Retirement You TV: Episode 39

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Video Transcript

Cynthia De Fazio – 00:21

And 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, as well as Neil, major Senior Investment Advisor. Brian, how are you today?

Brian Quaranta – 00:34

Good to see you, as always good to see you as well.

Cynthia De Fazio – 00:36

Neil, how are you today?

Neil Mager – 00:38

Good as well, how are you, Cynthia?

Cynthia De Fazio – 00:39

I am doing fantastic. Thank you so much for asking. And I’m just so overwhelmed by the popularity this shows have had, obviously, we gauge this by the amount of viewer questions that come in. But also we were talking before we started this morning, your appointments have been just so incredibly busy. Neil, what has life been like in the office for you?

Neil Mager – 00:59

It’s been nice to see I mean, we’ve had a really steady flow of people coming in wanting to solve the retirement puzzle that they have. So they, they’re watching the show. And not only are they watching the show, they’re watching multiple shows. So they’re picking up a lot of good information. They have a whole list of questions. You know, I heard you talk about this. What does that mean? And I want to know more about it. And should I be doing that? And I heard you talk about this. And should I be doing that? How do I? How do I figure that out? So it’s been really nice to have a lot of people come in and, you know, to be able to help the amount of people that we’re helping on a week to week basis is, it’s really rewarding. It’s why we do what we do. Yeah. So it’s been nice to have certainly,

Cynthia De Fazio – 01:39

absolutely. Brian, what types of questions? Are you hearing more than anything else right now? Would it be about taxes about inflation? What are you hearing most of

Brian Quaranta – 01:49

because we focus on the distribution phase of retirement, a lot of the questions are the same, because everybody’s dealing with the same problem that that’s what’s really neat about working with secure money advisors is that we specialize in a very niche area of retirement planning. And that’s called the distribution phase. It’s when we start to withdraw money from our accounts. Now that may be because you need the money. It may be because the IRS is forcing you to take money out. But the questions always are, I’m going to need additional income. And I need to know how to withdraw that money from our retirement accounts. I want to I want to try to pay as little in taxes. I’m at a point in my life where if the market goes down, I can’t afford another market loss. And they’ll tell us that we did look, we just don’t have the time anymore. A lot of people say I wish I had a pension. Is there any way for me to create one? The answer’s yes, of course you could. So those are the typical questions that we hear. And I would probably say the other number one question is, are we on the right track? Are we doing the right things?

Neil Mager – 02:46

Yeah, people want to know, I mean, typically the people are coming in to what we hear more often than not, is a lot of things have changed within the company, right? And so there may be looking to get out a little sooner than previously, kind of put the date out. And so they want to know, you know, can I retire? Am I on the right track? If I went two years earlier than I had projected? Does it work? Does it make sense? What am I numbers look like? And we always say if you if you weren’t on the right track, when would you want to know true? Right.

Cynthia De Fazio – 03:16

Very true. Good point. Well, we do have viewer questions this week. Gentlemen, are you ready to tackle some questions? Right, Brian, I’m going to come to you first, if you don’t mind. And question is a great question says, Brian, what advantages do exchange traded funds have over mutual funds?

Brian Quaranta – 03:33

Yeah, good question. Well, first off, you know, for those of you that don’t know what an exchange traded fund is, it’s also referred to as an ETF. But let’s just talk some basic fundamentals. So an exchange traded fund trades like a stock, right, but it’s multiple stocks within a basket. And it actually has a price that can be locked into at any point in time throughout the course of the day. Whereas a mutual fund is a basket of stocks, but you get what they call the end of the day pricing, which is the net asset value of the mutual fund at the end of the day. So if I want to sell an ETF right now I can sell it and get the price for whatever it’s at. If I sell a mutual fund right now, I don’t get the price until the end of the close a day. So that means the market could be up in the morning. If I’m in a mutual fund, the market could be up in the morning and I want to sell, but by the time the end of the day comes the markets down 1000 points and I lose money. Whereas an ETF if I want to sell in the morning, I can sell in the morning, get the price right there. Those are your big, big differences. And ETFs are a lot lower and cost too.

Cynthia De Fazio – 04:30

Okay. All right, Brian, thank you so much, Neil. This is a great question as well. It says Neil, I’m 61 years old, never married and no kids. How much retirement planning Do I really need to do since I don’t care if there’s any money left for anyone when I pass away?

