On the Money with Secure Money: Episode 78

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Video Transcript

Cynthia de Fazio 00:20

And welcome to On The Money with Secure Money. My name is Cynthia De Fazio and I’m joined today by Brian Quaranta. He is founder and president of secure money advisors. Brian, how are you?


Brian Quaranta 00:31

Hi, I’m doing great. Good to see you, as always,


Cynthia de Fazio 00:33

it’s so good to see you. Because I love our time together in the studio, you are so passionate about giving information to the viewers at home about how they can properly plan for retirement. We’ve talked about this for ages now, Brian, that a lot of people going into retirement, they don’t have a plan. They’re just going to the mailbox. They’re grabbing those statements. But there’s no true plan, correct?


Brian Quaranta 00:56

Yeah. And it’s a big problem. Because, you know, an investment plan is different than a retirement plan. And most people do have an investment plan. And the reason why is because they have a pile of statements. And they’ve got a bunch of investments, but there’s really no plan on how to use them for retirement. It’s just a little bit of a different strategy that you use to get through retirement. And so, you know, a lot of times when people come in, they do bring their POS, which by the way, stands for pile of stuff, step by step, they come in with their pile of stuff. And they say, look, we’ve got all this stuff, we’re not really sure whether or not we’re on the right track, whether we’re doing the right things, can you help us piece together a plan. And you know, the nice thing about secure money advisors is we’ve taken the time to put together a process a system that truly takes you through it step by step. So that when you’re done, you truly feel like you have a retirement plan, right. And it’s written down. And it’s based around math. And you know, they get a nice binder. And you know, it’s a tangible item that they can see touch and feel. And people do walk out with a real sense of peace of mind. And that’s really what it’s all about planning, protecting and peace of mind.


Cynthia de Fazio 02:02

Absolutely. Brian, thank you. I want to ask you a question. Obviously, we were talking before the show started today about a pensioner versus a gambler. Let’s talk about that in the first segment. Yeah.


Brian Quaranta 02:15

Well, most people are gamblers. If you ask most people, you say, tell me a little bit how you’re invested, they’re probably going to show you 401k statements, IRA statements all invested in the market. Those people are gamblers, they’re rolling the dice with 100% of their retirement savings. Think about that you got to work every single day, you got to work on days that you don’t want to be at work you work with people you don’t want to work with. There’s days you wish you could retire, but don’t know if you can retire. And so but every time they get paid, they have money going into retirement accounts, and they’re risking every dollar they have. And as long as the markets are cooperating and the markets are going straight up, you don’t have a problem. But we know markets don’t go straight up, they come down. And sometimes they come down fast, and they come down a lot. And a lot of people wind up having to delay retirement, a lot of people have to come out of retirement look at 2007 2008, I saw a lot of people, because they had trusted somebody to give them advice that took risk with 100%, their money didn’t set anything up as a pensioner for monthly income. And a lot of those people were not going to be able to continue to take money out of their retirement accounts to live off of because they were going to run out of money. So I would say think like a pensioner, not a gambler, because your job with your retirement money is to make sure that it provides you with enough money coming in every single month, so that you can maintain your lifestyle. And of course, even if the cost of living goes up like it has with inflation, you have to be able to increase that income. But you can’t be relying on the market for that. Because here’s the mistake people make when the markets go down, and they’re continuing to pull money out of their accounts, they are pulling money out and they’re compounding those losses. They’re locking into losses. So, imagine they’ve just lost 30 $40,000 in the market. And on top of that they take 10 or $20,000 out in income for the year. Now they’re down, not 30,000 are down 50,000. And that compounding of loss is what causes people to run out of money. And typically people run out of money Cinthia later on in life when they can’t go back to work because they don’t have the physical capability of going back to work. Yeah,


Cynthia de Fazio 04:16

yeah, that makes sense. So would you say that losses hurt more than gains help, Brian?


