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Video Transcript
Rebecca Powers 00:25
Welcome to this week’s edition of On the Money with Secure Money. It is all about securing your hard-earned money. I’m Rebecca Powers. So happy to be here with Brian Quaranta, of course, the creator of secure money advisors. You have been doing this for how many years? And what is your philosophy? Yeah.
Brian Quaranta 00:42
Gosh, going on almost 25 years. My dad, my dad did tell me, he said, Brian, life will go quick. And I’m telling you, it was like watching grass grow for a while, right? And then and then all sudden shoot is the where to go.
Rebecca Powers 00:58
And your children are small, your view? Right? I got two boys that very small. So, I will tell you every day feels like a year. Yes. But then every year feels like a day and you’re driving and you’re like, oh, and I think it’s like that with so many people you’ve said it before, don’t be embarrassed about it. And that’s how my husband and I were I don’t know where my stuff is. I haven’t saved very much. I’m embarrassed. But even physicians will come to you and say, I’ve made all this money. And I was never on the right track.
Brian Quaranta 01:28
Oh, yeah. Or people spend way more than they make, and they haven’t saved a whole lot or get in debt, getting debt or if they’ve been through divorce. I mean, there’s all kinds of things that pop up. I mean, there’s multiple women that I’ve helped over the last couple of years that went through divorces later on their life and had to start all over again. Yeah, and here they are in their early 60s going, I don’t have anything saved for retirement. scary. It’s scary. But just know that there’s always a way to potentially fix the problem. And so, when you’re working with a fiduciary firm, that first and foremost focuses on real written planning strategies, you will find a difference than if you’re just going in and talking with somebody about investments, mutual funds, stocks, those are just tools to solve a bigger problem. Those things should not even be talked about, until the main issues are identified and discovered. And ultimately, we have to work from the end. Right? Too many people say, Well, I don’t have enough state, I need to start putting money away. Now that you’re thinking about the wrong way, right? What do we need the end to look like? Exactly, right? Well, I’m gonna need X amount every single year. You know, I don’t my my, you know, family longevity is really good. You know, my parents lived into their 90s, my grandparents lived in the 90s. We have to think from the end. So, what is the end need to look like? Then we can work backwards and figure out okay, how much do we need to put away? What rate of returns are we going to need, which I talked about in the book, I talked about three rates of returns that are so important for us to know. And I don’t hear a whole lot of people talking about this stuff, Rebecca, and I want to share these with you. And remember, these are picking up a pen and write these down. But the first rate of return that you’ve got to figure out for yourself is what we call the spin down interest rate. Especially if you’re getting into retirement to where you’re gonna need to start withdrawing money, you got to figure out what your spend down interest rate is. So, the spend down interest rate is very simple for our clients, what we do is we create a withdrawal worksheet, we put the amount of the retirement dollars in this withdrawal worksheet, and we start to test it by adding in different interest rates. So, for example, if somebody needed 40 or $50,000 a year in income, we would look at a withdrawal strategy of taking that money out every single year. And we would say okay, if we got a 5% rate of return, how does that impact the balance? If we got a 3% rate of return? How does that impact the balance, if we got a 1% rate of return has that impact about what you’re looking for is what is going to be the minimum rate of return that you need to spend that money down to zero by the age of 95 or 100. That just spend down rate, then we look for your preservation rate, preservation rates really simple, the $40,000 a year, what rate of return you’re gonna need, well, if you had a million dollars, you didn’t need a 4% rate of return because that generates $40,000. And essentially, you could take that 40,000 each year and never touch your principal. And the last one is what we call your legacy rate. Your legacy rate is if you want to take out $40,000 a year, but still grow your money, what rate of return you’re gonna need. Now, why is this important? Because we have to figure out what is the range of return that you need your portfolio to do? Because how are you going to be able to determine whether or not your portfolio is getting the job done or it’s not getting the job done? You know, if you only if you needed a 7% rate of return earn and the last few years, it’s only done a 2% rate of return, we know that we’re behind.
Rebecca Powers 05:03
Then it’s just guesswork.
