Retirement You TV: Episode 25

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Video Transcript

Cynthia De Fazio – 00:20

And welcome to retirement You TV, my name is Cynthia de Fazio. I’m joined today by Brian Quaranta. He is a president and founder of secure money advisors. Great to see Oh, good to see you. How have you been?

Brian Quaranta – 00:33

I’ve been great. Very busy. Yes. Very, very busy. You know, it’s it’s amazing what this environment has done to the volume of, of meetings that we have at our office, I think it’s just more convenient sometimes for people to not have to worry about driving up and meeting virtually. So a mix between our in office appointments and new virtual meetings. It’s just been very, very busy.

Cynthia De Fazio – 00:53

Absolutely. And Brian, let me ask you, obviously, since we started doing the shows together so long ago, I think it’s been about a year now, if you will, it really has, I know, I know. It’s crazy for me to watch how things have progressed for you, because when you came in, you were obviously very busy, very successful, the shows have now taken you to a whole different levels. So how are you finding time to balance everything?

Brian Quaranta – 01:17

It’s a great question efficiency. You know, we really, my team and I have done a really great job in building in very efficient systems and processes. Not only for our office, but also the way that we help our clients. Because what what people have to understand is, no matter what you’re doing in life, you better have a process. And you can get a lot done if you have a process. And you can impact quite a bit if you have a process. So it’s really the reliant on a good system and good process.

Cynthia De Fazio – 01:44

salutely. Absolutely. Well, let’s talk a little bit today about the changes that we’re seeing, obviously, as a country, the last time we were together, we didn’t really know which administration would be in the office. Well, now we do know. Yep. So are you getting a lot of questions about how that’s going to affect people personally, as far as their retirement savings as far as their portfolios as far as taxes? What are you hearing right now?

Brian Quaranta – 02:08

Yeah, it’s all over the board, we really don’t know what the impact of the new administration will be just yet. But you know, this is why going back to what I was talking about just a little bit ago about systems and processes, this is why you have to have a process. Because if you don’t have a process for your investments, if you don’t have a system to utilize for your investments, then you’re going to be at the mercy of whatever administration’s in there. And then the way that the system, the way that your process should work. And your philosophy should work with your investments is it doesn’t matter what party is in power? The the process should work either way. Sure. And that’s and that’s the key to having a really good dialed in plan built around that that system.

Cynthia De Fazio – 02:50

Absolutely. Brian, let me ask you a question. When you sit with someone for the very first time, and you’re getting to know them, how long does it take you to construct a retirement plan for that person?

Brian Quaranta – 02:59

That’s a great question. And it takes quite a bit of time. I mean, because really, you know, we’ve built the right track retirement system. And the reason why we built that is, you know, you know, doing this now for over 21 years, the number one question we get all the time is, we really just want to know if we’re on the right track. Well, how do you know if you’re on the right track, because there’s a lot of different variables that come into play when it comes to retirement planning. Number one, there’s five of them, really, that we’ve identified that are the most important number one, and most importantly, is income, because none of us are going to be able to retire without replacing the paycheck, right? So when we retire, the paycheck goes away. And we’re going to have to replace that income somehow we know that for everybody retiring today, people are still going to be entitled to a social security check. But 85% of the people retiring today are not going to receive a pension. So we have to the first step in identifying things is really understanding what is our income going to look like second in the system is making sure that our investments are structured the right way, meaning, are we getting the right return for the risk that we’re taking, a lot of times people are taking a lot of risk, and they’re not getting, they’re not getting an equal return for the risk that they’re taking. And that’s part of the system is that, you know, when we when we help folks, we bring them in, and we have a really powerful software, we use Morningstar software that allows us to look at the risk associated with the portfolio and the return that they’re getting. And a lot of times it’s very eye opening for people to see that they’ve been taking this much risk, but they’ve only been getting this much return. And really what we’re going to try to do is flipped out I’d like to get I’d like to take this much risk and get this much return. So number three is making sure that things are set up tax efficiently. Because again, the retirement process that we go through should work regardless of what tax rates are or what administration is and, and so by having a good system built around planning for taxes, it doesn’t matter if tax rates are low or if they’re high. We should be in a good place or relatively in a good place when it comes to planning for taxes. And then number four is taking care of healthcare, we’re all going to need some type of health insurance, whether it be Medicare or Medicare supplements, or if you want to retire before the age of 65, you’ll have to bridge that gap from, you know, from whatever age you retire, let’s say 62 to 65, you got to bridge that gap until you qualify for Medicare. And then number five is really the legacy planning part. So what happens when the good Lord decides to take you home? You know, we better have a plan, because if we don’t, I promise you, the state of Pennsylvania will have a plan for you. And I can guarantee you won’t like that plan. Yeah, we want to try to keep Uncle Sam out of our back pocket, that’s really what we’re trying to do. And if you don’t do that type of planning, you’re just not going to be maximizing those areas. And those five key areas can be dialed in and focused on and and the system and process that will bring you through will identify each of those areas, we’ll look at where you’re at currently with all those five key areas. And we’ll help you make some better decisions around those to maximize each of those areas.