Brian Quaranta – 04:47

last check is to the undertaker. Yeah, well,

Neil Mager – 04:49

I think it’s actually you know, more important. I mean, if you’re single one, you only have one check, one guaranteed check most likely coming in because most people only have that Social Security as their guaranteed income stream. So you know, if you have a mortgage, you only have one check guaranteed coming in, you have utilities, you’re not splitting with anybody. So I think it’s more important than ever, right? You want to make sure that everything goes according to plan. This is not a dress rehearsal where you get a second shot, and I’m sure this person wouldn’t want to be forced to look into having to find a job at 80 years old, right? So it’s more important than ever. Now, the other key component of it is, well, what happens if this person had to go into long term care? Well, one, if they needed care, they’re not going to have family members most likely to lean on to take care of them. So if they did have to go into long term care, what’s the plan there? Are they going through the cost of looking to get some sort of long term care insurance? Are they looking to self insure? So I think when you’re single, you know, planning is paramount? Absolutely.

Brian Quaranta – 05:57

I have a lot of single female clients. And they’ll tell me all the time, they’ll say, Brian, I just I don’t want to be a burden on anybody. You know, that they’ll say, if something happens, I want to make sure that I can be taken care of at a good facility. You know, I don’t want to become a problem to somebody else. I think it’s the biggest fear of a single person, you know, they might have nieces and nephews, and they just don’t want that to come back on them. So a lot of the planning that that I do, it just happens to be with a lot of single women. I don’t know why. But we have a high proportion of single women.

Neil Mager – 06:32

Cynthia, I mean, I would say about 75% of people really have no great desire to leave money to anybody, right? I mean, they’ve said, we’ve helped the kids along the way we paid for college, we helped them get a start, whatever is left is left, right and similar to this woman. Now our goal at secure money advisors is one strategy very, very simple. Get the folks income as high as we possibly can as quickly as we possibly can. Because really retirement about age 80, they should be doing all the all the fun things that they promised themselves that they would do the bucket list, right? So I can appreciate this woman not really wanting to leave money to anybody. But we want to make sure that we do the proper planning to not only maximize her income, but kind of factor in bad things that could happen throughout that retirement and make sure we solve for those.

Brian Quaranta – 07:19

Yeah, it’s so important to have a plan. Let me tell you what happens when you don’t have a plan. You ask people all I ask people all the time, tell me what you want to do in retirement, they’ll say, Well, you know, we want to travel more. We want to spend more time with the kids, I want to buy a fishing boat, whatever. And you’ll talk to these people, they have all these things that they want to do. And you’ll come back to them a few years later, if they haven’t done anything. We’ll say, hey, how’s all that stuff gone? that you want to do? Are you traveling more? Are you spent more time with the kids? Did you buy the fishing boat? They’ll say, no, no we haven’t. Why not? Well, because you know, we’re just we’re afraid we’re afraid to take the money. What if? What if an emergency comes up? What if the market doesn’t cooperate, right? And so what happens is people never put together a plan and learn the proper techniques to utilize their money. And then here’s what happens. They die. And guess who spends the money? That’s right. The kids do. And I’m going to tell you right now, what’s the average?

Neil Mager – 08:12

I think about five months, five months, it takes

Brian Quaranta – 08:15

for an inheritance to be spent. Just think about that. How long it takes to accumulate your money. Five months is gone. Zero.

Neil Mager – 08:21

Because guess who just bought the fishing boat? took the trip to Europe? Join the country club? Yeah, your kid. Does.

Cynthia De Fazio – 08:28

That make sense? Oh, my goodness. gracious. Okay. Well, Brian, I know that you and Neil have a very special offer that you’d like to present to the viewers at home today. Let’s talk about what that is. And then open the phone lines. Yeah,

Brian Quaranta – 08:39

we’re looking at the biggest thing we hear all the time at the office is are we on the right track? Are we doing the right things. And we’ve designed the right track retirement system to help give you clarity and peace of mind going into retirement. So for the next 10 callers who call in, we’re going to give you a complimentary no cost review of your portfolio if you call 1-888-382-1298. Again, that’s 1-888-382-1298

Cynthia De Fazio – 09:06

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 your perfect stress free retirement. What Brian and Neil are offering you today as a complimentary consultation, a portfolio review, we have to take a very short commercial break, but when we come back, we have more viewer questions. So please stay tuned.

Commercial Break – 09:33

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Cynthia De Fazio – 11:07

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, gentlemen, a great show we’re having today. And again, the viewer questions the topics that they’re calling in about are so fascinating, and they’re so diversified. So I don’t want to waste any time, Brian, I’m going to come right to horn let’s do it. This is a great question says Brian, should I move my IRA away from a place that charges a 2.5%? fee? That seems high to me, and I’m not sure how to tell if I’m getting my money’s worth? I’m planning to retire in three years at age 67?

