Retirement You TV: Episode 37

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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 president and founder of secure money advisors as well as Neil Mager Senior Investment Advisor.

Brian Quaranta – 00:32

I can’t help but laugh. Getting closer, he’s getting closer. He’s getting closer. Neil, work on it after hours.

Cynthia De Fazio – 00:44

Oh my gosh, that is the funniest thing ever. So, I mean, it’s I have to pull that out later. But I have phonetically spelled the very first

Neil Mager – 00:52

word. Just one of those words.

Cynthia De Fazio – 00:56

So I love Neil major. That’s so easy.

Brian Quaranta – 01:00

We’re gonna let him take over the show.

Cynthia De Fazio – 01:03

Special Guest Brian? Yeah. Gentlemen, I know it’s been a very busy time for you. Obviously, you’re so passionate about helping people retire with confidence retire comfortably? Brian, What’s life been like in the office lately?

Brian Quaranta – 01:18

Busy, always busy, busy, busy. But a good busy? Yeah, I mean, you know, to me, you know, my, my kind of test to how things are going at the office is how many people are we helping? And it seems to be we’re helping a lot of people lately. So I think the show has a lot to do with that. You know, and I think once people come in, and they really get an idea of what real retirement planning looks like, it’s really special for them to see what, you know, 30 40 years worth of work can actually do for them long term in retirement. So very, very busy at the office. Sure.

Cynthia De Fazio – 01:50

Neil, what types of questions? Are you hearing more than anything else right now from your clients coming in?

Neil Mager – 01:56

Well, I mean, there’s a lot of different things that people are focused on. I mean, obviously, tax rates is a big question. Almost every single I would say 100% of people talk about because you know, the expectation is that in the future tax rates are going to increase, especially with a lot of the stimulus packages and things like that. And with just being in such a low tax bracket right now, they know it’s coming. And so they want to just make sure that they are prepared and in plan to do the right things, take the necessary steps to go about making sure that they’re prepared as those tax rates potentially increase to 20, 30, 40%. So what can we do now to help us prepare for the future for tax rates? It’s always interesting, the types of questions that we get into the office

Brian Quaranta – 02:41

one big one is, are we on the right track?

Neil Mager – 02:44

Are we on the right track?

Brian Quaranta – 02:45

Everybody wants to know, are we doing the right things, or, you know, are we on the right track. And for a lot of people, the reality is, they’re not on the right track, because they’re focused on the wrong part of planning. Most people are focused on the accumulation side of planning. And they’re not focused on the distribution side. And what we have to understand is that there are two different sides of planning. And you have to understand these two different sides. If you do, then you’re going to be able to build a really good plan. But most people are focused on this accumulation phase. And that’s easy. I mean, you’re just putting money away, you’re trying to grow it, most people are doing that in some type of retirement account, like a 401k, 403, B, something along those lines. But it’s when you retire the distribution phase, you’ve got to have that set up, right. And we talk about it all the time. On the show, there’s five key areas that have to be handled, yeah, it’s income investments, taxes, health care, and legacy planning. And if you follow the best practices on each of those areas, you’re going to have a really good secure sound retirement. But a lot of times people when they’re meeting with advisors, they might just talk about performance. They’re not talking about cash flow planning, or tax planning, or health event planning. I mean, you look at the cost of a nursing home these days, and you look at the cost of what it would cost you just to ensure that you would have money for nursing home, anybody’s ever got a quote on long term care insurance? I mean, most people will say, you know, forget it, I’ll take the risk, which I don’t blame them, because they’re it’s very, very expensive. But I would I would also say that, probably, you know, am I getting the return for the risk that I’m taking? A lot?

Neil Mager – 04:15

Yeah, I mean, that’s something that you know, we do in our offer here today. And I know that you’ll talk a little bit more about it later. But, you know, we offer a portfolio analysis. So we have a really great third party independent software, we’re able to put folks positions into the software and the dollar amount that they have in each position, and it’s able to generate us a report. So typically, what we’ll see is that maybe people are taking way too much risk for maybe the current stage in life that they’re at, but also maybe they’re taking too much risk for the actual return that they’re getting. You know, maybe they’re taking a really high amount of risk and they’re only seeing a five or 6% rate return, okay? And we know we’re able to make some adjustments there to level that out. actually reading reduce the risk, but increase the return. I mean, the portfolio analysis takes a look at fees, you know what fees they’re paying, you know, a lot of people don’t understand, they might say, well, I pay my advisor, you know, one or 2%. But there’s a lot of, you know, mutual fund expenses and things like that. So, a lot of times those fees within the mutual funds can really eat away the return. Sure. So this report, you know, is just invaluable to understand you know, exactly what you’re doing. And exactly, you know, what tweaks Can we make to improve this and put you in a better position now that you’re moving into a different phase?

