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Video Transcript
Rebecca Powers 00:00
You rob, welcome everyone to this week’s edition of On the Money with Secure Money with Brian Quaranta. I’m Rebecca Powers, and of course, everyone knows Brian. He has not only educated so many of us about retirement planning and savings really having that clear path to retirement. He’s also the creator of Secure Money Advisors, helping thousands of families now. Right? Their plans? Good to see you. Good to see you. All right, we have such great ratings and comments about the shows when we take your questions Pittsburgh, so that’s what we’re going to do this week, and we love your questions. Thank you so much. This one is from a high-income couple. Mike is 60, Heather is 58 and they earn $250,000 combined. They have 2.3 million in savings. Good job. They’re worried about taxes, eating away into their retirement. It’s so smart to think that way. Brian, what are some strategies that you everyone is different, of course, but when you have a high earning couple, what are those strategies that you put into place?
Brian Quaranta 01:32
Well, first off, I mean, there’s a lot of things that you can do depending on what you’re willing to do. So, for example, are they willing to start a charitable foundation? There could be a tax write-offs by starting a 501c corporation. Are they giving to charity right now? Could they qualify from charitable distributions, what we call QCDs. Do they have non-IRA accounts where they could do some type of tax loss harvesting, you know, they do. They own real estate where they could do some type of Cost Segregation strategy. So, I could go on and on, okay? And again, this is about, you know you don’t know what you don’t know. And I’ve talked about this before, when I worked with different tax accountants over the years, I remember my very first tax accountant was my professor from Robert Morris University. What smart of a tax accountant could I get? But as the company grew and it got bigger and more complex, you know, the type of tax planning work they were doing was just no longer providing myself and Secure Money Advisors with what it needed. You know, are these folks, business owners? Could they do what we call a section 162 executive bonus plan, where they could, you know, have a write-off for an executive bonus plan for themselves and for specific employees. So, there’s lots of ways to save on taxes, land partnerships, if they would qualify for that. So, taxes are a bigger problem as your financial situation becomes more complex. Most of your tax accountants out there, Rebecca, are there to basically process your tax return and take what you’ve earned for the year in income, what you got in interest, ask you what deductions you have, and then say, here’s what you owe. But they’re not tax planners. They’re not going to look at cost segregation, section 162, setting up a 501c, doing qualified charitable distributions. They’re not going to look at those things. That’s not what they’re skilled in. This is where a good fiduciary advisor can really help, and not all fiduciary advisors are equal. Sorry. I mean, you know, again, it’s like going to a doctor. How well educated is the doctor you’re going to? How well are they keeping, keeping themselves up to date of what’s going on in the medical community, right? And all you can hope for is that you find someone that is extremely passionate about having the answers for your situation. And the only way you can do that is by interviewing people.
Rebecca Powers 04:32
Absolutely, and in the book even touch on that too- how to know what to ask them, that’s right, how to find the right one.
Brian Quaranta 04:38
Yeah, and even how to fire them.
Rebecca Powers 04:41
That’s right, like you had to do with your CPA from college because you outgrew her. All right? This is a totally different scenario, and I want to just really give kudos to all of you caregivers out there. I know how very, very hard that can be, and it’s such a strain. So, I have such respect for David and Ellen. David is 62 and Ellen is 60. They are caring for David’s very elderly mother. They’re very concerned about the long-term care costs for themselves. Taking care of her has made them realize what a serious issue it can be. So, they want to ask you, Brian, how can they plan for their own potential late-in-life care needs without draining the retirement savings? It’s a great question. It’s so tough.
Brian Quaranta 05:21
Well, being a caretaker is very, very difficult, and it is so hard on the caretaker themselves. People don’t realize that, and we need to give those people a lot of credit, because it really flips their life upside down, especially if there’s no plans in place to help pay for the care, and the burden of it falls on them. And I think as you go through that, you say to yourself, I never want to put my kids through this exactly. I don’t ever want to put any of my family members through this. The challenge we have today, Rebecca, is that most people don’t qualify for traditional long-term care insurance.