Brian Quaranta – 11:47

It’s an interesting question, because I would say what performance Are you getting? And what are you getting for the two and a half percent? I mean, are you actually getting a plan? Are you getting a written plan? Are you getting reviews? You know, are you getting tax planning? Are you getting estate planning? I mean, two and a half percent would be good if there was a lot of value there. But if two and a half percent is what you’re paying, and you’re getting poor performance, and you’re not getting, you know, tax planning or income planning or investment strategies, and you’re not getting what I call the all encompassing plan, then maybe it might be worth you know, looking at other places.

Cynthia De Fazio – 12:21

Yeah, absolutely. Great answer. Thank you, Brian. This is a great question. I’m going to come to you, Neil says, I’m 51 years old Neil and my wife is 52. We don’t have a retirement plan. Now that our son is through college, we’re thinking about our financial future. We don’t have a retirement plan. But we have three life insurance policies with a total cash value of approximately $160,000. Should we remove some or all of that cash and invest in a Roth IRA? How should we begin saving for retirement? It’s a great question.

Neil Mager – 12:54

That’s a long one.

Cynthia De Fazio – 12:55

It is a long one. I know.

Brian Quaranta – 12:57

It’s $160,000 of cash value.

Neil Mager – 12:59

That’s interesting. Yeah. Yeah. So I want to know, you know, how much how much outside savings do you have? I mean, yeah, you know, one thing about life insurance is people are always seeking answers with it, right? I mean, they’re looking say, should I? Should I get rid of it? Should I remove some of the cash value? I’ll tell you one thing, when you lose a loved one, you’re going to have a loss of income of some kind. I’ve never seen anybody disappointed getting a check from an insurance company, when you’re dealing with the loss of a loved one, right? So you know, be tread very lightly when you ever consider getting rid of life insurance, because it’s really a key component to you know, replacing income helping a grieving family, right.

Brian Quaranta – 13:40

I mean, I think the other thing to add there is the fact that life insurance can become a great income source due to if the life insurance policies are structured the right way. So with cash value life insurance, you can actually borrow from it in the form of tax free income, we sometimes call this the super Roth IRA. So you’ll see a lot of strategies out there where rather than utilizing investment, traditional investment products, like mutual funds and stocks, people are promoting the idea of utilizing cash value life insurance, as a way to save for retirement and generate income. And there are some advantages with it. But there’s also some disadvantages with it. But if it’s structured correctly, it could certainly be a diversified part of an income strategy. So you could have some income coming in from a retirement plan, like a 401k or an IRA. And then you could have some income coming in from your life insurance policy. And the money that you get from the life insurance policy because of the way the money is, is loaned out from the policy is tax free, which is a great way to control taxation in retirement, we talked about how taxes will erode your wealth greatly over over your retirement. So so there could be some advantages. Again, if it’s structured correctly, and to Neil’s point, if you do have a loss of a spouse, that death benefit that pays tax free to your spouse could be used in reinvested as a way to create additional income and create another pension to replace the loss of a social security check or a pension check or anything along those lines.

Cynthia De Fazio – 15:13

Sure. Sure. That makes sense. Thank you both so much, Brian, this is a great question. How do I roll over a simple IRA to a Roth IRA?

Brian Quaranta – 15:22

Yeah, well, first, you’d have to convert it because a simple IRA is going to be under those traditional models, right? So if you got $50,000 sitting in a simple, you’re just going to, well, yeah, I guess you technically could move the whole darn thing into a Roth and just rip the band aid off. You could, you know, it’s a lot of times it’s better to do a conversion strategy, depending on how much money is in there. But there’s no, there’s no problem with doing that with a simple.

Cynthia De Fazio – 15:43

Okay. Yeah, excellent. Neil, this is a great question as well. What does period certain mean on an annuity contract? The complex language of the contract is tough for me to understand. A look at payout options look like there is a cutoff age? I don’t have a current advisor with the annuity company.

Neil Mager – 16:01

Yeah, I would, I would recommend calling the company to make sure that you’re very, very clear on how that annuity works. Now period certain is, how long are they going to pay you for? So, they might say you have a 10-year period certain within that annuity, where you’re going to get cash flow distributions to you, right? So, what does that mean? Well, if you die in year six, your beneficiaries would still get the money for the remaining four years, right. But keep in mind, potentially, your income ends after that period ends. So, you know, that’s why, with the annuities, there’s so many different things going on within them, you want to be very, very careful. And you make sure that you either find a local advisor or contact the company directly.