Cynthia De Fazio – 06:02

Okay. Brian, let me ask you a question. In your opinion, why do a lot of people spend more time planning their family vacations when they do their retirement years?

Brian Quaranta – 06:11

Well, because retirements changed so much. I mean, you go back 30, 40 years ago, retirement was pretty simple. I mean, you know, you probably knew exactly when you would retire, because when you retired, you got a social security check, and you got a pension, right. And this is why people used to have retirement parties. Because you knew if you worked for a company for 30 years, they were going to give you x amount of dollars for the rest of your life. And then you add a social security check to that, typically, between the pension and the social security check, that was enough money for people to live on. So there wasn’t really any planning that needed to be done. Except the time that you would put in working for your employer. any money that you saved back, then you really didn’t have to worry about taking a risk with it. And Matter of fact, most people took extra money that they saved or accumulated. They didn’t even put it in the stock market, I guess it took it down to the local bank. And they were buying CDs, because CD rates, I mean, probably 30, 40 years ago, we’re paying anywhere between 10 and 15%. So this is why my grandfather, my grandfather had a Kirby vacuum cleaner. Sorry, remember, Kirby vacuum cleaners worse? Yeah, I used to go into the bank with him. And he used to tell me all the time, he said, Brian, and he says, you’re gonna work very hard for your money someday, you got to remember, all you have to do is protect the principal and live off the interest. And what we were doing when we’d go into the bank is he was buying CDs. Of course, he was buying CDs. And Mike, my grandfather used that that money, that that that interest that he was getting for the banks at that time, he used that to supplement, you know, vacations or purchases of new cars. Today, it’s so different. Yeah. And so think about that you didn’t have to plan, it was pretty much mapped out for you. And people haven’t realized that there’s a monumental shift that has taken place here. Because now when you retire, people are still entitled to a social security check. But the grand experiment, and nobody knows how this is gonna work out is that employers replace guaranteed pensions, with 401k plans, 403 b plans, and these types of plans are invested directly in the stock market. And you need to have a lot go right, in order for you to be able to live off of that money. So the reason I call it the grand experiment is because the pension was guaranteed You didn’t have to worry about it was gonna pay you for the rest of your life, your 401k is not guaranteed. So when you retire, if you’re like 85% of people retiring today, without a pension, you’re probably going to need additional income above and beyond what you’re getting from your Social Security check. How are you going to generate that income? How are you going to generate that income and conventional wisdom has, you know, taught us that a lot of the strategies and techniques that we have used for a lot of time and planning are antiquated and outdated and have a high probability of failure, like something called the 4% rule, which we can talk about a little bit when we come back from the break. But what I want to do is, I would like to offer everybody today, the opportunity to come in to the office for the next 10 hours, we’re going to give you a complimentary view with our right track retirement system. And what we’re going to do is we’re going to focus on five key areas for you. We’re going to focus on income investments, taxes, health care and legacy planning. And what this is going to do for us, it’s really going to take the mystery out of financial planning, and help give you a very clear picture of what the roadmap for retirement should look like. So that’s the right track retirement system that we’re giving complimentary for the next 10 callers if you call 18883821298. Again, that’s 1-888-382-1298 folks take advantage of it. It’s not very often that you get to sit down with a fiduciary and go through those five key areas at no cost to you. We’ve seen other people charge up to $1,000 or more for these, these offers, and you’re going to get a complimentary when you call in. So again, that’s 1-888-382-1298

Cynthia De Fazio – 09:56

Brian, thank you so much to the viewers at home, the phone lines are now open that number to call As 888-382-1298 are you on the right track to retire comfortably, Brian can make sure that if you’re not he can put you on the right track. Again, the number to call is 888-382-1298. We only have 10 spots available this week. But when we come back, we’re gonna have more with Brian after this very short commercial break.