Rebecca Powers 06:06
Why is that? Because you have to go through the medical-
Brian Quaranta 06:09
You got to go through medical underwriting. The medical underwriting is very strict, so one little thing could disqualify you, and therefore you don’t have any additional coverage, except for the very little that Medicare might cover if you get sick. However, probably one of the greatest things that I’ve seen in the last 10 years, and they’re getting better and better and better, is what we call a hybrid policy. A hybrid policy is we all know that if we were to buy a life insurance policy, it would pay us when we died, right? So, but what if we could have something that actually had a living benefit, meaning it actually helped us out while we were still living? These hybrid policies actually will pay you a certain amount of money if you can’t do so many daily activities, right? So, there’s certain daily activities that if you weren’t able to do them, the insurance company would say, Okay, we’re going to pay you a check to help get you assistance in taking care of these daily activities. And that can be done on an annuity. It can be done in a hybrid life insurance policy, and you don’t have to qualify to do it. You know, one of the things that I love about the income annuities out there is that, for some income annuities, at no cost, you can put what they call a long-term care doubler on the annuity. What that would mean is, I had a husband and wife come in, and they needed about $40,000 a year in income, and the advisory firm that they were working with had them just taking withdrawals out of their investment accounts. They had a little over a million dollars invested in a diversified portfolio of stocks and mutual funds and they had them taking a certain withdrawal rate each year to get them the $40,000 okay? And they were using 100% of that money to do that. They were using all of their money to get them their income. And I said, what if we could use just 40% of your money to get 100% of your income? Would that be better, yeah, yeah. So, what we did was we carved off about, we carved off about $350,000 of about 1.1 million. We put that into a guaranteed income annuity that was guaranteed for his life, if he died, guaranteed for her life, and if she died, any balance would pay to the family members that $350,000 generated $40,000- a little over $40,000 a year in guaranteed income for both their lives. But get this, if one of them became sick and couldn’t do a certain number of those daily activities, the insurance company would double the income and take it from $40,000 a year to $80,000 a year for the period of time that they were not able to do those activities, even if it’s 10 or 20 more years, even if it’s 10 or 20 more years and activities. You mean, dress yourself daily activities, right? Yeah. So now what would happen? So, let’s suppose that you know, their 40,000 goes to 80,002 years later, the person dies, yeah, okay, well, that just means that now the income is going to go back to $40,000 so they’re not going to run out of money, right? They’re still going to get their base minimum, but that’s a way to solve that problem if you don’t have the ability to qualify for it. And this is why you want the book Right Track Your Retirement. It’s why I would recommend calling 888-382-1298, to order. Order a copy of the book, but schedule a time to come in. Look, as I’ve said before, folks, this is not a dress rehearsal. We do not get a second chance at this. We’ve got to get it right. If you weren’t on the right track, when would you want to know that? What if we could tell you, in that 45 minutes that you spend with us, that you were on the right track, how much better would you feel, but if you were on the right track, how nice would it be to say here’s some options to think about. So again, go to onthemoneyoffer.com get a copy of the book. Or call 888-382-1298.
Rebecca Powers 10:39
And the book is free, and he’ll even pay to mail it to you. That’s how easy it is. All right, stay with us more with Brian Quaranta on how you can secure your money.
Brian Quaranta 10:48
When most people think about retirement, they think about saving money, but what they often forget is that not all of that money belongs to you, a large portion belongs to Uncle Sam, and the truth is, taxes could end up being one of your biggest expenses in retirement. That’s why we developed our free tax calculator with just a few simple questions, you can see what your tax burden might look like in retirement, and, more importantly, where there may be opportunities to save. Let me give you a quick example. We recently had a couple come in who saved about $750,000 in their retirement accounts. Pretty good. They thought they were in good shape, and they were. But what they didn’t realize was that if they pulled the money out of those accounts the wrong way, they could lose over $200,000 of that to taxes over their lifetime. So, by running their numbers through our calculator, we were able to show them strategies to reduce that tax bill significantly.
Rebecca Powers 11:51
Welcome back. Tax savings, one of the many things that need to be in your retirement plan. We’re continuing to take your wonderful questions Pittsburgh. So, thank you so much for sending them in. All right; our next question is from Roy. Excuse me, Ray and Nancy. They own a small landscaping company worth $800,000 they want to sell in the next year. Already have a buyer, so they want to retire as soon as they sell. They really don’t know how to handle the future taxes and income planning. They said, Brian, we never really thought about things like that till watching your show. What are the things we can do now to be smart?
Brian Quaranta 12:26
Yeah, well, of course. I mean, as a business owner, you’re used to running your business and having income come in. Now all of a sudden, you’re going to sell it for a sum of money, and now you’re going to have to have the sum of money generate the income for you. But the big problem they’re going to have is they’re going to have a big liquidity event. Yeah, that big liquidity event, Rebecca, means big taxes. So, we better have a plan if that happens. Meaning, you know, usually people that are in landscaping, paving, you know, electrician, plumbing, they typically own, you know, buildings, assets. So, the question is, yeah, could they do some type of accelerated depreciation and do a cost segregation study where they could actually offset that big liquidity event and not pay any taxes on that money that they receive for the business. And these are all things that at Secure Money Advisors, we would do and look at and determine, how do we maximize this money that’s going to be coming in, because we certainly don’t want to give half of it to Uncle Sam, because if we give half of it to Uncle Sam, they are certainly not going to be able to generate the income that they need to be able to live off of or they’re going to be living a very different lifestyle, absolutely. So, there’s a lot to think about on this one.
