Retirement You TV: Episode 27

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Video Transcript

Cynthia De Fazio – 00:20

Welcome to retirement You TV My name is Cynthia de Fazio and I’m joined today by Brian Quaranta. Oh, I did the President and Founder of secure money advisors, Brian, we got we’ve been going, we’re going makes me laugh for the viewers at home. I don’t know why I’m bringing this out again, because we’ve been working together working hard. We’ve been working hard. But you’re doing so good. So good. Well, Brian, how have you been? Very, very busy and busy. Yeah,

Brian Quaranta – 00:57

busy, very, very busy. But still trying to take time and enjoy life. Right. You know, I’ve got an 18 month old at home. So I got to start a little late in life. No Matter of fact, we. We taught him to ski this year. And we took him skiing in the mountains, these 18 month olds, this little guy coming down in my eyes. I mean, it was just it was neat. For me. It was a real proud dad moment for me. Gosh, how cute. I hope you show me pictures. I definitely will I definitely well, very proud of those pictures and videos,

Cynthia De Fazio – 01:24

I can’t imagine it would be amazing. So obviously, you’re still finding time for the most important thing in your life, which is family, you have to family first.

Brian Quaranta – 01:34

that’s really that’s, that’s why planning is so important. And processes and systems are so important. Because whether you’re retiring or you’re still in your professional life, discipline, process systems, it gives you the freedom to do those things. It gives you the time to do those things. It’s it’s not having a plan. It’s not having a system where that robs you of your time. Right. It’s It’s It’s It’s having a very disciplined process that allows you the freedom to go do all the things you want to do.

Cynthia De Fazio – 02:06

Absolutely. Well, I have to tell you a story. Brian, I was actually in the grocery store last week, and someone stopped me and asked me, if I would ask you, what are the things that they should be doing right now being 10 years away from retirement? They’re like, well, you asked that on the show next time, I’m sure. Right, if someone’s 10 years away from retirement,

Brian Quaranta – 02:23

yeah, what should they be doing? Well, first off, you should be getting involved with any employer plan. Number two, you should be really thinking about how you can get out of debt as quickly as you can. So if you still have a mortgage, I believe debt is the thing that robs us the most when it comes to accumulated our wealth, but also maximizing our cash flow. You know, we’ve had questions before in the past about, should I invest money in my 401k, or should I maybe pay debt off, and I’m a big believer, especially close to retirement, that you pay the debt off, because if that debts cost you 1000 or $2,000 a month, the minute we get it paid off, that’s $2,000 a month in cash flow that we get. So debt management is probably the number one most important thing, try to really get that debt paid down prior to retirement as quickly as you can, if you can get it done in a very short period of time. And there’s lots of systems out there that you can use. One is by a guy by the name of john commuter, which is a program called transforming debt into wealth. And there’s a whole system that you can go online, and it will help you figure out exactly what debts to start paying off first, and it will show you how to create what we call a snowball technique. Okay, snowball technique is when we pay one debt off, and we use the payment from that debt and apply it to the payment of the next debt, which we use that debt payment, buy it to the next and what happens is, as you slowly pay debts off, the payment that you can make towards debts get bigger and bigger and bigger. Because if I had $50, on this one, I paid it off. And now I take that $50 and I move it to one that’s cost me $150. Now I can make a $200 payment. And then I apply that $200 that I paid off to one that’s costing me $300. Now I can use $500 to pay something off. So that’s called a snowballing technique. And you can get out of debt relatively very quick. I’ve seen people with six figures in debt, get out of debt in a very, very short period of time. And that really helps maximize your ability to accumulate a good amount of wealth going into retirement.

Cynthia De Fazio – 04:17

Thank you, Brian. The other part of that question that they asked me was, what is the difference between working with someone who specializes in the accumulation years versus the distribution years?