Brian Quaranta – 05:32

I think people are always very surprised with how much risk they really are taking. You know, a lot of people think they’re a lot more conservative than what they are, we’re we’ll hear a lot of times that the markets have been doing well, but they haven’t been getting the returns. Yeah, you know, and, and to Neil’s point about fees, you know, fees, reduce your gains, and they compound your losses, because the fees are always going to come out. Sure, right. If I get a 10% rate of return on paying 2%. And fees, I’m only going to get an 8% rate of return. But if I lose 10%, I still got to pay the 2% and fees. So now I’m down 12%. Now imagine if you’re taking money out at that point in time, too, if you’re taking another four or 5%. On top of that, it becomes a big problem. And this is why the portfolio analysis which the riskalyze program that we use, it’s very, very powerful. Most people have never had that done before. And it’s a very eye opening. And it’s not until you know where you are, that you can figure out where I need to go show. And that’s just how it works, we have to understand where you are. And then we can kind of put together a step by step guide of how to get to where we need to get. And sometimes it’s just making small adjustments that are better suited for that distribution phase of life.

Cynthia De Fazio – 06:40

Sure. So Neal, it’s not a cookie cutter, one size fits all approach, when you’re designing a plan for someone it sounds like it’s definitely tailored to that person’s needs.

Neil Mager – 06:49

Yeah, it has to be I mean, because people come in with entirely different goals, right? I mean, some people, their goal is to leave a legacy to their family to their children. Other people come in and say they want their the last check, they write to the, to the undertaker to balance, right, so they want to make sure that they have a lot of income generated. So you know, obviously, we would want to want to have those people in the same sort of portfolios, because one person who has no desire to leave money to their children’s can be more than growth oriented, we also have to do a lot of legacy planning and tax planning for that person to make sure that when the good Lord decides to take that person home, that Uncle Sam’s hands not in there, as well, as an equal partner. So you know, there’s a lot of different things that we have to do. And we really have to sit down and listen and understand, you know, exactly what their goals are, what their needs are, what their situation is going to be like. And, you know, sometimes we have to add in our expertise, because a lot of people, you know, come in, and they’re not really sure what things are gonna look like. So we have to kind of give them that guiding hand, and just show them what what things are going to look like and how we can help. Yeah, that’s

Brian Quaranta – 07:57

a really, you know, a compliment to our systems and processes that we’ve built. Because without a good system without a good process, you got to have a process or a system, if you don’t, you’re going to fall for anything. Yeah, you know, and then when times get tough, you’re not going to follow a system. And you have to, it’s so critical. And so the portfolio review that we offer is going to go through these five key areas, it’s going to look at the investments, it’s going to look at the income, it’s going to look at taxes, health care, and legacy planning. So we can figure out, you know, for this person, we might customize the portfolio this way for this person, we might customize it completely different. This person may have already done some good tax planning, this person may have not done good tax planning. These people might not have children, these people might have kids, you know, everybody’s situation is different. And there are different strategies based on how your life is right. I mean, do you have family members? How many do you have is are you an only child? You know, the brothers and sisters, do you have children, grandchildren at all makes a difference? When you’re building a portfolio and trying to achieve what you want? To Neil’s point. A lot of people might say, look, we took care of the kids, we pay for their college, we pay for everything we help them get started. We’re out there on their own. So what I’m going to tell you folks is take advantage of the portfolio review that we’re going to give because for the next 10 callers, you got to do your part though you got to pick up the phone, if you call 1888-382-1298. We’re going to give you a complimentary portfolio analysis. Now we’ve seen other people charge up to $1,000 or more for these reviews, we’re going to do it at no cost. The risk is literally on us because we don’t know if we’re going to be a good fit. We’re not sure if we’re really going to be able to help but you will be educated about where you are and where you need to go. So do your part. Pick up the phone schedule today. It’s 1-888-382-1298.

Cynthia De Fazio – 09:45

Brian, thank you so much, Neil, thank you so much. to the viewers at home. The phone lines are now open that number to call is 888-382-1298 we know you have a lot of questions about how to plan for retirement. Brian and Neil are offering you the opportunity to coming in to sit with them and let them take a look at what you currently have in place. Now we have to take a very short commercial break, but don’t go anywhere. When we come back, I’m going to ask Brian why age 59 and a half is very important to keep in mind. Stay tuned, we’ll be right back.