Rebecca Powers 13:45
And there’s also the estate too. You’re going to end up giving more to the federal government instead of your children, because it’s all You’re darn right part of that plan. Exactly right. All right. Our next question from Harold and Donna. They say they retired together last year. Let’s see. He is 66, she’s 65 they have $1 million in IRAs, Brian, and $60,000 in savings, but rising cost. Of course, they’re smart to be nervous. Their question is, how can retirees make sure? How can we make sure our income keeps pace with inflation without taking on too much market risk?
Brian Quaranta 14:16
First off, congratulations to Donna and Harold for retiring at the same time. I know. My question is, Harold, does Donna still talk to you? I will tell you-
Rebecca Powers 14:27
Are you thinking in the future for Kate?
Brian Quaranta 14:30
Yeah, well, you know, I say this. I say this because I can remember. And if these folks are so great clients of mine today, but they came to our office, probably one of the most loving couples I’ve ever met in my life. And I didn’t matter of fact, I thought it must have been like their second marriage, because the way they looked at each other in the conference room and held each other’s hands, and it was great. And, you know, she had been a homemaker all her life, and he was getting ready to retire, and so we finally retired him, and I remember about three months. Months after we retired him, they came in and there wasn’t a word being spoken. And I walked in and I go, something’s not right here. And you could cut the tension with a knife, right? Really? Yeah. And so, she says to me, he’s just in my way every single day. Now, can you imagine being a homemaker for 30 years, you’ve got your routine, and all of a sudden now your spouse is in your way every single day. But look, inflation is a big deal. You know, again, the first way to keep pace with inflation is not to lose any money. So, let’s think about that first. And you certainly don’t want to just throw that in a savings account, because then you’ll be losing money safely. So, we have to find a way to get returns without risk. So how can we do that? Yeah, well, we can do with CDs, but the question is, Will CDs keep pace with inflation? We could do it with indexed annuities. How do index annuities work? Well, they give us some of the upside, but we don’t participate in any of the downside. Now you’re listening to that, you might think to yourself, that’s too good to be true. Actually, it’s not. Here’s why, because they cap how much you can earn. So, if they give you a 10% cap, that would mean that if the market went up 15% you would only get 10 but that would mean that if you put 100,000 in, your 100,000 would go to 110,000 and that is now your new guaranteed locked in balance. You can’t ever lose that amount. So that would mean the next year, if the market went down 50% you still have $110,000, compare that to somebody that didn’t do something like that and had their money in the market, their 100,000 would go down to 50,000 and now they’re in recovery mode. And since you’re in the retirement red zone, you don’t have the time to recover the way somebody in their 30s or 40s would. So, again, lots of different strategies. You can read about them in the book, righttrackyourretirement.com, go to onthemoneyoffer.com, get a copy today, this information is so urgent, we have a major problem in this country, and it is the fact that 95% of you watching this show and all over the country do not have a pension, and your Social Security check will not be enough money for you to live off of. So how are you going to solve that problem? And if you think solving that problem is going to be as simple as your advisor telling you, don’t worry about it, you’re going to be just fine. You just let me know when you need to start taking money. Then I want you to have that person sign a document that says if they lose all of your money, they’ll still pay your mortgage, your gas bill, your electric bill and your cable bill. So again, onthemoneyoffer.com, go there right now and get a copy of the book. All I want you to do is read that. It’s a guide to help you put together a great retirement and get you on the right track.
Rebecca Powers 18:09
And he cares so much and really wants you to have this information. It is absolutely free, and he’ll even pay for the postage, and you’ll get it right there in your mailbox and the gold envelope. We really, really want you to have that great place to start, onthemoneyoffer.com, or questions from you, right after this.
Speaker 1 18:31
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 19:23
All right, let’s jump straight into more of your questions. Okay, here we go. George is 59, Emily is 57, they say they want to retire in five years and spend early retirement traveling. That’s the one they clicked. They have 1.2 million saved. Their home is paid off. So that’s excellent. Their question to you, Brian, is, how can we plan our withdrawals to enjoy the Go-Go years without jeopardizing long term? See, they watched our show.