Brian Quaranta 05:05
Then it’s just guess work.
Rebecca Powers 05:06
And that’s how most Americans feel, I believe.
Brian Quaranta 05:07
It’s guesswork, and we want to take the guesswork out of it. And we want to look at it more from a black and white mathematical perspective. Yeah,
Rebecca Powers 05:14
I love this book, too. Of course, you can get this, He will even pay for the shipping and handling. That’s how much he wants to educate and empower, like in the book read explains that you have to tell your money, what to do, don’t think of it as one lump sum, you have to give it a job. And I like your buckets, your three buckets, it simplifies how much I know everyone’s different. But how much should be in the bank a certain percentage of what you make, or what makes you feel comfortable with liquid. Let’s talk about the three buckets and kind of what percentages you feel comfortable with?
Brian Quaranta 05:46
Sure. So, the rule of thumb for money in the bank is typically anywhere from six to 12 months’ worth of expenses, okay? So, you know that whatever your expenses are times that by six are times that by 12, I lean more towards 12. If you can share solely for the fact that the pandemic has changed things, well you know, going through that, you know, this, it’s a good idea to maybe prepare for even a worst case scenario. So, if you have 12 months of expenses set aside, that’s a good thing. Don’t ever let anybody make you feel bad about having a lot of money in the bank. Everyone’s different. Yeah, you know, the thing that drives me crazy more than anything, is when somebody would come in and say, my advisor said, I have way too much cash in the bank. Well, why do you have it there? What’s the purpose of it. And when people typically explain it, as long as they’re still able to accomplish the goals they want with their retirement dollars, leave it in the bank, right? You know, people will go well, you’re not keeping pace with inflation, you’re not getting the right rate of return. We want to know something, it’s safe, it’s protected, it’s there, don’t ever let anybody make you feel guilty about having too much money in the bank, if it’s still able to solve the problems that you have in front of you. Now, if it’s causing you to not be able to get the income you need, or it’s going to cause you to potentially run out of money. That’s a different story. But if you’ve got a lot of money in the bank, and everything else is fine, then keep a lot of money in the bank, that’s completely fine.
Rebecca Powers 07:11
So, it’s safe. It’s liquid, but it’s really not going to grow.
Brian Quaranta 07:15
It’s not going to grow. I’m call it lazy money. You know, money in the bank.
Rebecca Powers 07:18
I like that, lazy money,
Brian Quaranta 07:20
It’s lazy money, it’s just kind of kickback. You got a little umbrella drink, it’s not doing a whole lot. You tell him to get up and do some work, it doesn’t want to get up.
Rebecca Powers 07:30
It’s like my 15-year-old daughter. No, I’m just kidding. Okay, second bucket, that’s the important one, to me, that’s where you know, you’re going to need where you’re gonna get your income from.
Brian Quaranta 07:41
Yeah, that’s what we call your income buckets. So, there’s a certain amount of money that we all need to set aside to generate the income we need, we talk about it on a lot of our shows when we’re talking about creating your own private pension. So today, with a stroke of a pen, you can create yourself a private pension, just like your employer used to give you. And that’s what everybody should be looking towards is giving themselves a private pension to at least take care of the basic needs in retirement, we’re all going to have basic bills that need to be paid. Sure, I mean, even if your mortgage is paid off, you still have a house payment. It’s called taxes, right? I mean, the- you know, you look at if you look at your mortgage can be paid off, but you still might owe $1,000 a month in taxes, you may owe $500 a month in tax. Absolutely. So, we’ve got to make sure that you’re gonna have a base amount of income, that’s always going to take care of the basic essentials, like, you know, paying the taxes, putting food on the table, things along those lines.
Rebecca Powers 08:31
And enjoying because you say some people save so much they don’t enjoy enough. So, we’re going to talk about happiness, too. Yes, I want you to give that phone number. And we’re also going to talk about the third bucket when we come back. We didn’t forget that onthemoneyoffer.com You can get this book for free. Really, you can get a first appointment with Brian for free, really no obligation at all. How important is that for people to feel comfortable when they come in that first time?
