Retirement You TV: Episode 31

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Video Transcript

Cynthia De Fazio – 00:20

Welcome to retirement You TV My name is Cynthia de Fazio. I’m joined today by Brian quaranta. He’s president and founder of secure money advisors, I didn’t have the our, our basis, you’d get four gold stars, you’re almost you’re this close to five gold stars. The viewers are probably wondering what we’re laughing about. But it’s true. I mean, since the beginning of time with what a year and a half now we’ve been together, I think I’ve said your name correctly, maybe 10%. Maybe 10%. And that might be generous. You give it a great effort, though. I always, always try and always keep the, I know, for me, like a year and a half ago. Anyway.

Brian Quaranta – 01:06

I write that on my whiteboard so many times at the office. He was like, you know about to hand over all this money to you. But how do you say your last name?

Cynthia De Fazio – 01:19

Well, Brian, I want to ask you, I know that you’ve been so busy, obviously, keeping everyone on the right track for retirement, if you will. Let’s talk a little bit about what types of questions people are coming in with today. Are you hearing something that’s one topic over anything else?

Brian Quaranta – 01:34

Well, the main topics typically are When should I take my social security? What’s going to be the best time to do that? Number two, is they’ll tell me that they’re going to need income from their retirement accounts. And they’re not sure how to do that, right? Or if they’re getting a pension, they’re not sure what pension options to choose, you know, pensions can be pretty complicated. I mean, they’ll give you a lump sum option, they’ll give you a or they’ll give you a monthly income. But then even with the monthly incomes, you got to decide do you want the larger amount, the medium size want? Or do you want the small one, and that all comes with strings attached, meaning the large ones, we have the large one, the large one, if you want, they want the big monthly income, the large one would say, Hey, we’re gonna give you $2,000 a month, but if you die, nothing goes to your family. The next one, we might say, Hey, we’re gonna give you $1500 a month. And if you die, we’re gonna give $1,000 a month to your spouse, or the next one might say, we’re gonna give you $1200 a month, and if you die, we’re going to give $1200 to your spouse. So there’s all these decisions to make, can you imagine an adult survivorship option? So it’s 100%, survivorship, 75%, survivorship, 50% survivorship? And it’s like, how do you know what to do? So between the lump sum and those three options, so people come in and say, Look, I’ve got all these pension options, I don’t know which ones to take. And again, everything we do at secure money advisors, is all based around math and facts, right? So all we’re doing is looking at the numbers. But you got to know how to lay those numbers out. So you can make an informed decision. Okay, you know, or sometimes people will say, Well, I want to retire and I want to continue to work. You know, if I retire, or I’m sorry, I want to I want to, I want to well, kind of like hybrid retirement, right? They want to retire, what they’re doing where they still want to work? Yeah. Should I collect my social security? If I’m going to do that? Well, depends. I mean, Social Security will penalize you if you make over too much money at a certain age. So if you’re below your full retirement age, you know, they only let you make up to about $18,400 a year before they start penalize you 50% on every dollar you make. So there’s all these different things where people will say the other big one is I just can’t afford to lose money at this point in my life. And I’ve accumulated all of this money over the last 35, 40 years of my working life. I just can’t afford to lose it. But the other big one is people say I don’t have a plan. I don’t have a written plan. And I need one. So many people will come in and say I’ve been working with this individual for a long time. I have no plan. I get statements. We go over the statements. We talk about performance, but I have no, I have no cash flow plan. Yeah, I have no withdrawal plan. I have no tax plan. I have no distribution plan. And I’ve got no plan if I die of how the money’s gonna be left to my family. So legacy. Yeah. So those are all the things that we kind of do that just aren’t being done by most of the firms out there. And I know because I hear it, people will come in and and, you know, they’ll say, well, we’re going to go visit three other people. Good. Go. Yeah. And and, and nine out of 10 times they circle back to us, of course, they’ll say, well, you guys are the only ones that took the time to really map out a plan for us that we understood. Yeah. It’s a difference between having a plan that you understand, and a plan that’s just full of charts and graphs and lines that you go. Sounds good, but doesn’t make any sense to

Cynthia De Fazio – 04:53

me. That is so true. And I know that we’ve heard this from so many of your clients who have come in to sit with you and who have met the intent Your team that you have there, they all say the same thing that you give them true, undivided individual attention that they feel like they can ask you any questions. And it’s not a silly question, right? No. And there’s a no judgment zone that takes there’s no charge for it, because a lot of times we’ve talked with this brand, people will come in with a shoe box, their POS pile of stuff, and you kind of sift through it, and you make sure that you can design that well constructed plan. So again, it’s such a benefit to be a fiduciary and be able to help people that are in the retirement

Brian Quaranta – 05:30

years. Absolutely. Absolutely. And retirement planning, it all comes back to solving problems, right. Yeah. It’s not about buying investments. It’s about solving problems. We have to utilize investment products to make the plan work. But we have to build the plan first. Absolutely.

