now this is only a 30-minute show, so yes, I’m gonna go through the whole book already.
Brian Quaranta 01:17
Let’s do it.
Rebecca Powers 01:18
Investment plan versus retirement plan.
Brian Quaranta 01:22
Which do you need? Yeah, first off, let’s talk about the difference. An investment plan is just a pile of statements that have a bunch of stocks and bonds mixed in with it, right? A bunch of ticker symbols. That’s it. That’s all it is.
Rebecca Powers 01:35
And a total at the bottom
Brian Quaranta 01:38
And a total at the bottom, the number you hypothetically have on paper.
Brian Quaranta 01:38
It’s your 401(k), your 401(k) is your investment plan, okay, okay, that’s how most people can understand it. Okay, a retirement plan is not about just the investments. It’s about having an income strategy. So, think about this for a moment. When you have to figure out when you’re going to be able to retire, you got to take all your income sources, your income, your spouse’s income, right? And then you got to take your Social Security, pensions, whatever else you got, and then you got to look, and you got to say, is there a shortfall? If there’s a shortfall, now you got to figure out, how do I make up that shortfall? But then here’s the other important thing people don’t do. They don’t simulate death, because what happens if you lose your spouse five years in retirement? What’s going to be the loss of income? Is it going to be 20% reduction? 40% reduction, 60% reduction. So now your spouse is gonna be living off less money. How many people are having that conversation with their advisor, right? Right? Not only that, but now you got the widow’s penalty, I call it. It’s very sad. The widow penalty is this, the widow now goes into a single filer tax bracket, which means not only are they reduced on the amount of income that they’re getting, but their tax rate goes up. Their tax rate goes up because they’re a single filer. Now there’s a massive amount of compounding problems. Right? The second thing: your investment strategy, the third thing, right, is your tax plan. Because why do we want to pay more taxes than we need to? Nobody wants to, right? So, there’s ways to reduce the amount of taxes that you pay in retirement, a lot of different strategies.
Rebecca Powers 03:10
Over the rest of your life,
Brian Quaranta 03:11
Over the rest of your life
Rebecca Powers 03:12
Not the last 12 months. That’s a history lesson. This is rest of your life.
Brian Quaranta 03:15
That’s why it’s called tax planning. And then you got to think about your health care right now, your health care that’s going to include your Medicare, but if you’re married and your spouse is younger, you may need to go on Medicare. Your spouse may, may need to pick up an additional health insurance policy, an independent policy outside of your place of employment, right? Because you’re not working anymore, right? And then, of course, the estate plan, basic legal documents, I would bet you that 70% of the people that we see on a weekly basis don’t even have basic legal documents, power of attorney, living will, healthcare directive, all of those types of things, by the way, all can be done at Secure Money Advisors.
Rebecca Powers 03:53
Yeah, and you know, living will, I found out that it’s really not even worth much of the paper that it’s written on, that you really need to talk about an irrevocable trust or a trust. But when you meet someone, you figure out all their needs with a million questions.
Brian Quaranta 04:06
It really is, It’s you know, everybody’s situation is just so different.
Rebecca Powers 04:10
Absolutely, that’s why we do not like the cookie cutter approach of the big box. All right. Chapter number two in Right Track Your Retirement Brian’s book. Think Like a Pensioner, Not a Gambler. Will you have enough to stay retired? That’s the key word, Stay Retired.
Brian Quaranta 04:23
-Key word, Stay Retired, yeah, because you’re not going to run out of money in the first three to five years. I don’t care how bad the market is, okay, it’s later when you’re older. When you look at the data, it shows that people will typically run out starting in year 15 and on, depending on what the stock market has been doing at the beginning of the retirement. Because when you retire, the most critical years are your first three years of retirement, because if you get negative returns, there’s something called sequence risk, which I write about in the book that you have to understand. And when you understand that, you’re going to realize the risk that’s in front of you. And. What causes people to run out of money? Now think about this. If you’re running out of money, if the data is showing that people are running out of money later on in retirement, think about how much older you are, right? More vulnerable. Are you gonna be able to go back to work? Are you gonna have the health to go back to work, the stamina, the want, the ability I can go on and on.
Rebecca Powers 05:17
All right. Leverage- This is chapter three, Leverage the Power of the Two Bucket Strategy.