Brian Quaranta – 04:26

That’s a great that is an excellent one because it’s completely different. Yeah, it’s it’s just a completely different set of skills. And it’s a completely different process and system and and, you know, there are systems and processes built around accumulation. But accumulation is really simple. I mean accumulation. I mean, accumulation is a process that anybody can pretty much do on their own because all you’re doing is you can pick relatively, you know, high risk investments, you can continue to make contributions to those. And the goal is that those investments perform well enough over a long period of time. That As you get closer to retirement, you got this pile of money. But once you’ve accumulated that pile of money, you’ve won the game. Yeah. And I’ve always said, when you’ve won the game, why do you keep playing it? Right? There’s there eventually is a finish line that we cross. Sure. And we have to understand that the problem is, is that, you know, the industry has convinced that we have to always stay in this growth phase. And that’s just not true. The growth phase is actually what can get you in trouble during your distribution phase. Because if you’re too heavily invested in growth, and the market corrects itself, and you lose 30, 40 50% of your money, I mean, just look at 2007 2008. Look at the beginning of 2020, which when we got hit with COVID Oh, yeah, I mean, you’re talking about portfolios going down 25 30% in a 30 day period? I mean, normally, normally, it takes for rica for a drop in the market of 30%. It normally is gonna take four to six years for that to recover. We got lucky. I mean, go lucky for the market to recover that fast. Yeah, absolutely. So it’s just really, really, there’s a complete difference between distribution and accumulation and distribution really is focused around how do I generate the income that I need, because remember, we talked about this all the time, 85% of the people retiring today are not going to have pensions, unbelievable. And, and we’ve replaced, right, we’ve replaced pensions with 401k plans. So when it comes time to build a retirement plan, you have to understand the best practices for generating cash flow. And if you think that you’re just going to go into your portfolio, and start taking money out whenever you want it, think again, because that’s how you’re going to get yourself in trouble. This is there’s there’s all kinds of risk called sequencing risk. I mean, it’s simple to understand, because look at it like this, let’s say you’re taking $5,000 a month out of your portfolio to live off of. So you take the $5,000 a month out, and now the market goes down and you lose $3,000 that month. So now you just took out $5,000 for income you lost $3,000. So now you’ve compound the loss, and you’re down $8,000. That month, it’s going to take a lot more returned to make back the $8,000 in it would the $5,000. And this is what we call sequencing risk. And this is what forces people into situations that they don’t want to be in retirement like running out of money too early.

Cynthia De Fazio – 07:19

Yeah, absolutely. And Is that still the number one fear, Brian that most people have is running out of money?

Brian Quaranta – 07:25

I think it will always be AARP does a study every single year on this. And you know, the last study they did they interviewed 1000 people and they said what do you fear most? running out of money or death and over 90% of people said they fear running out of money more than they fear death alone. And I know I would fit in that category, I think horrible to run out of money. in retirement. What do you do? I know, you know, I mean, who do you go to? Who do you lean on? I mean, there’s just it’s

Cynthia De Fazio – 07:51

I mean, there’s just it’s and children. A lot of people say well go to my you know, but who wants to knock on their child’s door and say, Can I

Brian Quaranta – 07:56

and most people that we talked to will say Look, I don’t want to be a burden on my children, Zach, you know, I don’t want to be overt on my children. So what I can tell you is be responsible with your planning. Once you get to once you get about five years from retirement, and in retirement, it really comes about protection of principle and the generation of cash flow. Growth is important. But growth is no longer your number one priority, it’s maintaining the cash flow from that account, and trying to maintain principal and there’s always three interest rates that we look at, Cynthia, the first rate that we look at is what we call the spin down rate. So if I have somebody, you know, we’re working on putting together a distribution plan, I want to know what rate of return Do we need the portfolio to do in order for us to take out X amount of dollars and spend that money down by let’s say, the age of 90 or 95? Right? So that’s what we call a spend down interest rate. What’s, what’s the return, I need there to do that? The next rate of return is what we call the preservation return. So what rate of return Do I need the portfolio to do to take that money out and not touch the principal. So that’s the preservation right. And then the legacy rate, the legacy rate is if I want to take X amount of money out of my accounts every year, but I still want to grow the money. So there’s a lot of money left to my beneficiaries, what rate of return Do I need there? If you understand what those three rates are, this really helps you guide yourself to the target of what risk level you really need to take with that portfolio. We’ve done you know, when I do this with with folks, a lot of times you’ll find that they’re for the amount of money somebody needs on a monthly basis, they might only need it three or 4% rate of return. And when you look at their portfolio, they’re in a high risk portfolio and you go wow, if you only need a 344 percent rate of return to maintain principal and get what you need. Why are you taking this much risk? Exactly. You could be taking this much riskier and getting done what you need to be getting done. So the distribution phase is as a whole complete different skill set and a whole different set of knowledge that goes into planning for that.

Cynthia De Fazio – 09:53

Okay, Brian, this is the perfect time for us to open up the phone lines to the viewers at home for the very first time this week.