Cynthia De Fazio – 05:47

Absolutely. Brian, let me ask you a question the pieces and parts the components of a well designed plan. Can we talk about what those pieces are? Before we take our first commercial break?

Brian Quaranta – 05:57

Yeah, I mean, there’s five key areas. Number one, most importantly, is income. Okay. And the reason why we focus on so much is because 85 to 90% of the people retiring today are not retirement pensions. So they’re going to have to go from an accumulation phase, to a distribution phase, the distributions phase is full of traps and turns and pit holes and booby traps, and whatever you want to call it, right? I mean, there’s penalties if you take money out prior to the 59 and a half. But yet, they say if I want to retire before 59 and a half, there’s ways that I could take money without penalties called the 55 rule, or 72, T. And then there’s even penalties after 59 and a half, if you don’t take what they call the required minimum distribution. So the distribution is most important, right? Because we’re all going to deal with it, we’re all going to deal with the distribution. That’s why we focus on it so much, because there is best practices that you want to follow when it comes to the distribution phase. And then we have taxes, we want to pay the least amount of taxes possible, everybody does. And there’s ways that we can do that. Three is we want to own the best investments for what we need the plan to do. Okay, right. And again, that comes back to understanding what we need, and then finding the investment products that get that job done. Okay. And then number four is making sure that we have a good health care plan, whether it meaning you know, you’re not ready, you know, you’re you can’t collect Medicare yet. Or maybe there’s a, you know, health event where you have to spend time in nursing home, we got to think through how are we going to handle that we’re going to self insure, what are we going to do? And then number five, most importantly, is let’s make your family the largest beneficiary of your money and not the IRS. And we certainly talk about that a lot. Right. So but again, that right track Retirement System, is really what you know, where you’re going to get all the answers to a lot of these most common questions and concerns.

Cynthia De Fazio – 07:38

Absolutely. Well, 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. Do you want to tell them what they can expect to receive by calling in

Brian Quaranta – 07:45

folks, we created the right track retirement solely for you. Because if you’ve ever thought to yourself, when is the best time I should collect Social Security, or maybe you thought I’m going to be retiring. And the only source of income I’m going to have is social security. And I’m not really sure how I’m gonna get the additional income that I need I have a retirement account at work. But how am I going to turn that into income, because a 401k is not designed for income, it’s designed for growth. So if you think you’re going to start just pulling money out of your retirement accounts, or roll it over and invested in an IRA and start pulling money out, think again, that’s what’s going to cause you to potentially run out of money, right? Or maybe you’re thinking yourself, I can’t afford to take another big market loss, because if I do, I just don’t have the time to recover. That’s what the right track retirement system does. It’s a simple, easy to understand process, that’s going to help you get the clarity and peace of mind that you need moving into retirement. So again, for the next 10 callers who call in we’re going to give that complimentary at no cost to you. You’re going to come in sit down with us. I’ve seen other people charge $1,000 or more for similar features or offers. But we’re literally going to do this at no cost, no obligation, it’s going to take the mystery out of financial planning. It’s going to give you the clarity and the peace of mind that you need moving into retirement, we’re going to show you ways to maximize your income. We’re going to show you ways to reduce your fees. We’re going to show you the best investment mix. And we’re going to run all kinds of different what if scenarios, the one promise I can make you is that you’re going to walk out of there very, very informed. So again, for the next 10 callers who call in right now that’s a right track retirement meeting. No cost no obligation, if you call 18883821298. Again, that’s 1-888-382-1298.

Cynthia De Fazio – 09:24

Brian, thank you so much to the viewers at home, the phone lines are now open that number to call is 888-382-1298 we have to take a very short commercial break, but don’t go anywhere. When we come back. We’re going to have so much more about how to plan your perfect retirement. Please stay tuned.