Brian Quaranta – 16:47

Yeah, and I just want to clarify something on that period, certain, okay. And just like Neil said, I mean, you know, if you have a 10 year period, certain, and you die in your six, it’s going to continue to pay your beneficiary up until you’re 10. And then it’s going to stop, however, though, is long as you’re alive, it will continue to pay you. So if you live 20 years, 30 years, it will continue to pay you the period certain has to do with your death, and how long it will pay to beneficiaries. So let’s just say you, you start collecting that income, and you’re in year 11, and you die, it stops right there, because we’re past the 10 year period. Okay, that’s where the period certaines can be a little bit challenging and tricky when it comes to retirement planning. And to Neil’s point, you always want to make sure you call the companies to get clarification on how those periods certains are designed.

Cynthia De Fazio – 17:31

Brian, thank you so much. We’re going to open up the phone lines in just a moment. I think we have time for one more question, Brian. I’m five years away from retirement, I do not currently have a plan in place. Is it too late for me to start?

Brian Quaranta – 17:42

How old is he?

Cynthia De Fazio – 17:44

Five years away from retirement.

Neil Mager – 17:48

It’s never too late.

Brian Quaranta – 17:49

It’s never too late. I mean, but the reason why it’s important to know how old he is, is because hey, you know, if he’s five years from retirement, he’s 65. We might use a social security strategy where we turn social security on, we save all the social security money and really ramp up his retirement savings. If he’s 55. He’s not gonna be able to do that. But the you know, so depending on where you are five years out, kind of is gonna filter out what strategies you can and cannot do so but to Neil’s point, it’s never too late.

Neil Mager – 18:19

It’s always very interesting. You know, people spend weeks planning their summer vacation. And they come into the office on November 1. And they tell us they’re retiring November 15. Right? And they said, Well, what have you done up until now to plan out your retirement? They said nothing. That’s why we’re here. Yeah. So you know, which is fine, which is fine.

Brian Quaranta – 18:42

If you’re one of those people, that’s completely fine. We understand. You know, and we deal with a lot of people that do deal with that. So don’t feel like you can’t come in and be honest with us.

Neil Mager – 18:52

So I think my The reason I’m saying that is it’s never too late, five years. You know, sometimes people are planners, and they plan out way earlier than that some people plan out, you know, a week ahead of time.

Cynthia De Fazio – 19:05

All right, excellent. Brian, I know that you and Neil have a special offer you’re going to be giving to the viewers at home today. Let’s talk a little bit about that. And then reopen the phone lines. Yeah,

Brian Quaranta – 19:13

the number one question we get all the time is, are we on the right track, a lot of people will come in and say, Look, I don’t know when to start collecting my Social Security. I’m going to need to take withdrawals from my retirement accounts. I’m not sure how to do that. I’m at a point in my life, where if I take another big market loss, I don’t have time to recover. And our right track retirement system will help you solve a lot of those concerns that you have. So if you call 1 888 382 1298, though, excuse me, 1-888-382-1298. We’re going to give you a complimentary portfolio analysis. We’re going to go over five key areas with you. We’re going to talk about income, investments, taxes, health care and legacy planning, but you’ve got to do your part. Reach out to us schedule that time now. 1-888-382-1298

Cynthia De Fazio – 20:01

Brian, thank you so much, Neil, thank you so much to the viewers at home, the phone lines are once again now open that number to call is 888-382-1298. We have to take a very short commercial break, but don’t go anywhere. We have time for a few more viewer questions, so please stay tuned.

Commercial Break – 20:18

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Cynthia De Fazio – 21:43

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 Mager Senior Investment Advisor. Gentlemen, a lovely show we’re having today. The viewer questions are amazing. So I’d love to keep going if that. Okay, let’s do it. All right. So Neil, this is a great question. Is it possible for viewers to reduce their taxable income by contributing money to a 401k or similar retirement plan at work? I would love to hear your advice.

Neil Mager – 22:14

Yeah, I mean, typically, that’s why people do make contributions to retirement accounts, right? They want to reduce their ordinary income in that particular year. So let’s say you’re making $100,000, and you make a $10,000 401k contribution. Well, now that year, you’re only paying tax on $90,000. So that’s exactly the reason why people do those types of things. Now, you can make contributions to your 401k. Potentially based on your income, you can make contributions outside of the 401k to traditional IRAs or Roth IRAs. To really turbocharge the savings. But those are going to be ways that you’re going to be able to reduce your, your ordinary income for sure.