Commercial Break – 10:16

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 is 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 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 – 11:50

And welcome back to retirement You TV. My name is Cynthia de Fazio. I’m joined with Brian Q president and founder of secure money advisors, as well as Neil Mager Senior Investment Advisor. See perfect.

Brian Quaranta – 12:03

Brian Q

Cynthia De Fazio – 12:06

So easy.

Brian Quaranta – 12:08

You deserve a mic drop today.

Cynthia De Fazio – 12:12

Well, Brian, I want to talk to you a little bit, of course, about age 59 and a half. Why is that so important and so special? And why should we

Brian Quaranta – 12:20

such a big deal? You know, it’s interesting, because I know you hear this a lot, because we talk about the 59 and a half rule quite a bit, people don’t realize that at 59 and a half, you have the ability to exit your company 401k, no taxes, no penalties, even if you’re still working. It’s what we call an in service withdrawal. Okay, so a lot of people say, look, I gotta get set up for retirement. And you know, what my companies offer me as far as my 401k. It’s just not structured for distribution plan. And it’s really structured for accumulation. So as you get five years away from retirement, it’s a good idea if you’re 59 and a half to look at the possibility of doing an in service withdraw. And what that means is that you’re going to be able to roll the money from your 401k, to a self directed IRA, where now you have way more options than what you would have in your 401k. It doesn’t close your 401k. So it still keeps your 401k open, and you still get your contributions, you can get your matching and all that. So it’s a really nice strategy for people to explore, to see if it would benefit them to execute something like the 59 and a half roll.

Cynthia De Fazio – 13:25

That’s fantastic. I hadn’t heard of that before. And I’m sure a lot of the viewers in the audience are agreeing with that, that they are hearing this

Brian Quaranta – 13:31

for usually most people well, most people don’t Yeah, yeah. So now I

Cynthia De Fazio – 13:35

want to talk a little bit more if we could about the basic fundamentals of a well designed plan. Can we break that down a little bit further?

Neil Mager – 13:42

Yeah. And to Brian’s point, you know, with what you have available to you in the 401k typically, just is not the base of a well designed financial plan. Yeah. So you know, it’s important to start to structure your investments for retirement. Yeah. So you really want to make sure that you have, you know, a lot of people are talking to us about risk. So typically, there’s some pretty decent risk options in the 401k. But at the point that they’re at in their life, they want to start to bring down that risk number Sure, to make sure that their retirement isn’t pushed back 357 10 years with a market correction. So you know, really, the structure is we want to set aside really 10 to 15 years of income producing investments, we just want to get a reasonable rate of return that we can generate income from. And then on the balance of the money, we really want to take a growth approach. So we know we buy something very, very important with that money, and that’s time. So if we have 1015 years, we can allow the market to go through corrections, things like that. We’re not taking any withdrawals from that money, and we have that time. So but there’s a lot more and you know, Brian talked about the five key areas that we focus on the income planning the investment planning, healthcare planning, tax planning, legacy, planning. We make sure that we’re very sound and all five of those key areas in order to build a successful retirement for folks.

Cynthia De Fazio – 15:07

Thank you now.

