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Video Transcript
Rebecca Powers 00:23
Welcome to this week’s edition of On The Money with Secure Money with Brian Quaranta, he’s the creator of Secure Money Advisors, and I’m Rebecca Powers, so happy to be with you.
Brian Quaranta 00:35
Great to see you as always.
Rebecca Powers 00:38
We have a lot of questions and a lot of comments, and a lot of people are asking about health care, and we always talk about planning, planning, planning in writing for your retirement. Why is health care one of those columns of the things you help people with?
Brian Quaranta 00:54
Yeah, well, first off, I mean, you know, it’s one area that’s majorly overlooked by most retirees. Yeah, they don’t realize that a health event can be very, very expensive. So, you’ve got a plan for these events. I always say, let’s make the bad things happen on paper. I love that, right? So that when they do happen, we actually have a plan. And this is why, when you come in to secure money advisors, our goal is to actually show you what would happen if one of you were to have a health event, and there would be a large sum of money that would need to be withdrawn from your retirement savings. What impact would that have? Would you be able to self-insure? Meaning, have you saved enough money that you don’t have to worry about getting any other type of insurance to make sure that that health care event is paid for? But what if you don’t have enough if you had a health care event and you needed to protect your portfolio a little bit more. There’s different approaches that you can take with different products to make sure that you have some protection on the health care side.
Rebecca Powers 01:50
Let’s talk about withdrawal strategies. Why is that so important?
Brian Quaranta 01:54
Well, it’s important because when you hear the term withdrawal strategies, what I automatically think about is withdrawal strategies from risk investments. And typically, when I hear withdrawal strategy, what I’m thinking of is what I was taught almost 25 years ago, and that was the 4% rule. So basically, a 4% rule said that if you had a million dollars in the first year, you could take out $40,000 and then every year after that, you could increase your withdrawal by the pace of inflation, which was 3% so the next year’s withdrawal would go to maybe 42,000 and then the next year’s withdrawal would go up from there, right, right. So, but when I think of withdrawal strategy, what I think about is more of a diversified portfolio that’s built around a stream of income, first, an insured stream of income, right? And if people don’t understand how much I believe in annuities, you know, after how many shows that we do, I don’t know how to help you, right? Because understanding how the annuity leverages your money compared to anything else. I mean, think about this. Let’s suppose that. And this is a real scenario, okay, okay, you know. So let’s say I have somebody that needs $40,000 a year in income, all right. Well, if I wanted to get them $40,000 a year in income using a withdrawal strategy, okay? And they had a million dollars, I would need to use 100% of that million dollars to make that $40,000 withdrawal strategy work, okay? And again, I don’t even know if it would work, because in my book, right track your retirement, I write about something that shows up when you start to take withdrawals, which is called sequencing risk. Okay? This is when you’re taking money out, and we don’t know what rate of return you’re going to get on an annual basis. Maybe the markets cooperating, maybe it’s not. But what rate of return is your portfolio getting when you’re withdrawing the money that’s going to determine how long your money lasts. People don’t realize that, right? Because when you pull money out of a stock account, you’re compounding the losses. If it’s down, and you’re locking into those losses. So, I would prefer to think about a withdrawal strategy built around a guaranteed stream of income first, where I can get a lot of leverage on my money. So, for example, again, if I need $40,000 a year using the 4% rule, I need 100% of the million dollars to do that. Whereas, if I use an annuity strategy, an income strategy, I could use $400,000 okay, and then I can have the rest of the $600,000 invested in the market long term to keep pace with inflation, but I’m also doing something very, very important. We are actually making sure that we’re benefiting from the power of compounding. Because Rebecca, if you start pulling money out of a stock account, even when the stock market is going up, you’re. Investing with the be the ability for that account to compound at a faster rate of return. So, if I can take $400,000 and get you over $40,000 a year of income, I’m using 40% of your money to generate 100% of your income. Would you rather use 100% of your money to generate 100% of your income, or would you rather use 40% of your money to generate 100% of your income? If you’re a math teacher out there, I hope you get this math problem.
Rebecca Powers 05:38
All right, and the whole point of saving and having your income is peace of mind. Of course, estate planning, so many of us as parents want to leave something to our children.