Cynthia De Fazio – 22:54

Okay. All right. Thank you, Neil, this is a great question as well, Brian, how do you guard against huge losses like 2008. And when recessions hit, I’m a little concerned about the stock market doing so well, and then declining?

Brian Quaranta – 23:09

Yeah, well, that’s a big fear of most people, especially as they get closer to retirement because they just don’t have the time to recover if they do take a big loss. And this is where things like the rule of 100 come into play. So, this is where we take 100 minus your age. So, if you’re 60 years old, we take 100 minus 60, which equals 40, 60% of your money should be protected, right, we don’t want a lot of risk with that money and 40% of your money can be in a high risk, growth-oriented investment. There’s also strategies that you can utilize within your investment portfolio. Some people put stop losses in where they limit the loss by putting a stop loss in so it automatically sells, you can use drawdown strategies, drawdown strategies are used a lot by portfolio managers that are executing their plans through algorithms, that’s something we like where we can have a pre determined drawdown number that we don’t want to go beyond. So you know, if we want to make sure that our portfolio doesn’t lose beyond 10%, we can set those parameters to make sure that we don’t go too far outside those numbers. So there’s lots of different ways to do it. The problem is, is that if you look at our industry, a lot of the planning being done out there, is still being done the old way. And they’re not utilizing the technology that’s giving people the peace of mind that they truly need, meaning they’re still using traditional mutual funds, stocks and things along those lines. And in fact, you can get much more sophisticated today, like utilizing algorithms where you can potentially, you know, maximize your returns and potentially reduce your risk a little bit more by having some pre determined drawdown numbers. Yeah, remember, it’s like you know, back in the day, it’s like the old cell phone, you know, people are still trying to get, you know, signal with the old cell phone when we got these these cell phones today that are a computer in our pocket. And that’s kind of how advanced investing has gotten and the product designs that are out there, but a lot of firms tend to still offer that old self versus the smartphone today.

Cynthia De Fazio – 25:01

Okay. All right, that makes just

Neil Mager – 25:03

to the caller’s point, you know, what we always say are the losses are going to hurt you much more than the gains are going to help you absolutely right. So as you get closer and closer to retirement, you’re running short on time for when you’ll need your money. And so those losses can be really, really, you know, impactful and maybe having to extend your work career, right, which most people don’t want to do. Okay, so it’s, it’s a great question. And I think, you know, you really want to protect yourself and make sure that you are positioned properly. And even more so as you get closer to retirement.

Cynthia De Fazio – 25:37

Okay. All right. Thank you so much, Neil and Brian Mele? This is a great question. I think we have time just to have maybe this one. And that would be all for the week. But great question about Neil, about social security. What happens if I claim early? Do I get a redo?

Neil Mager – 25:54

redo in terms of what would be my question. So maybe a redo in terms of, if you started taking it early, then got a job and didn’t want your Social Security will, your Social Security will stop. And then once you turn it back on, you’ll actually get a tiny, incremental increase in your Social Security again, so maybe that’s what they mean by

Brian Quaranta – 26:18

I think I were, I think, you know, there’s a certain period of time, and I’m not sure exactly what the timeframe is. But once you turn it on, I still think and I’m not 100% positive, that you can, you can possibly redo it, although a lot of those things have been taken away. And the loopholes have been shut down a little bit more. It used to be that you could, you could take your social security for a few years and decide that you wanted to pay it all back, right, you could pay it all back and then just start to go into the deferral phase, again, to get a larger amount later. But now it’s like when you collect there’s I think there’s a very short time period before they would allow you to stop collecting and then go back into that deferral phase. And so I’m not 100% sure, and that’s why, you know, Social Security is a very, very complicated, you know, convoluted bunch of rules and regulations and everything. But that’s why we rely a lot on social security software. Because, you know, a lot of times we have to go to the software, we’ve got to ask the software, because there’s so many different scenarios, so I’m not 100% sure, but I think there is a little timeframe that you might be able to read actually

Neil Mager – 27:20

I’m the same with you. I’m not exactly sure.

Cynthia De Fazio – 27:23

Isn’t that amazing when you think about it, but again, the viewer questions are so incredible. Thank you both for another amazing episode this week. I really enjoy that the viewers have to, to the viewers at home. Thank you so much for spending time with us. That number to call is 888-382-1298. We know you have questions about where you are on your road for retirement. And Brian and Neil have the answers for you. They’re offering you a complimentary consultation just for calling in today. Be safe, be happy, be blessed. Thank you for spending time with us. We will see you back here one week from today. Thank you.