Commercial Break – 10:20:00 AM

How confident are you in your current financial plan? Do you know with certainty how the recent market volatility will affect your future hopes and dreams? How much are you paying in taxes? And how much are you losing to unnecessary high fees? You didn’t work to save this money so that you could spend your time worried in retirement. Now it’s the time to take charge of your finances so you can feel confident about your future call in during the next 30 minutes of today’s show only to set up an absolutely complimentary no obligation, full blown Financial Review that will result in your own customized written plan. This is a $999 value that we’re giving away complimentary to the first 10 people who respond. We’ll start with a full blown analysis of what you already have, by running a report to untangle how much you are currently paying in fees, how you’re allocated for risk, and what it’s costing to work with your current advisor. Next, we’ll identify your goals. Where do you see yourself in the next five years? Where do you want to go? And who do you hope to go there with? Is your current financial plan set up to get you there without mishap? Let’s design a roadmap to create a financial plan you can follow with confidence, get the piece that so many people are missing from their retirement. Find out how having a written plan can make a difference to your retirement dreams. Call now to schedule your complimentary no obligation full blown Financial Review today.

Cynthia De Fazio – 11:54

Welcome back to retirement You TV, my name is Cynthia de Fazio. I’m joined today by Brian quaranta, he is president and founder of secure money advisors. Brian, a great show that we’re having today. And again, talking about the importance of planning for retirement. We briefly didn’t say we you briefly mentioned before. And ironically enough, you have a viewer question. Yeah, that’s right. So I’m gonna jump right into it. Go for it. So Michael from cranberry has called in Brian, he said, I am curious as to what you think about the 4% retirement rule? Is it still accurate? And if it is, what type of mix of stocks and bonds and annuities would be appropriate to use with it?

Brian Quaranta – 12:35

Yeah. So you know, if you go to the very interesting thing about the 4% rule is that this has been gospel in the financial industry for a long time on on how to plan for retirement. If you go back, and you look at the history of where this whole 4% rule is recreate created, was created back in the 1990s, by a guy by the name of Bill Benjen. And he was just a financial advisor out of California. And what he did was he put together a portfolio, a 60-40, split between stocks and bonds. And he ran 1000 different scenarios, which is called Monte Carlo scenarios. And he determined that if somebody roughly draws out 4% a year and increases their withdraw by 3% a year to keep pace with inflation, that they could have income for the next maybe 20 to 25 years in retirement. Well, when he was writing those scenarios, we’re talking about the market at the time when we’re talking about the 1990s, which things were a little bit different in the 90s, than they are today. And so studies have shown from the Harvard School of Business from the Wall Street Journal, for many different institutions, showing that the 4% rule actually has a high probability of failure. And this is from something called sequencing risk or orders or of return risk. This is the order in which your portfolio has its returns. So for example, if we were, if we were to look at a mathematical example, somebody that got maybe a negative return in the first year of retirement versus a positive return, would have a completely different result, after you know, 20 years one may run out of money, one may have a lot of money. And when you start to look at the math on this, you go wow, doing the 4% rule as a strategy for retirement really is a flip of a coin of whether or not it’s going to work for you or not. So things have had to be adjusted. And the 4% rule is not as gospel as what it used to be. The problem is, is that a lot of the big bucks for him still preach this rule of 4%. And at secure money advisors, what we’ve done is we’ve broken that rule up and we’ve looked at the the weakness of it, and we’ve said you just can’t build a plan like this, because here’s the major problem, people are living longer. That’s the problem is that people are living longer people are going to be in retirement for a longer period of time than we’ve ever seen before. And so the 4% rule just leaves you with a high probability of failure. So once we understand how to break the money up into two separate buckets, we actually can protect or mitigate that risk. Risk of potentially running out of money. So I’m not a big fan of the 4% rule, because the math and the and the data show that there’s a probability of failure with it.

Cynthia De Fazio – 15:09

It’s interesting, because I heard recently that he’s actually changed his mind and said, oops, more like four and a half percent.