Brian Quaranta 08:53
Well, it’s the thing that you’re gonna like the most about coming in to secure money advisors is because we’re not there to judge anything you’ve done. My promise to you, when you come in is always that nobody on my team will ever try to sell you anything. Nobody’s going to pressure you to do anything. But what we are going to help you do is get on the right track. If you’re not on the right track. If you weren’t on the right track, when would you want to know? So, I want you to find out if you’re doing the right thing is go to onthemoneyoffer.com Or call 1-888-382-1298 My team is standing by to get you scheduled for your appointment. We’ll send you out this book the very next day. So, you have it in your hands with a little packet of what to bring to the appointment. That appointment is about you. You’re there to get your questions answered. What concerns do you have that are bothering you that are keeping you up at night? Let’s solve those. And by the way, if you are on the right track if you are doing the right things, we’re going to shake your hand until you keep doing what you’re doing. You’re doing a great job. So again, onthemoneyoffer.com Or call 1-888-382-1298 or you can scan that QR code at the bottom of the screen also.
Rebecca Powers 10:00
And stay with us more right after this.
Brian Quaranta 10:03
So, everybody can tell you how to invest your money. There’s not a lot of people out there and a lot of firms that can teach you how to use your money. Most people also tell you that they’re scared. And the reason they’re scared is because they’re afraid of running out of money.
Neil Major 10:17
The last thing you want to do is have a really good job and you’re in your 60s retire and be looking for work again, in your late 70s.
Brian Quaranta 10:25
The average person might say, well, a good portfolio would be a good mix of stocks, bonds, and mutual funds. A good portfolio is all designed around the five key areas, income, taxes, investments, healthcare and legacy planning.
Neil Major 10:39
Because we’re not just product pickers here, what we do best here as we build retirement plans.
Brian Quaranta 10:45
9 out of 10 people, when they walk through the door, would ask us, we just want to know if we’re on the right track. And I always say, if you’re not on the right track, when would be a good time to know it. Probably now.
Neil Major 10:55
People, you know, can actually see a vision once we start to really build out their plan.
Brian Quaranta 11:01
This is about you, if you’re not getting what you need. And you feel that when you walk out of the advisor’s office, it’s time to get a second opinion. And you can’t get a second opinion from the person that gave you the first the difference at secure money advisors, as a fiduciary firm, we help you manage the risk, build the income, and give you the retirement withdrawal.
Rebecca Powers 11:31
Welcome back to On the money with secure money with Brian Quaranta we’re talking about giving your money, an actual assignment, a task? Do you know what your money is doing the three-bucket approach you can learn in this easy-to-read book from Brian that he will send you an absolutely no charge. We talked about the money in the bank. That’s one bucket. We talked about that income. That’s your second important bucket. Let’s talk about that third bucket, that’s where you could have potential for growth. Right. But it’s risky.
Brian Quaranta 11:57
Yeah, it’s risky. But if we’re setting enough money aside in the bank bucket, and then the income bucket, that money that is going into that growth bucket, or what we would call the risk bucket, that money now has time to do its job. And the only way you’re going to win in the market is to give the money that you’ve put in that market time to grow. See, the biggest mistake that people make is that they typically will keep all of their retirement savings in the market. Yeah. And so, when they get close to retirement or they’re in retirement, and the market starts to go down, they typically will do the wrong thing and that sell. But I can understand why because if you didn’t protect enough money to provide yourself with the guarantee of income that you need, then you’re literally watching your potential future disappear as the market goes down. Yeah. And so, people have no choice that tries to sell it. And so now they’re selling low.
Rebecca Powers 13:01
When they bought high, right? And other people are buying up what you just gave it to them on sale, yes, and so
Brian Quaranta 13:08
Yes, and so essentially, what’s going to happen is they’re going to sell when the markets down. And then when this market starts to get better, they’ll buy back and when it’s high. And this is why Vanguard did a recent study. And they looked at the difference of a of an individual using a financial advisor versus not using a financial advisor. And what they determine is that somebody using a financial advisor potentially gets a better rate of return, because the financial advisor acts as a coach and allows them to have some common sense through tough times. But our bucking approach allows you to eliminate or mitigate the anxiety that you would have when the markets volatile, because you know, any way you’re taking risk with is first off money, you can afford to take risk. Exactly. But secondly, you know, you have time for it to go up and down and eventually do what it needs to do over a 10, 15, 20-year period.