Commercial Break – 9:40:00 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 return Airmen. 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 will identify your goals. Where do you see yourself in the next five years? Where do you want to go? And who do you help 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 – 11:14

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 were we gonna say well, I got I got a bunch of five little stars now. Oh my gosh, well, now the pressure is on to keep delivering that same level of excellence. I don’t know about a fresher. So Brian, I love our show today. Because obviously we can always tell when people are calling in the phone lines are lighting up. And I love that. But we do have some viewer questions also. So are you ready for some? Let’s do it. All right, let’s my glasses on here quickly. So I can read this properly, says Brian. I’m 62. And I was planning to work for another four years before retiring. However, my job is wearing me down. I’m not happy there anymore. So I’m tempted to just quit and start taking my Social Security now that I’m eligible, and then work a low stress part time job somewhere. Have you seen people do this successfully all the time,

Brian Quaranta – 12:12

all the time all the time? It’s a very common thing for people to do. I think there’s a few things you got to keep in mind with that situation. Number one is if you do want to retire, and you do want to work, right, we were talking about this on the last segment, Social Security has a threshold to where you can only make so much money. But a lot of times if you look at what you might be getting in Social Security, plus what you’re allowed to make $18,396 if you want to be exact, okay. Any pays in there? I don’t think there is Yeah. But But you know, let’s say you go out and you find a low stress job making $25,000 a year. And then on top of that, maybe, you know, you are I’m sorry, but let’s say let’s say your Social Security is about 25,000 a year. And then let’s see, you make another 18,000. On top of that. I mean, that’s that’s a nice income, you know, that somebody could live off of so we see it all the time. You know, the one question that people have in those those situations, too, is, you know, should I even collect it at 62? Yeah, you know, I’m a big fan of collection at 62. I know, there’s a lot of people out there that feel a little bit differently. But if you look at the math of collecting at the early retirement age of 62, versus the other ages, your breakeven is that 68. So I’m sorry, 78. So let’s say you collected, you know, say somebody’s full retirement age is 66. You collected 62, or 66, doesn’t matter, you’re gonna collect the same amount of money at the time you turn age 78. So it doesn’t benefit you to wait until you live beyond the age of 78. So once you live beyond the age of 78, that’s when it benefited you to to wait till 66 to collect, right? Because that’s when you’re actually making money. The problem with that is the average life expectancy is 78. Oh my goodness. Right. So I mean, and for most people, if you look at retirement, it’s a window. And it’s a window of time. I mean, it’s not this 25 year retirement, everybody thinks they’re gonna have the window of time where you’re really going to do all the things you want to do is really from like 60 to 75. And that’s really when people want the most money to do the things. They wanted to have more energy. So why wouldn’t we utilize a guaranteed income that’s subsidized by the government that we’ve paid into, that’s only guaranteed to us if we’re alive? True? That’s a great point. So if you want to delay retirement, or I’m sorry, if you want to delay Social Security, what you got to think of is when you’re delaying Social Security, where are you going to get the money to live off of you’re going to pull it from retirement accounts? The problem with that is most likely what’s going to happen is you’re gonna put too much pressure on your retirement accounts too early on, and you’re gonna wind up running out of money later on down the road.

Cynthia De Fazio – 14:41

Wow. Thank you, Brian. That was an excellent response. Another viewer question. The whole idea of not working anymore makes me really nervous about our financial future. I’ve worked for over 50 years. I can’t imagine just stopping Brian, how can I know that the resources I have accumulated will meet our needs for the rest of our lives? Well,

Brian Quaranta – 14:58

that’s a great question and That’s a big concern for everybody. Yeah, you know, making that transition from those working years to the retirement years, years. Yeah, to where you have a paycheck coming in all the time to now you’re not gonna have a paycheck coming in, this comes down to having a plan, right? When we have a plan, we can confidently move towards our goals. It’s not having a plan. It’s not knowing the numbers. It’s not knowing the math. And it’s not looking at worst case scenarios. Because most people I talked to will probably look at their investments go, I think I’ve got enough here. Yeah, but they go, but what if, what if, what if my husband dies early on retirement? You know, what, what happens if we have a health event? What happens if there is an emergency? The nice thing about building a plan around math and really, truly looking at the numbers and adding those worst case scenarios in to the earlier times of retirement, we can stress test the portfolio to determine if these things were to happen, what impact would that have on the assets that you’ve accumulated? You know, one of my advisors, Neil was telling me, you know, a couple weeks ago, the new client that we just brought on board, and this happens quite a bit throughout the course of the year is that, you know, they’ll come in, so nervous to retire. And we’ll lay out a plan, and they’ll call us a month or two months later, and they’ll say, Hey, we’re moving to Wyoming, we’re, we’re building a house. And that’s so gratifying to us, because we truly sat down and understood what their goals were. And we mapped it out and showed them how they could do it. The thing is, is most people can do more than what they think, you know, I don’t know where this whole thing is. Remember, that commercial was like, what’s your number number? Yeah, people are so misled on on how much money they really need to retire, there’s so much you can do. When if you don’t have a ton of money, I there’s so much you can do people will say, I had no idea I was going to come in here and know that I was gonna be able to do this. Well, when you understand distribution, the way that we do and how to map it out. You understand that you can leverage and maximize what dollars you have. Because the distribution phase of retirement. Remember, it’s a different strategy and technique than those accumulation years completely.