Brian Quaranta 04:21

That’s well said yeah, the gains the losses will hurt you more than the gains will help you, especially as you’re you get into that red zone, you know, you start to get to 55 and older, those losses truly help you. I mean, you look at you know, when when, you know, the NASDAQ corrects 30 40%. I mean, it could take 1516 years for a portfolio to recover when you have those types of losses. And you’ve got big companies now, big name companies that are all part of, you know, what we call the fang stocks, stocks that are down, you know, 40% 50% 60% We hope to see those things recover but we don’t know and a lot of people that have been relying on those As those specific stocks to get them to retirement retirement are having a real Wake Up Call right now. And I just see so many people making the mistake of getting too greedy and not protecting their hard earned dollars because they’re saying, Well, I, you know, I’d like to be earning 25 30% Why would I? Why would I put it in an account that only earns four or 5%. And it’s that greed that gets us in trouble, we have to have a balance between safety and risk and retirement.


Cynthia de Fazio 05:25

How do you help someone find that balance? Brian? Because obviously that opens up a whole new can of worms, if you will. I’m imagining in your office every single day, you probably have husbands and wives that come in together, right? Yeah. How often? Are the ideas for retirement aligned with one another? Or do you have someone who is more risky and very conservative? I mean, let’s talk about overall how you help someone like that. Right?


Brian Quaranta 05:51

Well, I will say this, and it could just be at our office, right? This is no national statistic, I’m just sharing with you what I say. Typically, the male in the relationship is much more riskier with the money than the female, right? Women tend to want to protect that money more than what men are men are a little bit more gamblers with that money. So they have a different idea of how the money should be invested. But there is a balance you need to have, you can still take risk with your money. But you should be taking risk with money that you can afford to lose or taking risk with money that you can afford to have a longer time horizon with. Meaning if you’re going to take risk, you need at least a 10 year or longer time horizon. And this is why the number one strategy that we share, that’s in my book, right track, your retirement is a two bucket approach, where we have safe money and risk money, right. And that safe money and risk money is really what gives you a hedge against market risk. So when the markets go down, your safe bucket doesn’t lose anything. But your safe bucket is also designed to provide cash flow. It’s designed to provide cash flow, usually when we build a strategy, that safe bug is going to provide cash flow for 15 to 25 years. Now think about that. If we can provide cash flow from this bucket for 15 to 25 years, that means this bucket over here that we’re taking risk with has 15 to 25 years to grow. And that really gives somebody a competitive edge, in a sense, because what people typically do when the markets go down, and they get scared, is they sell they sell at the wrong time. So if you split the money between two different buckets, and the market goes down, and let’s just say this goes down 30% of your you’re not worried about it, because you don’t need it for a long period of time because the retirement the first phase of retirement has been protected with that first bucket of money.


Cynthia de Fazio 07:37

Well, Brian, I know you have a very special offer to present to the viewers at home today. Let’s talk about what that is, before we open the phone lines,


Brian Quaranta 07:44

folks, I really built the right track Retirement System for you. You know, a lot of people will say, you know, I can’t afford to take another big loss in the market, they may say, you know, I’m not really sure how to generate income from my investments. And I need to know how to do that because I am going to need money above and beyond what Social Security is getting me. A lot of people say I wish I just had a pension. I wish I could make things easy. These are the types of things we can show you. Some people want to learn how to save in taxes, the right track retirement system is built around five key areas, income taxes, investments, health care and legacy planning. You have an opportunity right now, to get a complimentary no obligation, right track retirement review with a fiduciary firm, it’s not very often that you get to sit down with a fiduciary at no cost. But you got to do your part, you have to call us today and schedule that appointment. So pick up the phone, put your cup of coffee down and get up off the couch, whatever you’re doing, and pick up the phone. It’s not the time to kick the can down the road and procrastinate scheduled today for your right track retirement review. It’s 1-888-382-1298.


Cynthia de Fazio 08:47

Brian, thank you so much. When we come back, I definitely want to talk about your book as well. But that’d be okay. That’s it. All right. To the viewers at home, the number to call is on your screen. That number is 888-382-1298. We know you have a lot of questions for Brian about how to plan a your perfect retirement. He has the answers for you and he wants you to stay on the right track. All you have to do is call in today 888321298. We’re going to take a very short commercial break. But when we come back, I’m going to talk to Brian a little bit about his new book and the inspiration behind writing it. Stay tuned.