Rebecca Powers 14:03
And then maybe at a certain age, you say you know what, I don’t want to risk anything, I want to move it all into my income bucket. And that’s what – one phone call.
Brian Quaranta 14:09
I’m so glad that you mentioned that that’s exactly right. Because as that bucket grows, we don’t let it just keep getting bigger and bigger and bigger and bigger to where we could lose it all again, right? As it grows, we take a little bit from here and we bring it over to this bucket. And as it grows more we take a little bit from here and we bring it over to this.
Rebecca Powers 14:25
And you’re always thinking about the tax advantages too. We’re gonna wiggle here, we’re here we’re gonna do. Okay, so I want to mention an F word. All right. I’m gonna say it on television. It’s called fees. Yes. That was for my husband and me one of those moments where we were kind of angry like, we thought we were with a real planner, but it was the guy that worked for a small insurance company was selling us his products. And when we got that third part, Morningstar report or whatever during the first appointment, it showed the real risk we were in. Which was okay, we were still young at the time; but fees. Yeah, yeah. I paid like $17,000, whatever it was at that time for those certain amount of years, and I barely spoke to the guy. Right. Right. That is to me, do you feel that people don’t know the fees that it eats up what they’ve got? Let’s talk about that.
Brian Quaranta 15:15
Well, yes. You know, first of all, I have no problem with a financial advisor, making money, of course, okay. A lot of financial advisors are very hard working, and they have to be paid. The question is, how much are you paying in fees? And what are you getting in return for those fees?
Rebecca Powers 15:33
And is it a commission or like, you pay X amount when you go to the doctor?
Brian Quaranta 15:38
Correct, yes, and you gotta be careful with fees because fees will reduce your gains and compound your losses. Right, right. So, the reduce your gains and compound your losses, certain types of annuities out there can be very high in fees like the variable annuity. So, we created something at an office called the variable annuity escape, where we have about 15 different questions that we asked the insurance company now. Now, you’ve heard me talk very openly about annuities on the show. And I do believe in annuities, I personally audit myself there. But there are different kinds. Matter of fact, there’s three different kinds. I write about them in the book. Yeah. But the variable annuity is a very expensive annuity to own. I mean, it varies. The balance varies. But when you call the insurance companies, you actually get a listing of these fees. First off, they’re hidden, they are not listed on the statement, you’ve got to call the insurance company. And you have to say, What’s the charge for the death benefit? What’s the charge for the income rider? What’s the charge for the amount mortality expense charge, the administrative fees, the sub account fees that can go on and on and on and on. And usually, when we get to the end, the fees are about three to 4%. So, we had somebody come in the other day, over a million dollars in a variable annuity, almost 4% in fees, paying over $40,000 a year in fees. And my question to them was this Holy smokes? Had you known that you were going to be paying this much money every single year going into this account? Yeah. Would you have signed the paperwork? They said Absolutely not. They said Absolutely not. Now, again, I have no problem with fees. But the question is, what do you get in return for the fee? Are you getting planning? Are you getting meetings? Are you getting some type of? Yes, are you getting something so it is important, and you mentioned the Morningstar report. This is what we use at secure money advisors, we use a Morningstar report, we use a Riskalyze report, we use a quantity report. And what this does is it allows us to take an individual’s investments, and enter that into this software, third party software, any financial planning firm combined, it’s not proprietary, right? Usually a lot of them don’t because it is expensive to purchase. But it gives you a report that says here’s the risk you’re taking, here’s the fees that you’re taking, here’s the overlap that you have meaning some people have maybe five, six different mutual funds. But a lot of those mutual funds are investing in the same companies catch, it might say mutual fund a and mutual fund B. But essentially, they’re the same mutual fund. And this is what we call overlap. So now they’ve got concentration risk, which means we own a lot of something. And they think they’re diversified. And these are the things that we do for people to help them determine whether or not they’re on the right track. And these are the little things that will make a big difference. Because remember, little mistakes become big headaches, little mistakes become big headaches, and I don’t want you making little mistakes. That’s why I want you going to onthemoneyoffer.com To get a copy of my book. So, you can read about how to approach retirement planning. I talked about the five most important key areas of retirement planning. In my book, I also talked about three very important interest rates that you need to know about. So again, onthemoneyoffer.com You can go there, get a copy of my book, when you’re there, you can schedule your appointment also, or my team is standing by you can dial 1-888-382-1298 Again that what’s 1-888-382-1298 Go there right now, get a copy of the book, my promise to you always is this. If you come to our office, nobody’s ever going to try to sell you anything. Nobody’s going to pressure you to do anything. Take advantage of it. Folks don’t procrastinate on this. We’ll see you at the office.