Brian Quaranta 05:48
Yeah, and there’s so many great ways to do this. By the way, one of the most overlooked and under utilized strategy for leaving money to the children is life insurance. Now here’s the thing, with life insurance, most people out there think that life insurance is something that you buy when you’re young, and maybe you’re getting started with a family. You don’t have a whole lot of money saved yet, and you buy life insurance to protect the family if you were to die, which is a great thing to do, but life insurance actually becomes an incredible tool for passing money to your beneficiaries through your estate planning. Let me explain why. Okay, let’s suppose that you had a million dollars sitting in your IRA account, okay, and maybe you didn’t even need that money, all right, and maybe you were just going to leave it to the children. Well, what’s that going to grow to the time that the children inherit that money? Let’s just say maybe it grows to $4 million okay, you leave the IRAs to them of $4 million well, if they want to take all of that money out at once. They’re talking about getting into the highest tax bracket there is between the income tax on that $4 million because, again, with a withdraw it, all of it counts as income. Most beneficiaries that inherit money typically are in their highest earning years. So now that income gets added to their work income, and now you’re seeing 4 million turns into maybe 2 million, or, you know, 2.2 million, whatever the bracket would whatever the bracket would be at that point in time. And if you’re in a state like Pennsylvania, where we still have that inheritance tax, now you’re talking about even more taxes being paid. Well, if you wanted to do it in a more tax efficient way, Rebecca, you could actually say, you know what, I’m not going to leave this money to my children in the form of an IRA, okay? I’m going to transfer money every single year to a life insurance policy. Okay? And the way you’re going to do that is through a cash value life insurance policy to where you’re going to maintain, very important here, folks, you’re going to maintain the liquidity, use and control of your money as you transfer it into that insurance policy. But here’s going to be the big difference. When you die, maybe the insurance policy you bought is worth five or 6 million and now when you die, the kids inherit that 100% tax free. And these are strategies that people are not being told about. I know it’s mind blowing. It’s mind blowing, and these are the things that we are doing for families every single day to change generations. And look, even if you don’t want to leave it to the kids and you just want to leave it to other people, you still get those tax-free benefits, folks. This is why I want you to go to on the money offer.com and get a copy of my book, because in my book, I write about a lot of things that are going to give you peace of mind and security in retirement. You deserve that peace of mind. You deserve knowing the right thing to do. I know there’s a lot of noise in the marketplace. You know, every week you could probably go out to dinner on a financial advisor and learn about, you know, some new strategy. And you might be one of those people that do that. But I can promise you, as you start to go to more and more of these events, you become more and more confused. You read more and more articles online, you become more and more confused of what to do at secure money advisors, our job is to keep it simple. Our job is to tell you the truth, even if it’s the hard truth, but we do it in a kind way, so that you understand the impact of what’s happening with your plan. I want you to go right now. Get up off the couch, pick up your phone, go to on the money offer.com. Can’t scan the Q. Our code, or just pick up your cell phone. It’s probably in your pocket or sitting next to your cup of coffee right now, just pick it up and call 1-888-382-1298, schedule with us right now. Get a copy of the book, and we’ll see at the office.
Rebecca Powers 10:13
Absolutely and here it is. It really is like a short and easy to read. It’s like a plane ride. Digest very easily. All right, stay with us. I’m Rebecca powers here with Brian Corona each week. We talk about how you can secure your hard earned money, and we’ll be right back.
Commercial Break 10:28
We know the market is going to get worse from here. This is the biggest monthly decline in 10 years. People’s 401k’s took a major hit. My investments are tanking. My retirement isn’t going as planned. I can’t believe I let my kid talk me into buying crypto. I mean, what is that anyway? This was the fourth worst contraction in history. So how are you two doing? Your financial future doesn’t have to be uncertain. I’m Brian Quaranta with Secure Money Advisors. If you have amassed a nest egg, it’s time for a financial advisor to help you reach your retirement goals. This is one of the greatest tax windows in history. Now is the time to take advantage of this tax discount while you can we specialize in retirement planning, tax mitigation, estate planning and more. Plan your retirement right. Call now for your complimentary portfolio review and tax analysis.