Brian Quaranta 05:23
The two bucket strategy that I talk about all the time is you have to have a guaranteed source. You have to if you’re not building your plan with at least one guaranteed source of cash flow, I am telling you, you are making a big mistake, and that’s why the information in my book, is so urgent for you and your family to have it will change you and your family’s lives to just understand what it means to have a true plan put together. So many of you out there are just still doing the same thing you’re all you’re doing is investing your money now with somebody else outside of your place of employment. You’re no longer using your 401(k), you’re just rolling it over, and you’re reinvesting it with somebody called a financial advisor, right? That’s not focused on all these areas that we talk about in this book, and you’re hoping and praying that you’re going to get the right rate of return, and that whatever this person told you is going to come true. But they don’t have a crystal ball. And they tell you they don’t have a crystal ball.
Rebecca Powers 06:21
They even write that small print on the bottom that, you know-
Brian Quaranta 06:25
Past performance doesn’t guarantee future performance, right?
Rebecca Powers 06:28
Right? And that’s, we say, the big box, but you know, the names, the big names there on the tennis tournaments and all the golf tournaments. It’s been this lull, I believe, a kind of a complacency, because we weren’t taught any better. We don’t know the difference. Just set it and forget it. You’ll be fine.
Brian Quaranta 06:44
That’s right. That’s right. Hopefully. Look, and when you’re brought into the financial industry, think about this. You’re coming in the financial industry. You’re young. You know you’re vulnerable to you know whatever your mentors are telling you. And so, what happens is people start to pick up beliefs about how money should be managed for somebody in retirement, right? And if you’re not conscious and aware enough, and you don’t question it, like I did, and you start to realize like this just doesn’t make sense, there’s too much risk still on the table here. Yeah, right, but a lot of advisors just get in line and do what they’re told to do, right? And that’s where the mistakes are made.
Rebecca Powers 07:20
When people first walk in, how do you help them find out their actual risk and the actual fees? For me, my husband, Ben, who’s from Sewickley, by the way, Ben Powers, it was the most eye opening moment for us. We saw the risk and at 50 and the fees we had been paying, we had no idea we were paying so many fees. How do you help people figure that out? Baseline.
Brian Quaranta 07:39
Yeah. Baseline, well, first off, we use a very powerful third-party software because, look, I don’t want you to take my word for it, just let’s look at the data, okay? Because we are a data driven company, right? I’m not here to give you my opinion, right? I think opinions are the worst thing you can get. Well, you know, in my opinion, I just think the stock market is going to do really well, right? This is why I don’t do commentary about the market on the radio, because, like, What’s it matter what I think about what oil or gas is going to do to stocks or bonds or whatever. It doesn’t it doesn’t matter, because I’m probably going to be wrong, and so is, you know, 90% of the other pundits out there, right? So, let’s talk about the real things that matter. And that’s what that book is about. It’s about the real things that matter, that will have an impact on you and your family for the rest of your life.
Rebecca Powers 08:25
All right, we’re going to continue talking about this book. We’re going chapter by chapter. We come back chapter number four, and I’ll give you the title real quick: Protect Yourself From Big Market Swings. OntheMoneyOffer.com. Brian will mail you this book in a beautiful gold envelope, absolutely free. We mean that. Stay with us. We’ll be right back.
Brian Quaranta 08:44
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 08:58
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 09:07
The average person might say, well, a good portfolio would be a good mix of stocks, bonds and mutual funds. No, no. A good portfolio is all designed around the five key areas, income taxes, investments, health care and legacy planning.
Neil Mager 09:21
We’re not just product pickers here. What we do best here is we build retirement plans.
Brian Quaranta 09:27
Nine 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 Mager 09:37
People, you know can actually see a vision once we start to really build out their plan.
Brian Quaranta 09:43
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 dreamed of.
Rebecca Powers 10:12
All about the income. All right, here’s the book again, right. Track your retirement. You can get a copy absolutely free. We mean it no strings attached. And Brian will even pay for the shipping, and it comes in a gold envelope, like Willy Wonka’s. You know, I’ve got a golden ticket. Golden Ticket. Golden information. OntheMoneyOffer.com is how you get it. All right, chapter four, Protect Yourself from Big Market Swings. Get an income without striking out. I love that. Baseball.
Brian Quaranta 10:40
Look, without an income plan, you’re guessing your way through life. Yeah. Right? You’re guessing your way through life. Now, Babe Ruth said, what was it, you know, Swing Big, Miss Big, something like that, yeah, you know. But the thing is, you can swing big, but swing big with money that you can swing big with, right? Exactly, meaning risk money that you can afford to lose.