Rebecca Powers 19:23
And stay with us, more with Brian Quaranta, some great ideas and wonderful tips and education, and how you can be on the right track for your retirement we’ll be right back.
Announcer 19:38
The work never seems to end until the day it finally does. After nearly a lifetime on the job. You should be rewarded for all the time you spent working. Whether that’s crossing off items on your bucket list, learning a new passion or rekindling the love of an old one. After all, life isn’t over when you stop working. It’s the start of an all-new chapter, the one where you’re the writer and you get to Choose how your story will go. A way to achieve that is by having a clear financial plan to sustain your golden years, the biggest fear most retirees have is if they’ll have enough money to maintain the lifestyle they always enjoy. Having a plan to help protect you against the curveballs life often throws will help to maintain your lifestyle. Call today to get your free written financial plan, see me live every day to the fullest and enjoy the retirement of your dreams.
Rebecca Powers 20:29
Welcome back to On the Money with Secure Money, I want you to go to onthemoneyoffer.com We save a certain amount of appointments scheduled each week for each broadcast, or you can call that number 888-382-1298. You know, Ben Franklin, who was one of my all-time favorites, he said the only two things that are certain in life are death and taxes. So, there’s a wonderful combination of both. Let’s talk about that.
Brian Quaranta 20:51
Yeah, well, taxes are a big deal in retirement, because taxes will reduce your purchasing power, right?. So, you know, let’s say you need $1,000 A month out of your retirement accounts. And that’s coming from an account that you got to pay taxes on like a traditional IRA or 401 K, well, if I take $1,000 out to live off of, and I’m in a 20% tax bracket, I’m only going to net $800. Right now, that’s going to reduce my purchasing power. But now add inflation into that 3%, inflation, 5%, inflation, whatever it might be. So, taxes, and inflation, will reduce your purchasing power and erode your wealth faster than anything. And this is why we really have to look at tax planning strategies going into retirement. Now notice I said tax planning, right? Because tax planning is something that takes place right now, for the future. Take myself for example. I’m tax planning right now by converting IRAs 401 K’s to Roth IRAs, and Roth 401. Ks. Why? Because the sooner I can get rid of my business partner, which is the IRS, because all of us all of you that own retirement accounts, your largest partner, in that account, is the IRS. And the sooner you can get them out of the picture, the better off things are going to be. You know, there was a saying that went, would you rather pay taxes on the seed? Or the harvest? Absolutely. Right. Yeah, so you know, if I pay taxes on $10,000, today, and it grows to $100,000, tomorrow, and I take that $100,000 out, and that’s in a Roth IRA, I could take all $100,000 out tax free. But if I don’t pay the taxes on that $10,000, and it grows to $100,000, and I want to take that $100,000 out, I’m going to owe taxes on every dollar that comes out. Now, if that’s a large balance, that can get pretty ugly. There was a story recently in Money Magazine, about a son that inherited his father’s half a million-dollar retirement account. So, the son finds out he’s the primary beneficiary of his dad’s account. He doesn’t know what to do. So, he calls the company, the company says, Send us these documents, please send us a copy of the death certificate. He sends everything in. And a couple of weeks later, he gets a check for $500,000. So, he puts it in the bank a couple of weeks after that, he gets a 1099. Well, that 1099 meant that that $500,000 was counted as income for him. So not only did he have $500,000 of income from his dad’s IRA or a 401 K account, but him and his wife were making a joint income of $100,000 a year. Now they pay taxes on $600,000. The article went on to say that the Son owed over $270,000, in taxes, you’re talking about half of that IRA wiped out the taxation. This is why tax planning is so important, not only to make sure you got tax efficient income, but what happens when the good Lord decides to take you home, which he’s going to at some point, right, as you mentioned, death and taxes, death and taxes. So, the question is, who’s going to be the primary beneficiary of your money? Is it going to be your family, your charities, your kids, your grandkids? Or is it going to be the IRS? And there’s things that we can do right now? Not with everybody. But with some people, you may want to consider some of these tax planning strategies, because they can be really good in helping you build a much more tax efficient retirement.