Cynthia De Fazio – 17:03

Absolutely. Brian, we have time for one more quick question before we take another commercial break. Brian, I am five years away from retirement. What should I be doing today?

Brian Quaranta – 17:11

Yeah, well, the most important thing you should be doing is making sure that all your debts paid down. Okay? You want to make sure you’re zeroed out on your debt. Right? I’m a big believer that if you have a little bit of a mortgage left, try to pay that down. And the reason I say that is because you know, let’s say your mortgage is $1,000 a month, okay? If we can pay that down by the time that you retire, that’s $1,000 in additional cash flow that we pick up. And you know, I’ll even have some people redirect their 401k contributions. Now, you might think to yourself, oh, my God, that’s crazy. What I mean, I’m getting free money and free matching. Yeah, I get it. But you know what, in the next five years, if I can guarantee you an additional $1,000 of income, that’s much better than you contributing to an investment that we have no idea whether or not it’s going to go up or down. That’s true, right? That’s true, making sure that your debt is paid off, as most importantly, and five years out from retirement, you can do some serious tax planning, too. So that as you get into those retirement years, we can start to have buckets of money that are tax free, rather than taxable. So again, our right track Retirement System is really designed to answer all of these things that Cynthia and I are talking about today. If you’ve ever thought to yourself, you know, when is the best time to collect Social Security, or you thought when I retire, I’m not going to have enough money between social security. Or maybe you’re even getting a little pension, it might not be enough money, and you’re going to need to generate income from your retirement accounts. We’re going to show you the best practices to do that. Other people will say, I just can’t afford to take another big market loss because I just don’t have the time to recover. the right track Retirement System is going to go through five key areas with you, Cynthia and I talked about on every show, its income, taxes, investments, health care and legacy planning. These are the five key areas, they’re going to help get you on track and point you in the right direction, but you got to do your part. You can’t kick the can down the road. This is something you don’t want to procrastinate on. Again, that’s for the next 10 collars or right track retirement meeting. no cost, no obligation. I’ve seen other people charge up to $1,000 or more for similar features or offers, but we’re gonna do it complimentary, if you call in right now. So again, that number to do that is 18883821298. Again, 1-888-382-1298.

Cynthia De Fazio – 19:17

Brian, thank you so much to the viewers at home. as Brian mentioned, the phone lines are now open, all you have to do is pick up the phone and call 888-382-1298 we have to take a very short commercial break, but don’t go anywhere. When we come back. We’re going to have more viewer questions, and it could be one of yours, so please stay tuned.

Commercial Break – 7:35:00 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 great 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 – 21:01

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 Quaranta – 21:12

Yes, yeah.

Cynthia De Fazio – 21:17

Well, Brian, I want to dive right back into viewer questions, we have a limited amount of time, and you have been so popular with the viewers that there are many to get through. So let me just kind of jump in and get going. So Brian, I recently changed jobs and I can’t decide what to do with my 401k. I can either leave it where it is roll it into an IRA or roll it into a 401k at my new job. I’m planning to retire in four years at age 67. Brian, how much does it matter? Which one? I do? That’s a good question.

Brian Quaranta – 21:47

Yeah, it’s a good question. At 67 at 67, you know, obviously, you’re going to have better options by rolling it to a self directed IRA is going to have much better options. Now, if that person was younger, you might want to roll it to a 401k depending on what they want to retire, because you can actually take money out of a 401k prior to 59 and a half, called the 55 rule. If you enroll that to an IRA, you lose that option. Okay, so So I would say roll it to a self directed IRA for a number of reasons. Number one, your your your employer sponsored retirement plans, like a 401k, it’s just going to limit you too much to what you can invest in. Typically, you’re very limited, they’re expensive to be in, even though you don’t actually see the fees. You know, you can request those reports to actually see that, but there’s no disclosure, there’s a lot of bills in Congress right now to try to create some more transparency with the cost of these 401k plans. But I would tell you, you know, you’re going to have much, much better options rolling out to a self directed IRA, you’re gonna have much better options on distribution, all kinds of different things that are going to benefit you where you are at this point at when you want to move that and also when you want to retire in the next four years.