Rebecca Powers 11:02
Let’s go into a casino. Yes. Go with $100, but if you can’t afford to lose $10,000, don’t bring 10,000 to the casino.
Brian Quaranta 11:09
Here’s how simple this is, folks, we make it too hard. The financial industry makes it too hard for you to be able to retire. It is this simple. All you got to do is look at your statement, pick it up, look at your account balances, and ask yourself this question, how much of this money can I afford to lose? And that answer that you give to yourself should tell you right then and there, what type of investor you are, right? Are you a gambler, or are you a pensioner? Now, most of you, if you look at your account balances, are going to say to yourself, I can’t afford to lose any of this. Now, I will tell you that there is a portion of everybody’s money that can be put at risk, right? But it’s different. It’s a different portion for everybody, sure, yeah, and we should have some money at risk, because that’s what helps us keep pace with inflation, right? So, I want people to understand, I’m not saying to take every dollar you have and throw it in something like an income annuity, but you’ve got to be responsible, right? This is not a dress rehearsal. You do not get a second chance at this. You do not want to get this wrong, and that’s why, in this book, Right Track Your Retirement, this information is so urgent for you and your family to have. That’s why I send it out for free OntheMoneyOffer.com go there, get a copy, schedule an appointment. I promise you, you won’t be disappointed, because the information we will show you at our office will truly change you and your family’s life.
Rebecca Powers 12:39
And I’m really glad, I know a lot of people have clamored for you to write a second book, and I’m really glad book, and I’m really glad you’re doing that. And this book is on audio books now too. So, if you don’t even like to read, he’s making it super simple, right? Chapter Five, Use the New Technology to Profit from Market Returns.
Brian Quaranta 12:55
Yeah. So, the new technology is just the algorithms that are out there that can basically give signals for money that you can risk right of when to make strategic moves, all right? And that technology is getting better and better and better by the day, I will say as good as that technology is, keep in mind the best way that you can still invest, in my opinion, until that technology improves. But I wanted to write about it so people knew that that technology exists. The best way still is just buying the S&P500, right, right? And buying the 500 biggest companies out there. Those companies are going to rotate out each and every year, right? Because some come in, some fall off because they missed the cut for being the 500 biggest companies, and that means that you’re owning them. Now, what’s driving the market is probably about 10 companies in general. I was just gonna say, I didn’t even know how you know, Amazon, Microsoft, like these are the companies really driving the growth of the market. If you really look and study in the individual stocks that are available in the marketplace today.
Rebecca Powers 13:58
So, the S&P10 instead of the S&P500, right, all right. Chapter Six: How- Oh, this is a tough one, because so many people have beautiful, kind, loving hearts. And this, for me, was one of these, How to Fire Your Advisor and Hire a New Team.
Brian Quaranta 14:16
Yeah, that’s a hard one.
Rebecca Powers 14:18
It really is for loyal people. It’s so hard.
Brian Quaranta 14:21
It’s very hard, and I’m guilty of it myself. I want you to know that you are not alone in this. I am guilty of it, myself. I will tell you the story. I worked- my first accountant I ever had was my accounting professor from college, right? I mean, what better accountant? Who would you trust my business, and she’s the one that taught me accounting. But as my company got bigger, I realized that the tools and techniques that she used were not keeping pace with how complicated my returns were getting, right and so every year I would go in with the intention of saying, we’re done. It, right? We’re done. I’m moving on. I’ve got to find somebody new. And I would go in, and I would see her, and she’s got that beautiful smile. She had the picture of her family up, and then she’d say, How’s your family, Brian? I tell her, I’m good. And she’d know my father’s name, my mom’s name, my brother’s name, right? And then by the time we got to the end of the meeting, I felt so guilty I couldn’t break up with her. But eventually I had to realize that this was not about a relationship. Yeah, it was about doing what was right for the company. And I would tell you the same thing about your money. It’s not about a relationship, it’s about doing the right thing for your money, and sometimes that means making the hard decision, even though that person has always been there for you, has provided you good service, if they’re not solving the five key areas that I talk about, your income, your investments, your taxes, your health care, your estate planning, folks, you are missing so many things in your retirement plan, you’ve got gaps that are creating so much risk that you don’t even know about a lot of times when we bring people through all of these five key areas, they say, I had no idea that I had that risk. I had no idea that I was facing that I’ll tell you one that is so obvious that gets people all the time when we simulate the death of a spouse, and you see that number on our big screen, and you see that annual income number that you have while you’re living together get cut almost in half.