Brian Quaranta – 09:58

Yeah, folks, there Right track Retirement System is what secure money advisors has developed to help you determine whether or not you’re on the right track. And for a lot of you, you’ve probably thought to yourself before, you know, when’s the best time to take social security? When should I take it? Should I take it at 60 to 6670? What’s the best time to do that the right track retirement system will help you look at what those best solutions are for you and what those best ages are. Also, a lot of people tell me, Look, I don’t have a I don’t have a pension, I really want to guarantee some of this income so that my lifestyle is guaranteed, so that if the market goes down, I don’t have to go back to work, the right track retirement system will help you understand what that looks like. And then if you’re like most folks we meet, a lot of folks will tell us, okay, I just can’t afford to take another big loss in my account, I just don’t have the time to make it back. And we’ll show you what the right track retirement system, the best practices to help you build out a great distribution plan, a great preservation plan that’s really customized to you and what you need your money to do for you. So again, folks, for the next 10 callers, this is complimentary, we’ve seen other people charge over $1,000 for these types of reviews. It’s not very often that you get to sit down with a fiduciary and have this type of consultation at no cost. But you’ve got to do your part, you’ve got to pick up the phone, it’s 1-888-382-1298. Again, that’s 1-888-382-1298. We’re going to give you the right track retirement system. And we’re going to help you go through five key areas, we’re going to look at helping you maximize your income, maximizing what you’re doing with your investments, taxes, healthcare and legacy planning. Folks pick up the phone 18883821298.

Cynthia De Fazio – 11:37

Brian, thank you so much to the viewers at home, the phone lines are now open that number to call is 888-382-1298. As Brian mentioned, let’s make sure that you’re on the right track for retirement. If you’re not when you want to know today, I think you would again, all you have to do is pick up the phone and call 888-382-1298 we have to take a very short commercial break when we come back. We’re gonna have so much more with Brian, about how to plan your perfect retirement. Please stay tuned.

Commercial Break – 12:03:00 PM

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 – 13:38

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 this part of the show because we do have some viewer questions to get through.

Brian Quaranta – 13:52

Yeah, we’ve had a lot lately. I know. You know, and I love them. Because I think it’s so much more helpful to the viewing audience for us to really do a q&a because I think people can identify that with their current situation. So, but I know we’ve got somebody on the line who has

Cynthia De Fazio – 14:07

Yes, actually you’ve had a call Pete and he’s called you from Monroeville. I’d like to know, Brian, I’m 65 and I get retired. I am considering purchasing an immediate annuity using all the funds in my 403 b plan upon retirement with the annuity distribution satisfied required minimum distributions, how will be how will placing the entire amount in the new DB taxed? And how will the monthly payments be taxed?

Brian Quaranta – 14:31

Yeah, great question. So most likely, he’s got a few things he’s asking in there that helps me understand maybe what type of monies he’s talking about. So he’s talking about rmds there. So it might be that with that 403 b we’re probably considering qualified money here, which is most likely what it is because all 403 B’s are pretty much what we consider qualified dollars meaning pre tax, the government gave you a benefit for depositing money in their tax benefit for depositing money in there. And when you pull money out, you’re gonna have to pay taxes on it. So with an immediate and annuity, it’s pretty simple. When we give the insurance company the money, the insurance company is going to pay us a monthly income. Okay, that monthly income is going to be taxed at his ordinary income tax rates. So whatever is ordinary income tax rate is, that’s what he’s gonna have to pay on that money. Now, keep in mind that, that, that if you’re collecting a pension and Social Security, that’s all going to be added together. So, you know, who knows where your ordinary income tax rate could be? With the money coming out of the annuity to pay you a monthly income, it is going to satisfy the required minimum distributions that’s required by the IRS assuming that these at the age of 72? Because again, I mean, if he’s pre 72, I mean, him taking monthly income isn’t going to satisfy rmds, because the IRS doesn’t ask for rmds until 72. Okay, so but ordinary income. Now, some of the things you might want to think about is that with an immediate annuity, when you turn that money over to the insurance company, for them to pay you that income for the rest of your life, because that’s technically what you’re doing, you’re basically turning that money over for a guarantee of lifetime income, you’re gonna forfeit the principle that account for the return that monthly income. So what does that mean to you? Well, if it’s paying $3,000 a month, and you need $10,000, that month, you can’t go in there and take out any extra income, because you have no control over that principal amount anymore. The immediate annuity really is kind of the old way of doing it. Because you do lose control of your principal fixed annuities. indexed annuities are a better way to approach that now, because they have guaranteed income riders on those that you can use, that will allow him to get the same guarantee of income, but not forfeit the access to the principle of the money. So you know, if he’s got money in the account, and he’s using something else other than an immediate annuity, or, you know, when he’s using a fixed to your index annuity, if you need some extra money that month, you can go in and take it. And that’s a big difference, right? I mean, sure. None of us really want to give up control of our principal amount. And that’s what you would be doing if you bought an immediate annuity probably wouldn’t be my first choice. Personally, if it were my money.