Brian Quaranta 09:20

So everybody can tell you how to invest your money. There’s not a lot of people out there and a lot of firms that can teach you how to use your money. Most people also tell you that they’re scared. And the reason they’re scared is because they’re afraid of running out of money.


Neil Major 09:34

The last thing you want to do is have a really good job and you’re in your 60s retire, be looking for work again in your late 70s.


Brian Quaranta 09:42

The average person might say Well, a good portfolio would be a good mix of stocks, bonds and mutual funds kind of a good portfolio is all designed around the five key areas income, taxes, investments, health care and legacy planning.


Neil Major 09:57

Because we’re not just product pickers here. What we do best here as we build retirement plans,


Brian Quaranta 10:02

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 Major 10:13

people you know, can actually see a vision once we start to really build out their plan.


Brian Quaranta 10:18

This is about you, if you’re not getting what you need, and you feel that when you walk out of the advisors 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 appointment. The difference at secure money advisors, as a fiduciary firm, we help you manage the risk, build the income, and give you the retirement withdrawal.


Cynthia de Fazio 10:49

And welcome back to on the money with secure money. My name is Cynthia De Fazio. I’m joined today by Brian Quaranta. He is founder and president of secure money advisors and an amazing author, by the way, I want to point that out. Yeah. Let’s talk about your new book, Brian, and most importantly, the inspiration behind you writing this book? Where did it come from? Why was there a need? Yeah,


Brian Quaranta 11:11

well, first off, it took me five years to write it, I would start stop, start stop. And you know, I’m going on 24 years of doing this now for a living and I don’t know anything other than the financial industry. And, and what I found is that there’s a lot of noise in the marketplace. And unfortunately, you know, it’s great that we have easy access to information today. Anything that you know, you’re dealing with in your life, you can Google and you can find, you know, millions of articles on it. Well, it’s it’s it’s a blessing and a curse at the same time, right? You know, I tell my wife all the time, you know, when you’re sick, don’t google it. Right? It’s not a good idea.


Cynthia de Fazio 11:47

It’s not our ends, it never ends.


Brian Quaranta 11:51

But it’s the same thing with finances. I mean, if you if you google how to build a retirement plan, you’re gonna find so many different opinions on how to approach it. dividend stocks, annuities, ETF, say which which direction you go, how do you structure it? How do you build it? And so I’ve always had a very simple approach to retirement planning that’s worked so well for over 20 years. And so I really wanted to commit it to paper so that people could get information that was easy to understand. And really, it was all about a lot of times people asking me the number one question I would hear at the office all the time is, do you think that we’re doing the right things? Do you think we’re on the right track? And you know, because it’s the number one question, I wanted to make that the title of the book, because most people don’t know, they’re scared about whether or not they’re doing the right things? Have they saved enough money? Are they going to be able to retire? When are they going to be able retire? If they do retire, they’re going to run out of money, are they doing all the right things they can be for further taxes, if they die, or their kids or their charity is going to inherit their money, whereas Uncle Sam gonna get a large portion of it. So I’ve laid it all out in the book. And in really the right track retirement book is all about a simple planning strategy that really helps you reduce risk. It helps you build income, it gives you peace of mind. And that’s really what I think people want at the end of the day, is they want to be able to retire and have peace of mind.


Cynthia de Fazio 13:10

Absolutely. Thank you so much, Brian, I can’t wait to get a copy of your book. I’m so excited. Yeah, as


Brian Quaranta 13:15

a matter of fact, if you come in for your right track retirement view, I will hand you a copy of this book. Unfortunately, you can’t buy it right now. But I will hand you a copy when you walk through the door. But you have to schedule your appointment to get it.