Rebecca Powers 16:36
And then the tax bracket, like you mentioned, is penalizes you in a way, when you file single, yeah.
Brian Quaranta 16:42
And then you say, you know, to the surviving spouse, are you going to be able to live off of this much money? And I will tell you that 80% of the time, they’re going to say, No, there’s no way I’m going to be able to do that.
Rebecca Powers 16:54
Or they have to sell their beautiful house.
Brian Quaranta 16:54
So, how are you going to solve that problem? Right? You know what Wall Street’s going to tell them, take risk, grow your money at a faster rate. The first thing we would look at is, how can we replace that loss of income? How can we make sure that it’s never gonna go away? Now I can tell you this one social security check is guaranteed to go away that you’re not fixing right now. This is why you can do what we call annuity laddering, where you can buy more than one annuity, because if the death of your spouse happens, which it will, we just don’t know when we can turn that second annuity on and bump that income right back up, right and that. And you can do that whether you lose a spouse or you’re just looking, like for myself personally, yeah, Katie and I, I have multiple annuities, because a lot of people ask, well, am I too old to buy an annuity? No. I mean, I’ve got sea turtles older than you. I mean, so. But the idea of flattering- the idea of laddering, I don’t know what that means, but the idea of laddering is the fact that I turn my first income source on, right, the cost of living goes up. Okay, yeah, the market’s down. Well, I can’t pull money from my market account because the market’s down. So, I turn the second annuity on. And the longer you allow the annuity company to have your money and you defer it, okay, meaning you’re not turning the income on yet. It will increase every year that you wait. Your yield on your money will get higher and higher and higher, just like if you were to wait to take your social security. So, when should you buy an annuity? Now. When would now be a good time?, Now.
Rebecca Powers 18:43
Oh, and interest rates are still kind of high, so that’s even better, right? Annuities are better when interest rates are high- though not good for the borrower.
Brian Quaranta 18:50
We have seen, we have seen some of the best annuity payout rates ever in history right now. So, for example, I met with a couple that needed about $40,000 a year in income. Okay, you go back to when interest rates were really low, okay, that was taking somewhere around $450,000 to $480,000 to generate that guarantee of $40,000 a year for both husband and wife if they were going to turn the income on within two to three years. All right, now you could create that same amount of income with $300,000 because the payout rates have gone up so much. Now, the beauty in working with Secure Money Advisors as an independent is we have a software that plugs in all of your information, and then it looks for all the big, strong, safe companies out there, and it says, this is the company based on your age and what you need that’s going to give you the highest payout rate. And you’re going to hear all these crazy things out there about annuities, right? Well, this annuity said it’s going to give me a 9% growth rate every single year. I don’t care what it says. The bottom line is, how much is it going to pay me, right, because they’ll get you with that. They’re smoke and mirrors. Yeah, right. You can have annuity that says every year it grow by 9%. This annuity might say every year it grow by 4%, but the one that grows by 4% actually pays you more than the one that grows by 9%, that’s why you have to have the software to solve the problem.
Rebecca Powers 20:16
Gotcha. All right, we need to take a very, very short break, but I want to remind you all OntheMoneyOffer.com is how you get a copy of Brian’s awesome book. Right Track Your Retirement. If you are wondering, Am I on the right track? When can I retire? Do I have enough money? You’re the perfect person to give us a call or go online and we’ll send you a book absolutely free. Brian even pays for the postage, and we will be right back.
Speaker 1 20:46
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 so you may live every day to the fullest and enjoy the retirement of your dreams.
Rebecca Powers 21:38
All right, a penny saved is a penny earned. We’ve all heard that adage but think about that. A penny saved is a penny earned. If you help people, you do it every day. Tax plan forward and you show them. If you don’t do this, this is how much you’ll owe to Uncle Sam at the end of your when, RMDs right? When in your 70s, when you’re forced to take it out. It’d be- give me a story of when someone come in- and came in and said, I’ve never really thought about taxes. I go to my CPA, I do that. But then you help them figure out what their lifelong tax bill is, and you say, this is the amount we can save. And how do you help them do that?