Cynthia De Fazio – 17:05

Yeah. Yeah. That’s excellent. Thank you, Brian. This is a great question, too. We have a caller that called in actually from Butler, they would like to know, Brian, what is your opinion on bonds? And how much of my portfolio should consist of bonds?

Brian Quaranta – 17:18

Yeah, well, I mean, you know, bonds used to be a great thing, to actually pay halfway decent interest. I mean, I think the average bond return right now is a little over 2%. Wow, I mean, think about that. So I’m gonna, I’m gonna give my money to a company. In return, I’m maybe going to get maybe 2%. But then I’m going to be subjected to interest rate risk default risk, which means I can still lose money, right? Because, you know, most people know. And if you don’t, for the viewers, bonds, the way that they move in the marketplace, as far as the value of those bonds, they have an inverse relationship to interest rates. So if interest rates were to go up, the price of your bond will go down, right, if interest rates go down, the price of your bond goes up. Now, that’s important for you to know, because we’re probably in the lowest interest rate environment that we’ve ever been in. So if you buy a bond right now, most likely interest rates will go up. And if they do, the value of your portfolio will drop. So bonds just don’t the technology isn’t there anymore, I mean, the returns just aren’t there anymore. And if you look at just even what the markets been doing, and you see how the markets been increasing, especially in the tech sector, a lot of money is coming out of fixed income or bonds, going into the equity markets, because there’s no return there right now in bonds. So bonds will actually cause you to lose money to inflation, right now, if we have an average inflation rate of 3%. And your bonds are paying your two, you’re going to be losing 1% a year just to inflation alone. And that’s probably the problem even with bank money right now. Sure. You know, a lot of times a lot of us might have money in savings accounts or money market accounts, you know, at point one 5% or point one 0%. And it’s nice that it’s there is liquid, we have access to it. But the problem is, is that actually, we’re actually losing money safely. When we’re using instruments that are paying small interest rates, like bonds at an average of 2%, or even savings or money markets or CDs, we’re losing money safely. So, so in lieu of bonds, right, and maybe other things that they can look at, which would give higher returns right now. Or even fixed annuities. I mean, fixed annuities will pay three to 4% right now, tax deferred, meaning you don’t even have to pay the taxes on the interest that you’re earning. So and you know, you know, so you’re talking about possibly a 30 to 50% increase on the interest that you would be getting in a bond. I mean, if I’m getting, if I’m getting 3% in an annuity and a bonds pay me two, right, that’s a 50% increase on my return, that’s big episodes really big. So, you know, bonds have always been one of those components of a portfolio. But in today’s interest rate environment, they just really are not as impactful as what they used to be. So there’s just other alternatives. And I think once people get those alternatives laid out in front of them, and they understand the pros and cons of each of these alternatives, they’ll make good decisions. And a lot of times we can get better returns, and even have some better guarantees. Absolutely.

Cynthia De Fazio – 20:13

Well, Brian, thank you. That was an excellent response. And it’s time for us to reopen the phone lines to the viewers at home.

Brian Quaranta – 20:17

Yeah, folks, today, what we’re going to be doing is we’re going to be offering you the right track retirement system. Now we’ve worked very hard and secure money advisors to put this system together for you. It really is a roadmap of how to get you from point A to point B, the right track Retirement System is going to do exactly what it says help you determine whether or not you’re on the right track. You know, over my years, 21 years of doing this, the things that I’ve heard is people say I just don’t know when to collect Social Security. Or they’ll say, you know, I don’t have a pension when I retire, I wish I had a pension, is there a way for me to guarantee guarantee some monthly cash flow? Or people say you don’t, I can’t afford to lose money again, in the market. I just don’t have time to recover. If you’ve been thinking about these things or thinking about, you know, is there a way that I can pay less taxes, the right track Retirement System, we’ll address that by going through five key areas with you. It’ll go through your income, it’ll go through your investments, your taxes, your health care, and your legacy planning. But you’ve got to do your work on your side, you got to pick up the phone. It’s 1-888-382-1298. Folks, this is not the time to procrastinate. planning for retirement is so important. You know, some people spend more time planning their summer vacation than they actually do planning a lifetime’s worth of retirements. So do not procrastinate. Don’t kick the can down the road. It’s not very often that you get a complimentary view from a fiduciary pick up the phone 1-888-382-1298 talk with my team schedule an appointment today. That’s complimentary at no cost to you,

Cynthia De Fazio – 21:44

Brian, thank you so much to the viewers at home. The phone lines are once again now open that number is 888-382-1298. When we come back, we’re gonna have more viewer questions with Brian. So please don’t go away. It could be one of your questions that Brian is going to answer next. We’ll be right back.