Cynthia de Fazio 13:26

Alright, save me one of the coyotes, you promise. Let’s talk a little bit about I’ve heard you mentioned the grand experiment was the grand experiment, a grand


Brian Quaranta 13:35

experiment, and the greatest trick ever play? The grand experiment was in 1978, the Revenue Act was passed to create something called a 401k plan. Okay, and 401 K plans were really designed at first to help highly compensated employees defer bonuses and stock options. And then it was about 19, probably 83, that they started allowing salary deferral to go into 401k plans, meaning every time you got paid, right, money would go into the 401k. Okay. And so companies realized very quickly, that it was a lot cheaper to provide this 401 K, versus having to provide a pension for the rest of the employee’s life. This is why you look at companies like Ford, I mean, Ford wound up, you know, they, I had a lot of clients that retired before they had great pensions. And then years later, we’ve never seen this, by the way, years later, Ford contacted them and say, Hey, would you like a lump sum? Usually the cup of the pension company gives you one option, right? When you retire, would you like to take a monthly income or would you like the lump sum, Ford was allowing people to collect on their their monthly income for years, and then he came back and said, Would you like a lump sum? Why are they doing that? They want to get rid of that legacy cost? Because it’s so much cheaper for them to only have to worry about the 401k Plus, they’re not responsible for generating income. For this individual for the rest of life, the 401k really puts the responsibility back on the employee you will give you a place to to save money and will, you know, they will call your retirement. But you now when you retire, you’ve got to roll this over. And you now have to figure out how to create a pension with it how to how to get it to last for the rest of your life. And think about the monumental task here. We’re talking about doctors, nurses, lawyers, we’re talking about steel workers. We’re talking about welders, we’re talking about union workers, electricians, right, people that have a specialty in a specific area. Okay, I was just talking to all the camera guys before the show, I have no idea how to run an operating these cameras, but I ordered them for the office because I wanted to try to do a few segments, I have no idea what I’m doing. Right, these guys can walk right in and show me exactly what to do, I will never figure it out. Because they have years and years of experience. And we’re asking people to take 25 3040 years worth of work and saying, Here’s your 401k Good luck, you’re on your own, you figure out how to do it. And the grand experiment is we don’t know how this is going to work out. Because most people, when they retire, they usually keep 100% of that money invested in the market. And they’re going to need to generate income because most people Social Security is not enough for them to live off. I say it all the time. So when are they going to run out of money? Are they going to run out of money? Is it going to last the rest of your life? Unfortunately, Cynthia, I meet people they call my office, they’re 15 years in the retirement. They’re running out of money. I’ve seen it multiple times multiple times a year. And unfortunately, when I get that call, and they walk through the door, it’s too late. Yeah, that’s what I can do.


Cynthia de Fazio 16:39

Well, Brian, is that ever tied to the 4% rule? Because we’ve talked about this in the past, that was the rule of thumb that so many people followed for. So very long take 4% Let’s talk about that. It was


Brian Quaranta 16:50

I mean that. And you know, you could trace that back to the early 90s of when that was created. And it really was a good rule of thumb for quite some time. But the markets were so much different in the 90s than they are today. Yeah. And really, the bigger problem is that we have people living longer and and of course, the cost of living has gone up. So people need more income. But for those of you that don’t know what Cindy and I are talking about the 4% rule just basically said if you had a million dollars saved, in your first year of retirement, you could take out 4% or $40,000. And every year, you could increase that withdrawal by by an inflation rate of like 3%. So the next year, you’d go from 40,000 to maybe 42. And then you’d keep going up what wasn’t what wasn’t identified for the longest time. And I think it was identified it just really nobody was talking about it. We had noticed it many, many years ago. And what was happening, it was called sequencing risk. So this was the order in which someone would receive returns while they were taking income out. So this is where I talk about the fact that when people take money out of their retirement account when the markets going down, they’re compounding the loss or locking into the loss. And the 4% rule can jeopardize your retirement. Because if you’re pulling money out of a stock portfolio, and the market is going down, and you’re pulling money out, you accelerate the spin down of that account much quicker, and it’s harder for the market to come back. And that’s why with market money, you never want to take withdrawals from it. Market money is all designed to be long term money, because you’re gonna have volatility there, the way you do it, is you separate it into two buckets. So this safe bucket is what you do to create your pension. The risk bucket is what you do to grow your money. And as this grows over the years, right now, you take some gains, and you harvest those gains and you bring them back to the safe bucket, you don’t pull monthly income out of the risk bucket, because the 4% rule, which is what that’s all based around, could potentially get you in trouble. As a matter of fact, the Wall Street Journal did an article and they said, depending on the year in which you retire, there’s up to a 57% chance that you could run out of money 57% chance you could run out of money if you follow this 4% rule. Now, I don’t know anybody out there today that wants a a portfolio that has a 57% chance of failure. Think about that. I mean, I always related to getting on an airplane. I mean, let’s say we’re about to get on an airplane today. And we were headed for Hawaii. And right before we’re about to be got back out of the gate. The captain gets on the intercom and says folks, I want you to know we just got word from the tower, there’s a 57% chance we may crash into the ocean. Before we get to Hawaii. How many people watching the show right now would stay on that plane. It’s true. I asked that all the time during our educational events and most people say there’s no way I’m staying on a plane I’m getting off. So, I said well, what percentage of failure would you be okay with? What if the plane only had a 20% chance? Would you stay on it? And people say “No way”. What about 10%? No way. What does it need to be? 0! By the way, do you want to know what the percentage of a plane crashing into the ocean is? On the way to Hawaii? I don’t know. But it would be be terrible if I told anybody I knew. They’d never get on a plane again.