Rebecca Powers 11:24
Welcome back to On the Money with Secure Money. And of course, Brian Quaranta is the CEO and founder of Secure Money Advisors. And I always point out, you feel so passionately about securing people’s money that you named your business that, and you named our show that. And of course, right track your retirement, because most people came into your office asked, am I on the right track? So we just break it down. To keep it very simple for you, we’re going to talk now about retirees managing inflation risk. We hear about inflation, but we don’t consider it a risk. It’s one of the biggest.
Brian Quaranta 11:56
Right, it is a big risk. So how do we manage risk. We manage it through a non-correlated asset allocation strategy. And it’s really, really simple, right? We’re talking we talk about compounding interest, right? Albert Einstein, Einstein called it the eighth wonder of the world. And there’s a lot of folks out there that still don’t understand the power of compounding. And as a matter of fact, a lot of folks out there actually ruin the future compounding of their accounts, because they when they retire, they typically will start to take money out of their accounts, whether the accounts are up or down, and they’re ruining the compounding. You ruin the compounding on the way up, if you’re taking money out, and you ruin the compounding on the way, if there be, if the accounts going down, matter of fact, you’re compounding the compounding on the Lost side. So, the way that we approach it, and I write about it in the book, is we have two non-correlated assets. Non correlated assets, folks, is just a fancy jargon word that means that these two accounts do not move in the same direction. If the market were to go down, nothing is going to happen to this account right here. Okay, it’s designed to do one thing and one thing only and provide you with the cash flow that you need. So how do we keep pace with inflation? Well, with allows by putting a little bit of money into an account that guarantees your cash flow. It allows the remainder of your money to go into a stock account, low cost, low fee, ETFs that are going to lower your fees probably more than what you’re paying right now, because when you look at our total fee that we charge, were a lot lower when you look at it on an aggregated basis. So low-cost ETFs that allow us to invest the money a little bit more aggressively than if you would have had 100% of your money in the market. And this account over here in the market is going to go up. It’s going to go up. And there’s going to be some years that if we’re finding that you’re going to need more income now or later in life, we can peel off some of those gains and we can bring it over and create more income. But that’s the only time we would ever want to peel off money from over here and bring it over to an account that generated more income. Is if you were going to need that. Other than that, we’re going to leave this alone, because we don’t want to mess with the compounding on the way up.
Rebecca Powers 14:27
My next question was going to be about the common mistakes you see that people make, but I think you kind of answered it. That’s one of the biggies, is taking out, jumping in, thinking you can see the future when nobody can. What are some other mistakes people make besides jumping in and out of the market.
Brian Quaranta 14:42
Well, I like to, I tell my advisors all the time that we’re more behavioral financial counselors than anything else, because people are their worst enemies. And people will say that they’re okay with risk until risk happens, when risk happens. And they don’t have a plan, that’s when people get very nervous. There was a study done, and I might be misquoting this study, but it was done by dal bar, and dal bar had looked at the average return of the average mutual fund out there, and the average return of the average mutual fund was 10% then what they did was they looked at the average return of the average investor and it was 3% Well, that’s a big difference. That’s a 7% difference. So why such a big difference? Well, if the average mutual fund did 10 and the average investor did three, where’s the variable that’s causing the average investor to do three? And it’s because the average investor because they usually keep 100% of their money in the market. When the markets start to get volatile, they get nervous. And when they get nervous, what do they typically do? Jump out. They jump out. And then when the market starts to go back up, they jump in, jump back in. So they’re jumping out at the wrong time and jumping back in at the wrong time, and they’re missing out on those gains. And this is why, folks, it is so important that you do the right thing at the right time, because if you do the right thing at the wrong time, it’s just the wrong thing to do.
Rebecca Powers 16:18
So, can we get a bumper circle?