Commercial Break – 9:59:00 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 – 23:26

Welcome back to retirement you TV. My name is Cynthia de Fazio and I’m joined today by Brian covanta. He is president and founder of secure money advisors. Do you see I’m striving? They are there? Brian, we have time for one more viewer question. And this is a really good one. This is a call her name is Pat from Mount Lebanon. She would like to know Brian does my 401k I’m sorry, does my employer’s matching contribution count towards the maximum I can contribute to my 401k plan? Great question.

Brian Quaranta – 23:55

I believe that the maximum contribution amount this year is 19,500. So I mean, you know, the 401k is a great place for us to accumulate money. A lot of 401k providers right now will even offer a Roth 401k option. So 19,500 is the maximum contribution that an individual can make right now. So you know, if you don’t have debt, and you know, you’re you’re, you’re close to retirement, take every advantage you can to maximize your your contribution and also your employer contribution. It’s 19,500. That’s a lot of money to be able to put away. So yeah, it’s absolutely can be done.

Cynthia De Fazio – 24:32

Okay, thank you so much. That was an excellent response. This is a great question, too. It says Brian, I’m five years away from retirement. I have not yet started to have a retirement plan put together. What should I be doing right now, five years away from

Brian Quaranta – 24:45

five years away from retirement First off, don’t worry about it. Relax, because a lot can get done in a five year period, right? We have to understand that working with somebody like secure money advisors. We see this all day every single day and We know the best practices to help you do it, there’s a number of things that you should be doing first, I wish there were the you know, there’s not like just one thing. There’s lots of things that you’ll be doing. But number one, we should be looking at the amount of debt, right? Because remember, debt eats into our cash flow debt, always ease into our cash flow. And if we can eliminate that debt, then we pick up cash flow. But number two is if all debt is paid, then really what we should be doing is trying to maximize all of our contributions. And the other thing we should probably be considering is tax planning, and tax planning happens, you know, 510 years from retirement where we can start to take accounts that are taxable, and start to reposition those into tax free accounts. So now you can go from taxable money, right to tax free money. Why would we want to do that now? Because taxes are on sale right now? Yeah, right. And I don’t know how much longer that’s gonna be. But if we can eliminate the taxes over time that we have to pay, that means all the money that we receive in the future, all the growth, all the income 100% of its tax rate, which protects our clients, because now no matter what tax rates go to, we’re not impacted by them. So but this is why we do the right track Retirement System. Cynthia, we’ve worked so hard as a team, to really put together a comprehensive process for you to come in to maximize the clarity that you’re going to get when we walk you through this process. And the right track Retirement System was built for you. It really was built for those that are trying to figure out whether or not they’re on the right track. You know, my question to you is, if you’re not on the right track, when would you want to know, when would be a good time for you to know that? Remember, you can’t get a second opinion from the people that gave you the first opinion and the right track Retirement System is going to bring it through five key areas, it’s going to bring you through your income, your investments, your taxes, your healthcare and your legacy. And it’s very comprehensive, it’s not very often that you get to sit down with a fiduciary at no cost and go through this comprehensive model. My guarantee and promise to you is that the time you leave, you’re going to be super clear on what retirement planning really should look like. And how to maximize your returns, potentially reduce some risks, and really get the most from retirement that you should. But more importantly, we’re going to teach you how to have a real, tangible written plan in place. And we’re going to walk you through all that at no cost if you call 18883821298. Again, that’s 1-888-382-1298

Cynthia De Fazio – 27:26

Brian, I can’t believe how fast our time goes by each week on the show together. We’re almost out of time again. But thank you for another amazing show. I know the viewers have so many questions. I love how they keep coming in each week. to the viewers at home. Again, thank you so much for your viewer questions. We’d love to receive them. We hope to have yours answered. If not this week, it’ll be next week. The number is 888-382-1298. Thank you for spending time with us. Be safe, be happy, be blessed. And we’ll see you back here again next week. Thank you.