Cynthia de Fazio 19:59

Well Brian, you have a very special offer to present. Let’s talk about what that is before we revisit the phones.


Brian Quaranta 20:03

Yeah, folks, the right track retirement system really was designed with you in mind is going to help you get on the right track. If you’ve wondered if there’s a better way to be managing your money if there’s a way to pay less in taxes, if there’s a way to maximize your income and retirement, potentially reduce risk and maximize the returns you’re getting. This system is really designed to help you identify that it’s based around the five key areas, income taxes, investments, health care and legacy planning. You have an opportunity right now, to schedule an appointment today to come in, sit down with a fiduciary firm at no cost, no obligation, all you have to do is pick up the phone and schedule right now. Call 1-888-382-1298.


Cynthia de Fazio 20:45

Brian, thank you so much to the viewers at home, the phone but a call is on your screen and that number is 888-382-1298. We’re going to take a very short commercial break, but don’t go anywhere. I have so much more with Brian when we return.


Announcer 20:59

As a good saver, you’ve been putting away money during your working years. Studies find that the biggest fear of retirees is running out of money. Market volatility isn’t just a downward movement of stock prices. It’s the size and frequency of change. The more dramatic the ups and downs, the higher the volatility. This can put savers who are newly retired or a few years away from being retired at greater risk. Today’s generation of retirees is not receiving traditional pensions as our parents or grandparents did. Instead, we have retirement accounts such as 401 KS or 403 B’s. These accounts typically expose your money to market risk. The last thing you want right before retirement is to lose a portion of the money you need for income. But how do you turn these accounts into a retirement income? Is it safe to keep all your retirement money sitting in the stock market. The last thing you want is to lose a portion of the money you need for income due to market loss. By working with a financial professional, you can learn how to turn a portion of your savings into an income stream for life and income for the life of your spouse if you’re married. We all have moments in our lives when we wish we had taken action sooner. Don’t let procrastination rain on your retirement parade. Act now before it’s too late. Please call our office to set up your no cost no obligation retirement income review today.


Cynthia de Fazio 22:27

And welcome back to On the Money with Secure Money. My name is Cynthia De Fazio and I’m joined today by Brian Quaranta. He is founder and president of secure money advisors. Brian a great show we’re having today talking about of course such an important topic planning properly for retirement, I want to shift gears a little bit and talk to you about something that we were talking about during the commercial break. The greatest trick ever played. Viewing, you know


Brian Quaranta 22:53

you’re in Pittsburgh, you would think it was one of the sports teams that we’d be talking about right now. The Steelers. But the greatest trick ever played was by boys by the IRS on the grand experiment, which was the 401k. And the reason why I say it’s the greatest trick I’ve ever played is because in 1978, when they said that we could start putting money in these 401K’s, right? And then in 1983, when they said we could start deferring our salaries, they said that it was going to be a really great idea that you’re going to be able to defer this money and any money that you defer that his retirement plan, you are going to be able to write off on your taxes, right? So, if I invested $20,000 A year into my 401k, that came off my gross income, so I would pay less in taxes, right? But the greatest trick was that that $20,000 that I put into that retirement account, when that 20,000 grew from 20,000 to 200,000 to 500,000 to a million, and I wanted to take that million dollars out, I have to pay taxes on 100% of that $1 million. So, the greatest trick is the fact that the IRS became the largest partner in that account and nobody knew what’s happening.