Brian Quaranta -15:16

to echo that point, The Wall Street Journal, when they did the report on it, they said, if you don’t want to risk running out of money in retirement, you shouldn’t take 4% out, you should drop that withdrawal rate down to 2%. So think about that. That’s a 50% reduction in income that they’re telling you to take from your investments. And again, people are not retiring with pensions, what we first have to understand is we have to understand how to guarantee our lifestyle, how to guarantee our income. And once we guarantee our lifestyle and our income, then whatever’s left over, we can we can take risk with it. Because we can afford to take that risk. The problem is people are taking risk with money they cannot afford to lose. And I’ve always said that if you’ve won the game, if you’ve accumulated enough money, why are you going to continue to play the game? Why are you going to continue to roll the dice, that’s the number one priority and retirement is protecting that principle as much as you can first get a reasonable rate of return. So that if there is any market volatility, you don’t have to go back to work. The problem with the industry is that when there’s market volatility, the cookie cutter phrases that are used as Don’t worry about it hang in there, you’re in it for the long haul, it’s just a paper loss. Anybody investing, anybody invested in the market has heard those terms, sure, at some point in their in their lifetime with with an advisor. Well, those phrases, I call them cookie cutter phrases, they may make sense, when you’re saying that to a 30 year old, 40 year old, or maybe early 50 year old. But when you’re talking when you’re using those phrases, for people that are five years from retirement or retired, it’s just inaccurate, because a major loss for somebody five years for retirement could delay their retirement, you know, seven 8 10 years. Or if you take a loss very early on in retirement, think about the people that retired in 2007 2008. And in their first year of retirement, the market takes 50% of their portfolio away, a lot of those people couldn’t stay retired, they had to come out of retirement and go back to work because they couldn’t afford to take the money out of their plans like they were planning on to. So we have to build a plan that basically is bulletproof, that has a high probability of success. And we do that by mitigating the risk by splitting the money up into two separate buckets, we want to have a buffer account, which we have the ability to grab money out of that account if the market goes down. And we don’t have to take money out of an account that’s down see the problem that the challenge that people have, or, or the mistake that most people make is that if they have all of their money in the market, and they plan on taking money out of his account on a monthly basis. Let’s say they plan on taking $5,000 a month out. But now the market goes down that month, and they lose 3000. So now they lose $3,000. But they take $5,000 out now they’re down $8,000. Not only do they compound the loss, but they lock in that a loss, and it becomes very difficult for that portfolio to recover. So, again, folks, this is something that we call sequencing risk, it’s order of return risk. And that happens when you’re trying to generate income from a risk portfolio. So there’s just better ways and better techniques and strategies to do that. A lot of that a lot of those traditional methods that we use for a long time are just very antiquated and outdated.

Cynthia De Fazio -18:29

Brian, this is the perfect time for us to reopen up the phone lines to the viewers at home. Can you tell them what they can expect to receive a call?

Brian Quaranta – 18:34

Yes, folks, what we’re going to be doing today is we’re going to be offering you the right track Retirement System, which secure money advisors has developed to help you determine whether or not you’re on the right track, we’re going to focus on five key areas with you, during your appointment with us, we’re going to focus on income, which is most important because you can’t retire without understanding how to replace your entire income and how to guarantee that income so that you can guarantee your lifestyle. Number two, we’ll talk about how to maximize the returns of your investments while potentially reducing the risk. And then we’ll talk about taxes, how to how to eliminate taxes and retirement or how to lower the taxes in retirement. And then we can talk about health care and legacy planning. Again, this is complimentary for the next 10 callers. But folks, you have to do your part, you’ve got to get up you’ve got to pick up the phone and you’ve got to make the call. It’s not very often that you get an opportunity to sit down with a firm that’s a fiduciary to go through a very thorough process like this with your current situation. And we’ll be very upfront with you. If we can help and we can help you improve what you’re currently doing. We’ll let you know what some of those suggestions are. And if we wanted to move forward working together, we can talk about what that would look like but the very first meaning is complimentary to you again, that’s for the next 10 callers who call 188838 to 1298. Again, that’s 1-888-382-1298

Cynthia De Fazio – 19:54

and Brian, I think we only have five spots available right now five have already been taken. So to the viewers at home, there are five spots last remaining this week, don’t miss the opportunity to sit with Brian. That number to call is 888-382-1298. We know you have a lot of questions about planning for retirement, perhaps Tax Questions. Brian has the answers for you again, don’t miss the opportunity five spots remain 888-382-1298. When we come back, we’re gonna have time for a couple of viewer questions. So stay tuned, it might be one of your questions that Brian answers We’ll be right back.

Commercial Break – 8:25:00 PM

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 – 21:52

And welcome back to retirement You TV. My name is Cynthia de Fazio. I’m joined today by Brian Quaranta. He is president and founder of secure money advisors. Brian, a great show we’re having today. And I love the fact that we have viewer questions to get through because your viewers have been so patient, they called and they said can you please make sure that Brian answers my question. So we have an in Pittsburgh, let’s go to Andrew, because she was really sweet on the phone. She said, My ex husband and I were married 25 years before we divorced, he passed away this year he was 68. And I am as well. My question is How is so security affected? Will I still be entitled to half of his social security even though he passed away?