Brian Quaranta 16:22
So again, folks, you know, I really want to make sure that this book gets into your hands. I spent a long time writing it, and I spent a long time shortening each chapter so that it got you the information very, very quickly. I didn’t want to have to have you spend a month reading a book about money, I wanted you to have the facts very quickly. Now I will say this, not every one of you watching this show is a good candidate for what we do at secure money advisors, and that’s okay, but at secure money advisors, what we’re looking to do is help the people that know that they have a problem, and that know and connect with the fact that they do not want to risk 100% of their money anymore. After 35, 40 years worth of work, you’ve realized that, look, I don’t have time to recover if I lose all of this money. So, I better do something that if this market goes down and it doesn’t cooperate, that if it goes down, I’m going to still be okay. That’s what I write about in this book. That’s why I want to get this into your hand again. It’s a simple planning guide that’s going to give you peace of mind and security. It’s going to teach you how to build the income, how to protect the money. And all you’ve got to do is go to on the money offer.com and you can get the book right there. And by the way, when you’re there, you can schedule your complimentary appointment. You can scan the QR code on the screen. That’ll bring you to the same landing page where you can also get the book and schedule the appointment. Or for those of you that have your cell phone sitting next to you right now, just pick it up and call 1-888-382-1298, what do you have to lose? It’s a free book. I sent it to you. I’m probably spending 10, $11 to get this book to you. Take advantage of it. That’s how passionate I am about getting it in your hands. And if you’re like most people that read this book, when they come in, they said, Brian, my eyes were open to things that I never even knew. I wish I would have met you guys 10 years ago. So again, call the number 1-888-382-1298, get the book schedule the appointment we’ll see at the office.
Rebecca Powers 18:36
And we’ll see you back here in just one minute.
Commercial Break 18:42
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’ve always enjoyed. Having a plan to help protect you against the curve balls life often throws will help to maintain your lifestyle. Call today to get your free written financial plan so you may live every day to the fullest and enjoy the retirement of your dreams.
Rebecca Powers 19:36
All right, so we always talk about you cannot time the market. No one has a crystal ball. From the biggest investors in the world to us, no one has a crystal ball. So you don’t know what’s going to happen in the market. That’s why you have to plan. And in Brian’s book, he just spells it out there five essential areas of your retirement. And we did have a prop, but I don’t hear it. I. Me,
Brian Quaranta 20:00
I want to talk about this crystal ball thing for a minute. Is very, very important to me, because I do think these big box firms feel that they have a crystal ball well, they make us think that. Well, they make us think that. But here’s what’s very interesting, because you’ll hear this language used quite a bit. People will say, or financial advisors will say when they’re meeting with people, look, we’re going to invest your money, but we don’t have a crystal ball. We don’t know what the stock market is going to do. Okay, okay, that’s fine. But when you start losing money, what do they say?
Rebecca Powers 20:35
Oh, how could we know?
Brian Quaranta 20:36
Don’t worry about it. Hang in there. You’re in it for the long haul, it will come back. So, all of a sudden they start to have a crystal ball of what to do.
Rebecca Powers 20:47
That’s a good point.
Brian Quaranta 20:48
It’s a very good point because it’s the truth. They tell us all the time that we don’t know what’s going to happen. They don’t have a crystal ball. But when the money goes down right and they don’t have answers, they just let you know everything is going to be okay and everything is going to come back. Going to come back. And you know what? Rebecca, I’m okay with that advice. If they’re telling that to a 25 year old, a 35 year old, maybe even a 40 or 45 year old, depending on how much runway they have left before they retire. But what bothers me is this, or telling my mom and dad that your mom and dad that because they don’t have the time to recover. They need their money right now. And when I share that with people, they’ll say to me, you know what, Brian, you’re right. You’re right. I do need to protect my money, and I don’t know why I continue to listen to people that tell me that everything is going to be okay when they don’t know if everything is going to be okay. You know, a lot of financial advisors don’t even own some of the investments they recommend. Wow. What a good point. There’s been a study on I’m going to find that study at some point, and I’m going to reference it because that’s very interesting. Matter of fact, they did a study on even managers of mutual funds that don’t even own their own mutual funds.
Rebecca Powers 22:04
Because everything you recommend you and Kate, have it all.