Cynthia de Fazio 24:02

Oh my gosh, right? How do we change that?


Brian Quaranta 24:06

That you got to kind of just care about the advisors, or rebuy book, right track your retirement, it’s all linear. But there are there are ways to fix it. And people should know about them. And you know, the better way to do it today is through utilizing of Roth accounts where I can take that same $20,000 Right and invest it. So, it’s secure money advisors, we have a 401k for our teams, but we have we have a Roth 401K. So that means when we invest our money into that 401k That $20,000 When it grows from two, or 20,000 to 200 to 500 to a million and we take that million out, it’s all tax free. Now the only thing is, we didn’t get a $20,000 write off in the year that we made the investment, but who cares? Would you rather pay taxes on $20,000 or a million dollars?


Cynthia de Fazio 24:49



Brian Quaranta 24:49

No, it doesn’t take a rocket science. Yeah.


Cynthia de Fazio 24:51

Right. Much better.


Brian Quaranta 24:52

Yeah. So that’s, yeah, a lot of people just weren’t aware of it. Right. Yeah.


Cynthia de Fazio 24:56

Well, again, you don’t know what you don’t know.


Brian Quaranta 24:59

You don’t know what you don’t know. And This is why people need education. And when I wrote right track your retirement, it was really about taking all of this complicated stuff out there. And breaking it down to a very simple, easy to understand system. That really is what I call an airport read, you know, my favorite books to read are on the airplane, my favorite book to read is when I can finish it on the airplane in a two or three hour flight, right. And that’s I said, when I, when I wrote this book, there’s so many books that I read. And you know, I probably read two or three books a month. And the books that I read, you know, I start going through these chapters, I think, why this author could have said this in two pages. Instead, I got nine pages to read or 50 pages to read to get to a simple point. So I’ve taken out all the fluff. And I’ve gotten right to the point of how to properly build this. And when you come in folks, I will give you a copy of the right track retirement book. And it will really help you understand what even have a meeting. But it would be good for you to read even after you leave, because it’ll reinforce some of the things that we talked about in that meeting.


Cynthia de Fazio 25:58

I love that Brian, and I think it is amazing gift that you’re going to give the viewers that are coming into the office today. So, let me ask you that first consultation, we have a couple of minutes left, how long does that first consultation typically take?


Brian Quaranta 26:09

About 45 minutes to an hour, it doesn’t take very long, we’re really there just to to understand what their concerns are, what they’re trying to accomplish, and whether or not we would even be a good fit, right. And if we’re not a good fit, we’ll shake hands, we’ll part as friends, not everybody is going to be a good fit for what we do at secure money advisors. But a lot are.


Cynthia de Fazio 26:27

Okay. Well, Brian, with a minute and a half left of the show this week, any final words of wisdom and advice you want to give our viewers at home?


Brian Quaranta 26:34

Folks protect your retirement is the most important thing that you can do. The most important thing that you’re doing with the money that you’re saving right now is for most people, it’s going to be to provide an income in their retirement, but you got to be able to protect it. And you got to be able to know how to build a plan that’s based around income. And that’s really what our right track system is all about. And I want you to have this system because it really does give you the peace of mind that you deserve in retirement. It really takes the anxiety and worry out of whether or not retirement is going to work or even if you’re in retirement. There’s so many people that I meet that are in retirement, that they have no idea if the plan that their current advisor has them is even going to work. Remember, it’s really easy to take risk with somebody else’s money, especially if they get paid a commission to do it. That’s why we prefer to be a fee based firm and secure money advisors. We work for you, and we only make money when you make money. You got to do your part though for the right track review, call 1-888-382-1298 You can schedule that right track retirement review today.


Cynthia de Fazio 27:35

Brian, thank you so much to the viewers at home. Thank you for spending time with us this week. The number to call is 888-382-1298. Again, thank you for watching on the money with secure money. Be safe, be happy, be blessed. We look forward to seeing you back one week from today. Take care.