Rebecca Powers 24:29
And we’ve talked about it before, we have no idea when the tax current tax laws sunset in the end of 2025. First of all, we have no idea how high they’re gonna go. We all agree they’re not going lower. But you don’t know what else they’re going to do. Could they get rid of the Roth IRA conversion, which is so great, could they change that 59 1/2, you can move money tax free? We don’t know.
Brian Quaranta 24:50
That’s right. That’s right. There’s all kinds of little tax strategies right now. You know, you’ve got the 55 rule that allows you to take money out of your 401 K if you retire hire at the age of 55. If you rolled that money to an IRA, you lose that 55 rule. So, you can take money out without incurring the 10% penalty, you get the 59 1/2 rule, which allows you if you’re still working, if you’re still working, listen to this, folks. If you’re still working, and you’re 59 1/2 or older, you can do something called an in-service withdrawal. What that in service withdrawal allows you to do is actually take the money from your employer 401k plan, roll it over to a qualified retirement plan without paying any taxes and get your retirement properly structured, in maybe an income strategy, like we talked about here on the show, it doesn’t close your 401k, you still get the contributions from your employer, you still get to make contributions. There are many strategies out there like that we’ve got, you know, qualified charitable distributions, we’ve got different ways to handle RMDs all kinds of different things.
Rebecca Powers 25:57
Is it true that you can give your child X amount 12,500 a year, for instance, and let’s talk about growing their wealth and getting kind of a break when they go to college and make student loans like there’s so many smart things that we can be educated about? Because of you?
Brian Quaranta 26:15
Yeah, well, you know, if you own a business, we can actually put your kids on payroll, okay, pay him a salary. And you know, have him participate in company plans, get a deduction for putting in, you can gift out, don’t quote me on the Gift Amount, I think it changes a little profit chain 16,000 A year right now something like that, that you can give to, to a child.
Rebecca Powers 26:34
Instead of going to the federal government. Yeah, give it to your child who would not do that? Exactly.
Brian Quaranta 26:38
So gifting strategies are very important. And so, taxes become part of the overall plan. This is why it’s secure money advisors, we focus on the five key areas, your income, your taxes, your investment strategy, your healthcare strategy, where we’re talking about Medicare and how to properly get the right plan. And if you’re retiring before the age of 65, how are you going to bridge that gap until you reach the Medicare age, we have people at our office that do that, and of course, your estate planning strategy. So, I want you to onthemoneyoffer.com, go there, schedule your appointment, you’re also going to get a copy of my book, which we’re going to send to you absolutely free, there’s no cost, I pay for the shipping and handling onthemoneyoffer.com You can do it all right there or scan the QR code at the bottom of the screen. Or better yet, my team is standing by right now you can call 1-888-382-1298 and schedule with us. And as always, if you come to the office, nobody from my team is ever going to pressure you to do anything. Nobody’s going to try to sell you anything. We’re there to help. Take advantage of it folks. Don’t kick the can down the road. It’s not time to procrastinate on this one.
Rebecca Powers 27:43
Absolutely. Give us a call and go online onthemoneyoffer.com really no risk, really no charge and no obligation. Thanks so much for joining us. We’ll see you next time.