Brian Quaranta – 15:07

Yeah, you know, and I just want to add to what he’s talking about, because, you know, he’s referring to what we call our bucketing approach. Right? So when you get to retirement, one thing you’ll learn at secure money fighters is we believe in buckets, buckets of money, because most people can understand buckets, right? So and as Neil was saying, you’d need a bucket of money that we set aside for income. And the reason is, is because there’s this risk that shows up in retirement that people don’t know about, and it’s called sequencing risk. And it’s the order in which you receive your returns over time of how well your portfolio is going to do. So let me give you an example. At our educational event, which by the way, if you want to come to one of our educational events, just go to secure money, you can go to our Events tab, and you can look at what we’re one of our next educational events is going to be, but we do, we do a case study where we have big brother Bill and little sister Joe, okay. And big brother Bill has his portfolio of a million dollars and little sister Joe has her portfolio of million dollars. Okay? The interesting thing about it is they have the exact same portfolio, all right, the only difference is Bill’s gonna retire three years earlier than his sister. That’s it, okay. So what happens is when they start to take withdrawals from their accounts, okay, just because of the order of the returns the sequence of the returns of the of the market, one has $2 million, after 20 years of retirement, and one has no money after 20 years. It’s absolutely amazing. And this risk only shows up in the distribution phase. And this is why I’ve said a number of times, the strategies and techniques that you use during the accumulation phase are not the same strategies and techniques you’re going to use during the distribution phase, it’s going to get you in trouble if you do that, because of the sequencing risk that exists within these portfolios. And nobody’s talking about this. You know, everybody talks about this 4% rule as far as you know, the gospel way of dret generating income. And in fact, it’s it’s under a lot of criticism lately, too. But when we talk to people about Tell me a little bit about your income strategy, and how you’re going to do it. Most people say, nobody’s ever talked to me about how I’m going to generate income. Other people will say, Well, you know, we were gonna, we’re gonna withdraw 4%. Well, the 4% rule, The Wall Street Journal just said, If you try to follow this 4% rule, there’s up to a 57% chance that your plan could fail if you follow this 4% rule 57% or 57% chance. So think about that. If you’re if you’re building retirement plan, do you want a potential 57% chance of it failing? No, I think if people knew that we think about like this, let’s say you’re about to get on an airplane, right? And and, and this airplane is headed for Hawaii. And right before we’re about to get back out of the gate, the captain gets on the intercom. And he says, folks, I just want you to know there’s a 57% chance we may not make it to Hawaii, and we’re gonna crash into the ocean. How many people would stay on that plane? Most people will say none. And then you’ll ask people, well, what risk? Would you be okay with? Would you be okay? If there was only a 47% chance of the plane crashing? And they say now, what about 20%? chance? No, what would the chance need to be? Zero? Yeah, zero. And this is why we use a bucketing approach because we want to get to the highest probability of success for the portfolio. And most people have a very low probability of success with the portfolio because they’re just not building the distribution phase the right way.

Cynthia De Fazio – 18:28

Sure. Sure. That makes sense. I have to have to ask question, the 4% rule, has that changed due to inflation, Neil?

Neil Mager – 18:35

Well, there’s a lot of changes with the the 4%, or one volatility of the market, unlike we’ve ever seen before. I mean, you’re seeing things occur like last March, where the market went down very, very significantly, very, very quickly. Things like that, because of the automatic trading and things like that, but also, the bond yields. So what are the safe investments available to retirees today, with the bond yields being so low? They’re not a great option with what the banks are offering CDs and stuff like that. I know that we’ve all tried to get some short term return, and there’s nothing available. Yeah. So that has really impacted and affected the 4% withdrawal rule. And that’s why they’re saying now, your withdrawal rate should really be two or 3%. So I mean, think about that, if you saved a million dollars in you were anticipating $40,000 from your portfolio. Now they’re saying cut that in half and only take 20,000 you know, most people can’t do that. This Remember, this is their pension. Absolutely. So there’s their challenges head but you know, we’ve really mapped out and understood, you know, at secure money advisors, what are the best safe money options available for retirees? Because we tell people all the time, this is not a dress rehearsal. You know, people that are retiring are typically in their best earning years. And we’re not going to say Hey, sorry, the plan didn’t work. I know you’re 75 years old. We need you to go back to work. What can you go and do you’re not gonna find that high. paying job. Yeah, that’s true. That’s why we planned so very soundly to make sure that this is going to go according to how we designed it.

Brian Quaranta – 20:08

it’s why we do the portfolio review. You don’t want to make a mistake, as Neil said, you don’t get a second chance of this. It’s not a dress rehearsal, please. You know, most people think they have time and the greatest commodity that you don’t have much of anymore is time. So don’t kick the can down the road, pick up the phone, call us. 1-888-382-1298. Get a complimentary portfolio analysis from us. We will go through the five key areas with you that we continue to talk about income investments, taxes, health care and legacy planning. Do your part pick up the phone schedule that complimentary read today, you’ll be happy to did it. We’ve seen people charge up to $1,000 or more for what we’re going to do at no cost. But you’ve got to do your part. 1-888-382-1298.

Cynthia De Fazio – 20:53

Brian, thank you so much, Neil, 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. I’m going to have so much more with Brian and Neil. Please stay tuned.