Cynthia De Fazio – 22:55

Okay. All right. Thank you so much. Brian, I have a question about rebalancing a portfolio. Can you explain this more in detail? And is it necessary?

Brian Quaranta – 23:04

No, this is this is one that for some reason, and I don’t know where it started or when it started. But everybody thought this, we’re going to rebalance your portfolio. Let’s just I just use a personal story of mine, right? So I invest in individual stocks, very aggressive individual stocks, okay. And some stocks that you invest in go up really fast. And so now what happens is, let’s say you had $5,000 in each stock, okay? And one goes up really fast. And now there’s $20,000 in there, okay, and the other ones still have 5000 in there. Well, rebalancing would mean that we’re going to take that $20,000 in that one stock and redistribute it to the rest of them and rebalance so that all stock positions have an equal balance of them. So the problem with that is that you rebalancing is not always a good thing, because now I’m going to take money from a big winner, right? And possibly rebalance it back into losers or ones that just don’t perform well. So I’ve never been a big fan of rebalancing, although a lot of portfolio managers do that. And it advisors like to talk about rebalancing, like it’s, you know, you know, gospel and that this is a big deal that we’re going to rebalance. I’m just not a fan of it. I think you lose a lot opportunity when you rebalance.

Cynthia De Fazio – 24:17

that was a very good response. And I love the way you explained it about taking it from the big winner, and then kind of making it kind of balance, if you will,

Brian Quaranta – 24:24

why would I take it from a big winner that’s doing really, really well and then redistributed to two guys that are just sluggish and possibly even losers? Yeah. And that’s what automatic, you know, automatic rebalancing will do people don’t realize that they’ll say, well, the portfolio automatically rebalances every quarter. Well, how terrible is that? Yeah. I mean, what if we were just kicking butt in three or four different positions, and now the quarter comes and we got to automatically rebalance. And now we’re going to take money out of those ones that are doing really well. Just not a fan. Okay, a lot of fan.

Cynthia De Fazio – 24:54

Brian, thank you so much. This is another really great question. I think we have time for just one more, maybe two, says Brian. I actually getting up in age, do you recommend that I limit my exposure in the stock market? Doesn’t say how old just getting up in age? Yeah.

Brian Quaranta – 25:08

Well, you know, as you get older, the concept and the best practices always been to try to reduce risk as you’ve gotten older. But this is where that bucketing approach comes in. Right, we’ve talked about this a number of times on the show, the simplest form of bucketing that you can do is what we call split funding, or a two bucket strategy to where we create a bucket of safe money, right, that has no risk to principal, we still want to give it an opportunity to grow. But we certainly don’t want the risk of losing 20 or 50% of that money. So we want a bucket that’s completely principle protected. And what that does is the money now that we put at risk, so let’s say I’ve got a $500,000 portfolio, okay, and I split it, I got 250 in the safe bucket 250 in the risk bucket. Well, the 250 in the safe bucket, I can actually use this bucket first to generate cash flow. So if I want to generate monthly income, I can do that. Now, depending on how much money I need out of there, I might be able to get this bucket to generate cash flow for the next 15 to 20 years. Okay, okay, well, what does that do? It creates, it creates the ability for this bucket to now have time, and we’re investing in the market time is our friend, it’s the most important part of the equation. So the only way we create time is to have a bucket that’s guaranteed and safe that can buy back the time that we need over here. Right? So So what I want to do is I want to spend this bucket down ultimately over the next maybe 15 to 20 years. But is this one spending down guess what’s happening? This one, it’s going up? And if this one goes up really, really fast. We want to be smart and say, well, heck, we just made a lot of money. Let’s move some money over to here. So again, these are all things that we can talk about during the right track retirement meeting. And this right track retirement meaning truly was designed for you it’s designed to take all the guesswork out of financial planning is designed to take the mystery out of financial planning and simplify the process. If you’ve ever thought to yourself, what’s the best time to collect Social Security or you need income or you just can’t take the risk? the right track retirement meeting is all designed to give you the clarity and peace of mind you need moving into retirement and the turn by turn directions that you will need to maximize your retirement. So if you call 18883821298 again, that’s 1-888-382-1298 you can schedule your complimentary meeting today.

Cynthia De Fazio – 27:27

Brian, thank you for another amazing show this week. Most importantly to the viewers at home. Thank you for spending time with us. That number to call is 888-382-1298 we love to have your viewer questions come in. So please keep those questions coming. Ryan will look forward to answering those in the weeks to come. Again. The number to call is 8883821298 time 1298 be safe, be happy, be blessed and we look forward to seeing you back here again next week. Same time, same location.