Brian Quaranta 22:07
I have it all. I’ve got the life insurance, I’ve got the investments, I have the annuities, I have the crypto currency. We’ve got cash in the bank, but I don’t go heavy on those things. I have gold. Why I’m diversified? I’m diversified across different asset classes. But why the annuity at 47 years old, some people will go, you’re too young to buy an annuity. No, I’m not. Remember. I’ve talked about this before on episodes that the longer you defer your money with an insurance company, the more leverage you get on your money, which means I get to put a lot less money in defer for 15 years, and I can get just as much income as someone that might just deposit six, $700,000 and I only had to deposit $300,000 and I get the same amount of income they did, because I was willing to give The insurance company time to have my money, and that benefits them. That’s called a liquid premium yield, and that yield is what you get for being in an annuity that essentially doesn’t tie your money up. But you know, if I wanted to get all my money out, I’d have to pay penalties, but that’s the yield that I benefit from for letting them use my money. So why wouldn’t I if I’m going to need a stream of income because I don’t have a pension, it’s the smartest thing my wife and I can do, because if my investments are not going well at the time that I retire, guess what? I know with absolute certainty what my social security is going to be, I know what absolute certainty my annuity income is going to be so I can retire. When I say I want to retire when you have all of your money in the market. Very difficult, very, very difficult for you to be able to confidently say when you’re going to be able to retire. But it’s even more difficult for you to say if you’re going to be able to stay retired.
Rebecca Powers 24:06
Yeah, and that’s the scary part. So, do you think you should do these annuities on children? Can you do that?
Brian Quaranta 24:12
You probably wouldn’t want to do it that early. Okay, you probably wouldn’t want to do it that early. So, you know, probably in your 40s is when you can is when you can start to look at them. And again, I mean, the annuity market is very strong right now, so now is a good time to look at some of that stuff. Unfortunately, for a lot of young, 40 year olds, a lot of their money is tied up in their company retirement plans, and unfortunately they can’t get that money out of there, so they’re subjected to continuing to invest in that 401k, but if they did have money in, you know, outside of their corporate retirement plan, then certainly looking at a strategy like that could be beneficial for them, maybe not everybody. It certainly was for us and for many people that I. Help that are in my age group, but the majority of people that we help are, you know, 55 and older. I mean, that’s the main focus. I mean, we’re typically buying annuities for people at age 6062 64 it’s never too late. It’s never too late. But if you get a little, a few years of deferral on that money, you can definitely leverage a lot more than if you put it in and needed income in one year, it’s still very strong if you need income in one year. But there’s benefits for that longer deferral time.
Rebecca Powers 25:28
And most companies that I’ve found the minimum is not as high as you might think. You know, it’s about $20,000 right? Yeah, for most to get in. And then you can add money to it each month.
Brian Quaranta 25:38
You can some annuities you cannot Okay, so you got to be careful there, right? Some annuities might only have a window of being able to add for a year. Some might have a window of adding for three years. There’s some annuities out there that will allow you to add every single year. So you really have to know that marketplace, and we know it very well, because I’ve been focused on it for 20 years, and you know, we’ve got very powerful software where, you know, let’s say you even had a you you have a new fixed index, you have a fixed index. I could take your fixed indexed annuity right now loaded into my software system. That software will evaluate your annuity against the current annuities that are in the marketplace. And it’ll say Rebecca’s annuity is still the best, or it might say Rebecca could go from here to here and get a lot more. And so we use the power of technology to be able to do that for us. And we can determine what type of level of company we want to work with. So, I can tell the software I only want a rated companies, right, right? These are very powerful systems that we have folks to be able to guide you in the right direction. You know, we’re not just giving you our opinion. We’re looking at the marketplace and choosing the best products that are going to be best for you. And we’re not loyal to any specific company. We’re not beholden to any specific company. That’s why you have the advantage of working with an individual, independent fiduciary firm, and look whether you come to secure money advisors, go find another fiduciary firm that you know, maybe a friend is working with or you’ve heard about, and go see if they can build you a plan. Because all I want to make sure that you do is get a really good plan built. So folks, again, go to on the money offer.com. I want you to schedule an appointment right now. Take advantage of it. The appointment is complimentary. You’re nobody from my office ever going to try to sell you anything. You’re not going to pressure to do anything. We’re here to help. We are problem solvers, and we don’t want to solve those problems for you. But if you’re on the right track, we’re going to let you know that. But if you’re not, we’re going to let you know that also. And if you want to make changes, we’ll show you how to do it. Call 1-888-382-1298, and order the book and set the appointment.
Rebecca Powers 27:51
Thank you so much for being with us. We love you. We’ll see you again next time