Brian Quaranta 22:17
The people that think they’re the safest from taxes are those that are in a position where they’re fortunate enough to have a pension and Social Security and that’s enough money for them live on. So, they’re going, haha, I don’t need to touch my retirement account. I don’t need to touch but what they don’t realize is that they have a massive compounding tax bill coming down the road that they don’t know what kind of damage that is going to do. So, think about an IRA, right, that someone has. They don’t need, they don’t need to take income from it, right? So, they retire. They have this 401(k), right? They roll it over to an IRA. They just let it keep growing in the market. But at 73 the IRS comes in and says, hey, it’s time to pay up, right? This is called your required minimum distribution. You’re forced into taking money now, whether you want to or not. Now, here’s what’s going to happen. Let’s say that- Let’s say you retired at the age of 60, right? Or 62, we’ll say 62. Well, by the time 73 comes, that’s 11 years that that money’s had to grow. That money, depending on what rate of return it’s gotten, could have just doubled itself from 200,000 to 400,000
Rebecca Powers 23:40
You’d think that’s great, but…
Brian Quaranta 23:42
Right? You think it’s great until you’re forced to take out this big distribution now, right, which is going to be about a $20,000 distribution every year that you need to take out now that’s going to get added to your pension income, added to your social security income. Now, what do you think is going to happen? It could cause your Medicare premium to go up; it could cause your individual tax rate to go up. So now the money that you’re pulling out, you know, let’s say you were pulling out $1,000 a month and you were paying at a 20% tax rate. Okay, you know, you’re netting $800 but now it forces you into another tax bracket. Maybe you’re jumping to 30% now, now you’re only getting $700 a month if you’re pulling $1,000 out, right? So just by taxation alone, you lose purchasing power. See, inflation isn’t the only thing that will hurt you in retirement. Taxation risks. It’s almost like reverse inflation, right, right? Because it gets you, it pulls money, it pulls money out of your pocket, right, right? So, but if we were smart and we were tax planning, we would figure out how much of that IRA we could convert to a Roth IRA, going from a taxable account to a tax free account, so that now, at the age of 73, now you got $400,000 in there, but it’s all tax free. And guess what? There is no RMD because
Rebecca Powers 24:59
Because you’ve already paid all your taxes when the harvest was just a seed.
Brian Quaranta 25:03
That’s right. And now you’ve done it over a long period of time, incrementally, incrementally. So, you’ve controlled how you paid out the taxes. But now you avoid this nasty RMD at the age of 73 which is eventually going to go to age 75 but that’s a long story, but now you’ve just gave yourself more diversification with your money from a tax perspective. See, there’s diversification of your money from an investment perspective, okay, yeah, there’s diversification on taxes too, because with IRAs, you pay taxes at your normal income tax rate. With Roth IRAs, they’re tax free. With non-IRA investment accounts, you’re going to have capital gains tax rates. So now, if you’re doing tax planning, you can do all these different things, like Roth conversions, tax loss, harvesting, all kinds of things to offset taxes, right? And so these are the things that people don’t know about, but these small little things can have huge impact on someone’s overall retirement, and that’s why I want you to go to OntheMoneyOffer.com and get a copy of this book, because I’m telling you in this book, there is information, information you and your family need to have right now. It is so urgent that you have this information, because so many of you are getting the retirement planning game wrong. You’re getting it wrong and you don’t even know you’re getting it wrong, because no one has ever taken the time to educate you. Once you start to get educated on things, you start to be able to make way more informed decisions. Remember when they said carbohydrates were good for us to eat, and they said, stay away from- stay away from steak, right? Because, oh yeah, steak, you know, it was fat, it was going to clog up your arteries
Rebecca Powers 27:03
Now they flipped it on us.
Brian Quaranta 27:04
And now they tell you eat stick you want, right? Because it’s great for you. It’s great for your blood pressure, it’s great for your cholesterol, it’s great for everything. And so just like things change, like they did with health, right? We have the same thing happening in financial planning, because people start to get the information out there, but you are responsible for getting the information, so don’t procrastinate. This is not the time to kick the ball down the road. This is the time to take action, like I’ve said before, this is not a dress rehearsal. You do not get a second chance at this. So go to OntheMoneyOffer.com and get a copy of my book right now. It’s absolutely free. We’ll pay for the shipping and handling and make sure that this information that’s so valuable gets in your hands so you can make informed decisions.
Rebecca Powers 27:50
And we really appreciate you being with us. We love you, Pittsburgh. We’ll see you next week.