Brian Quaranta – 22:32

That’s a great question. And, you know, when it comes to social security, there’s a lot of moving parts. And people are just really confused in social security in general. But at death, what happens is we lose the lowest Checkout, we pick up the highest check. So you know if her husband’s cheque was let’s say $35,000 a year and hers was $28,000 a year, hers is going to drop off of the 28,000. And they’re going to pick his or she’s going to pick his up of 35,000. So she’s going to get the larger amount. Now the question would be are they already collecting, because if she’s not collecting, she may want to continue to delay that and wait till 70 to get his but while she’s waiting to get his she could actually start collecting hers, and then transition over to his which is another way to maximize. So, you know, with Social Security, it’s like if you pull this lever, this lever moves if you turn this dial this down, right. So there’s a lot of different combinations of what you can do to not only maximize the amount of social security that you can get at the time of death when your spouse passes. But also if you’re a married couple going into retirement and you’re determining when the collector Social Security, there’s a lot of different strategies available of how to maximize your Social Security. I always, you know, then people always want to know, you know, do I take it at 62? Or I take it at 66? Do I wait till 70 and maximize it? But and that’s a really great question. And this is one of the things that will do for you when you come in during the right track Retirement System meeting is that we’re going to walk you through what a cash flow model would look like for you. And we’re going to look at what that cash flow model looks like. If you’re a married couple, and you’re both living, but we’ll see what happens if your husband dies, we’ll see what happens if you die. And the important thing of doing and building your cash flow model that way is we can look at all of these bad things happening on paper. And we make all these bad things happen on paper when they really do happen. We know exactly how to execute the plan. So what we don’t want to be doing is waiting to put together a plan and something bad happen. And then we have to make really big decisions without our loved ones when you’re already in a highly emotional state. So handling these things up front and getting very organized with a written plan. the right track Retirement System is all about you having a real written plan, not a bunch of investment statements and brochures. It’s not about building a plan around fancy sales brochures. It’s building a plan around real numbers around real mathematical solutions that make sense and that are based around mitigating As much risk as possible. So if the market goes down, you’re not going to have to come out of retirement, you’re not going to have to delay retirement. And these are the important things that the right track retirement system really addresses during those meetings.

Cynthia De Fazio – 25:13

Thank you, Brian. We have a caller, actually from Monroeville, they would like to know, his name is Milo, can I contribute to a Roth IRA and still participate in my employer sponsored retirement plan? Brian, I love your show.

Brian Quaranta – 25:27

Thank you, Milo, I appreciate it. You know, and we’ve just these are such great questions. Because, you know, what can I do? Can I can I put money in a Roth? Can I put money in a traditional Can I still do my employer plan? Well, there’s income thresholds, right? Are you married? Are you single? So there’s all different combinations there, right. I mean, typically, in his case, if he’s a single male, depending on what his income is, he can contribute to a Roth IRA and at the same time still contribute to his employer plan. And I would even ask Milo, I would even ask your employer if they have a Roth component to your 401k plan, because most 401k plans right now are being built out with some better options for the employee, including the Roth 401k. So imagine now, rather than getting a tax deduction for putting your money into a 401k, right now, you have to pay the taxes on the money. But when you put the money in the 401k, all the future growth of that money, and all the future income that we take from that account is all tax free. So if you plan correctly, right now imagine, you could have tax free income for the rest of your life. Wow, this is so important, because if tax rates go up to 50%, or 100%, you don’t have to pay a penny in taxes. If you take care of that right now, by contributing to a Roth 401k versus a traditional 401k. Great question, though.

Cynthia De Fazio – 26:46

That really was a great question. Brian. We only have about a minute and 10 seconds left of the show today. If someone is in the retirement Red Zone five years out, what advice do you have for them today?

Brian Quaranta – 26:56

Start planning, okay, start planning, the most important thing you can have is a written plan and the right track Retirement System is going to help you put together that written plan. We have a very specific process and system to help get you organized and help you make very good informed decisions. decisions that are based around real math, real facts, real data, not opinions, not fancy sales brochures, but real math, and and real data. And that’s important for you because all you need is someone to help you look at what information you need to be looking at and you people are smart enough to be able to make their own decisions. So again, that’s the right track Retirement System for the next 10 callers that’s complimentary. 1-888-382-1298

Cynthia De Fazio – 27:40

Brian, thank you for another amazing show this week. I can’t wait to see you next week. to the viewers at home. Thank you for spending time with us. The number to call is 888-382-1298. Most importantly, keep those questions coming. We love them. Be safe, be happy, be blessed. We’ll see you back here next week.