Commercial Break – 21:08

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Cynthia De Fazio – 22:33

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 as well as Neil major Senior Investment Advisor. Yay, yeah, wonderful. Perfect. Perfect. Well, I love this part of the show, gentlemen, because we have viewer questions. And I love that people are paying attention and they’re reading their questions down and they’re calling in with them. Do we have time to go through refuse do it. Alright. So Brian, we have a question. Actually, regarding the secure act, they would like to know, Brian, I heard there are some new changes to the secure act. Can you explain what those are? What a

Brian Quaranta – 23:12

mess this has been. I mean, 2019, Congress changed the rules on how we can inherit IRAs. So in the past, we used to be able to inherit a family members IRA, and we used to be able to to defer paying taxes over that person’s lifetime. It’s called a stretch IRA. So I’ll give you a good example. So this is kind of the horror stories that we’ll hear. So there was an article Matter of fact, and Money Magazine, about a son that inherited his father’s half a million dollar retirement account, son was the primary beneficiary. The son didn’t know anything about the what we call the inherited IRA rules or stretching rules. So he calls the company. He says, Hey, I’m the primary beneficiary of my dad’s retirement account, they say, Yep, we see that. Please send us these documents. And we’ll go ahead and process everything. So he sends everything in. They sent him a check for $500,000.02 weeks later, he gets a 1099 showing that he has $500,000 that he received an income that year, because of the the nature of the IRAs. The IRAs have never been taxed before. Right, their traditional IRAs never been taxed. So the minute that money comes out of that IRA, it all counted as income for him in the year that he received it. So him and his wife were making $100,000 combined together, plus they received dad’s inheritance of 500,000. So now they have to pay income taxes on $600,000. The article went on to say that the tax bill that the son had to pay was over $260,000 Wow. Now folks, I want to ask you When’s the last time you wrote a check for $260,000 in one day to the IRS? I want you to take it one step further. How much money do you have in your IRA accounts. Now I want you to deduct about 40% because that’s the partnership that you’re in with the IRS. If you don’t learn how to get them out of the picture, sooner than later, you’re going to be dealing with bigger problems down the road. And that’s the things that we’re going to show you when you come in at secure money advisors.

Cynthia De Fazio – 25:10

Thank you, Brian. Neil, this is a great question. I love this question as well. Neil, I’m 10 years away from retirement, what’s the most important thing I should be doing today?

Neil Mager – 25:20

Well, really, I mean, being that close to retirement, you really want to make sure that you’re zoom in focus then on those five key areas that we always talk about, okay. So you know, as you get closer and closer to retirement, you want to make sure that you start to reduce the risk in the portfolio. Because the worst thing that can happen to you is you experience like a 2008 market correction, and your portfolio goes down 3040 50%, right? Because then you’re gonna have to extend that retirement date out, you know, 357 years. Now, most people coming into our office are saying, I have a specific date that I want to retire. And that’s happening no matter what. So you really want to start to work on that plan. And look at all those five key areas. What can I start doing now, to make sure that I’m making all the right decisions? So I’m on the right track? Knowing that if I do this over the next 10 years, I’ll be able to hit that retirement date.

Cynthia De Fazio – 26:15

Okay, thank you, Neil. Bryan, we only have about a minute and 40 seconds left of the show this week. Any final words of wisdom you would like to impart to the viewers at home?

Brian Quaranta – 26:24

Yeah, folks, what I can tell you is take advantage of our complimentary portfolio analysis. It’s so important for you to determine just like Neil was talking about for you to determine whether or not you’re on the right track, let me ask you this, if you weren’t on the right track, when would you want to know that? When would you want to know? So if you come in, we can help you determine whether or not you’re doing the right things. If you’re not, we’ll give you some advice on what you can do. If you wanted to hire us, that’s fine. If you want to stay at your current advisor, that’s fine, too. But we’re truly here to help take advantage of the portfolio analysis. It’s complimentary. We’ve seen other people charge up to $1,000 or more, but you’ve got to do your part, you got to call 1888-382-1298. When you come in, we’re going to go through all the five key areas with you. We’re going to talk about income, we’re going to talk about the investments, taxes, health care and legacy planning. And we’re going to show you the best practices and all of those areas so that you have every I dotted and every t crossed to make sure that you your family and your retirement are on the right track.

Cynthia De Fazio – 27:26

Gentlemen, thank you so much for another amazing show this week to the viewers at home. Thank you for spending time with us. That number to call is 888-382-1298. We know you have questions about how to plan for your perfect retirement. Brian and Neil have the answers for you. Again, the number to call is 888-382-1298. Thank you so much for spending time with us again this week. Be safe, be happy, be blessed. And we’ll see you back here one week from today.