Brian Quaranta 19:53
Look the question you have to ask yourself, if the market corrected tomorrow, is your plan going to survive? That’s the real question you got to ask yourself. Most people, again, don’t lose their retirement all at once. It’s usually from a series of bad decisions or bad advice. And in this case here, what we want to do is make this so simple, and what I want the listeners to understand is that what they’re asking for here, George and Emily, this is so easy, okay, good, if they can just wrap their minds around what I’m about to tell them. Okay, okay, you ready? I’m ready. Here we go. You got a coffee mug there? Let’s put our coffee mugs right here in the middle. Okay, all right. On this side, we’re gonna call this bucket number one. Okay, okay. On your side, that’s bucket number two. Okay, this bucket of money right here is gonna do all of the heavy lifting for income. So, we’re gonna put a portion of their money in here, and we’re going to insure it, and this bucket is going to send them a paycheck every single month. Now we’re going to put money in your bucket also, okay, but here’s the thing, we’re never going to touch it. Oh, we’re never going to touch it. It’s going to be in the stock market. And since we’re never going to touch it, our probability of making money is good, good because you’re staying with it in the long term. That’s right, okay, so simple, two bucket strategy here, we insure the income we have long term growth with the other bucket. That simple, that’s how easy you can make it. Now we can get much more sophisticated, if you like, but if you follow that basic principle of understanding that your little pile of money that you’ve accumulated over your lifetime has to be properly segregated into different buckets so that you give it a job to do, every dollar needs to have a job. And in this case, we always want to use- Please listen to me on this. You always want to use the least amount of money to generate the highest amount of monthly income. Most of you out there today are using all of your money to generate your income. I want you using the least amount to generate all of your income. That’s called leverage. And when we use leverage, our money works that much harder for us. That simple strategy right there will change your life and because of your market money bucket now being long term money, and you’re never going to have to touch it. You are going to keep pace with inflation period. Bottom line, all the studies show it. All the reports show it. The academics understand it. The only people that do not understand this are the big box firms. Why? Because they want you to believe that the traditional Wall Street approach is the only approach to your retirement dollars. And I’m here to tell you that you are being led in the wrong direction. You are not a gambler. You are a saver and a pensioner. And I want you to think like a pensioner would think I have a sum of money. I need it to send me mailbox money every single month, and all I want to do is make sure that the cost of living goes up. I have the ability to give myself additional money so that I can continue to put gas in the vehicles, buy groceries, buy my kids/grandkids, Christmas presents, go on vacation. In my book, chapter three is, think like a pensioner, not a gambler, and that’s the way I want you to think. You know, Rebecca, you and I have talked about this before. Babe Ruth!
Rebecca Powers 24:39
Yeah, this is a great story.
Brian Quaranta 24:42
Babe Ruth, the Big Bambimo? Big Bambino?
Rebecca Powers 24:48
You’re Italian. Come on, your last name is hard for most people to say. You can say Bambino.
Brian Quaranta 24:56
Bambino? Babe Ruth had an annuity. His manager. Convinced him in the 1929 depression to go out and get an annuity, and when most baseball players didn’t have two nickels to rub together, Babe Ruth had income coming in every single month, equivalent to someone receiving a $250,000 paycheck. Today, it’s all on my book again. Go to onthemoneyoffer.com get a copy of the book today. Do not procrastinate. Do not kick the can down the road. Like I said before, we don’t get a second chance at this, so, do it right.
Rebecca Powers 25:31
I know we only have two minutes to go, but I really want to ask you about this one quickly. For someone worried about their health care, Rob and Denise say they’re very worried about what Medicare eligibility and health care costs might be. How do they have any idea what to plan for that in the future? That’s it. That’s a question a lot of Americans are facing today.
Brian Quaranta 25:48
Yeah, absolutely. And a lot of people overlook this when it comes to their planning, is what the cost of health care is going to be over their lifetime, and it is very expensive, right? So, we have to plan for it, just like I showed this very simple two bucket strategy. Guess what? There’s a third bucket and a fourth bucket, and it covers these things. That’s right, and how we invest that money is important. A good friend of mine and I were just talking not too long before the show, one of the most underutilized accounts out there is an HSA account, a health savings account. It’s a triple tax deduction, meaning you get a tax deduction for putting money in it grows tax deferred, and you get to take it out tax free. Oh, and by the way, when you put your money in a health savings account, you get to invest it in the market, and you get to use it for any qualified medical expense, including paying for Medicare premiums. So again, this is about financial engineering, folks, right? If you’re going to build a bridge, you’re going to want to go to the best bridge builder there is and get a blueprint. Yes, and get a blueprint. You’re not going to just slap a bridge together. Okay, if you want the best financial plan, my recommendation is come to Secure Money Advisors, because that is what we can do for you. We don’t take it lightly. We know that this is one of your most important assets, besides God and family. So do it right. Get a written plan in place. Call the 800 number, go to onthemoneyoffer.com and get yourself a copy of the book and schedule an appointment while you’re there. Heck, come on and see us and have a cup of coffee
Rebecca Powers 27:41
onthemoneyoffer.com. There’s the book. It is free again. Brian will even make well, he won’t, but someone in his office will mail it to you, and we love you, Pittsburgh. Thanks so much for watching. We’ll see you again next time.
