*A Roth conversion may not be suitable for your situation. The primary goal in converting retirement assets into a Roth IRA is to reduce the future tax liability on the distributions you take in retirement, or on the distributions of your beneficiaries. The information provided is to help you determine whether or not a Roth IRA conversion may be appropriate for your particular circumstances. Please review your retirement savings, tax, and legacy planning strategies with your legal/tax advisor to be sure a Roth IRA conversion fits into your planning strategies. All rights reserved.
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Video Transcript
Rebecca Powers 00:26
Welcome and thanks so much for joining us for this week’s edition of On the Money with Secure Money with Brian Quaranta, I am Rebecca Powers, a retired news anchor and now a consumer advocate. I used to be an investigative reporter, and now I have learned more about money management than you could ever imagine just doing these shows and, of course, reading Brian’s book. Great to see you, as always.
Brian Quaranta 00:51
Great to see you. Always great to see you.
Rebecca Powers 00:53
We’ve had so much great reaction and emails and comments about this amazing RightTrackMyTaxBill.com. This is a calculator that Brian and his team created to show you your tax liability. This is major stuff, because with tax planning, you can cross the tracks, as they say, get on the right side of the tracks.
Brian Quaranta 01:13
Yeah, and get on the Right Track.
Rebecca Powers 01:17
Hey, that’s right! Or you can be like so many of us you know, who didn’t know. You don’t know what you don’t know. And that’s what this show in this book is all about. What’s the power of tax planning, Brian?
Brian Quaranta 01:27
Yeah, well, the power is, tax planning is like sailing a sailboat with the sail behind, you know, with the wind blowing behind you, right? Yes. I mean, it’s the wind against your back, right? Yeah. Or it’s, it’s the oasis in the desert of retirement planning. There’s many ways to say it, but, but it is a critical piece to the planning process, because without tax planning, we always say there’s five key areas, right? The first one, most importantly, is, how am I going to generate the income I need in retirement? And number two is, how am I going to reposition my investments in retirement? Because the things that you were doing to grow your money,
Rebecca Powers 02:14
Completely different than retirement.
Brian Quaranta 02:16
Completely different. And we call that accumulation years versus distribution years, and then you have your taxes, which is third, your health strategy, and then your estate strategy. Okay, so, but taxes, getting that right truly makes a difference, because it avoids you from having many problems down the road. For example, there’s a lot of variables that you cannot control right when it comes to your to how your money is going to perform or react to certain scenarios, meaning, I don’t know what the stock market is going to do, and anybody that tells you that they do is lying right? Because we have no clue whether the market’s going to be up or down. What we do know is that if you’re in the stock market, you’re going to experience times of volatility that stuff. We also have no idea what interest rates are going to be. I mean, we saw over the last year here, interest rates fluctuate wildly. You know, in our favor, they went up rapidly. Great for savers, not so great for people that want to borrow money to buy a house or, you know, buy a car or start a business, right, right? So, there’s, there’s lots of things going on here, a lot of variables that you can’t control, but one thing that you can control is how efficient your money is from a tax perspective, by doing the tax planning right now, and tax planning starts early in retirement, doesn’t start the day you retire. And this is why it’s important for people to take advantage of RightTrackMyTaxBill.com and utilize the calculator that we built so that you can understand what your tax liability is, and you can understand what the problem is that you’re dealing with, and then once you understand the problem that you’re dealing with, now we can go out and we can start to look for solutions that are going to help your money become as tax efficient as possible. And the more variables that we can eliminate or control, the better.
Rebecca Powers 04:21
And that’s- we always say this. That is the definition of peace of mind. Yeah, for sure. When you watch the news, you see the volatility. The more the wars, wherever they are in the world, the debt, the national debt, the personal debt of Americans. It does literally make you lose sleep at night.
Brian Quaranta 04:38
Well, think about this, and I want to say this, but think about this for a moment. Let’s say that you have a 401(k) plan, okay, and let’s suppose that you’ve been every year that you make a contribution to this for 1k plan, you’re getting a tax deduction, okay? And let’s also suppose that that 401(k) is invested in this. Stock Market? Well, you got two variables now that you have no idea how are going to impact you. One is, what rate are you going to pay in taxes when you withdraw that money? Right? Because that all of that, all of that money in that account, every dollar you take out, is going to be taxable. So, you have no idea what tax rates are going to be at the time you withdraw. And even if you do start withdrawing, and the tax rates are relatively low, like they are now, they may not be that way in three to five years, as you continue it to withdraw, right and then on top of it, your money’s in the stock market. So now you have no control over what the market’s going to do or how your investors can perform. So just by having that 401(k) invested in the market in a tax deferred account, you’ve got two variables that you’re out of control of, the tax rates and the rate of return that you’ll get because of not knowing what the market is going to do.
Rebecca Powers 05:56
And there’s nothing more powerful than kind of taking the control back where you can, at least,
Brian Quaranta 06:02
Well, think about it like this. So, let’s say that same money that’s in the 401, K, let’s say a portion of that money needs to provide you with an income stream. Okay, well, I can remove that money from the 401, K, I can convert it to a Roth IRA, okay, by and I roll it over to a Roth IRA, I’ve got to pay the taxes, but I rather pay the taxes right now, right smaller and I’m younger, so now I’ve created that bucket of money to be completely tax free. So now as it grows, it’s going to continue to stay tax free, and when I withdraw the money, it’s going to be all tax free. And now, rather than leave it in the market, I insure that money through an income annuity. And now I’ve controlled that variable by having a guaranteed source of income that can never change, that I can never run out of. And now I’ve just taken two variables that could cause me a major problem and have eliminated them and turned it into something that now is guaranteed and provides me with peace of mind.
Rebecca Powers 07:06
And you just said insured. And that reminds me of another wonderful lesson that I learned from you probably two or three years ago, we started doing the show you insure your home, your car, your jewelry, sometimes even your cameras and your golf clubs. But nobody talks to us about ensuring their income.
Brian Quaranta 07:23
That’s right, that’s right, and not only should,
Rebecca Powers 07:23
What’s more important?
Brian Quaranta 07:25
It’s the most important thing, yeah, none of us can live without a monthly paycheck, right? None of us, if that disappears, well, you’re in big trouble. You’re in big trouble. You do not want these types of things to happen to you, and this is why I want you to first go to RightTrackMyTaxBill.com, and get your own tax report so you understand what the problem is that you’re dealing with. You understand what your tax liability is, and once you understand how your what your tax liability is, we’re going to show you on that report what the difference would be if you did tax planning, and how much is going to save you in taxes. And every time somebody goes to this calculator, they’re absolutely amazed and shocked that no advisor that they’re working with right now has talked to them about this, because taxes should be a big part of the conversation. Now, that conversation needs to take place earlier in retirement than later. So, understand that tax planning is something you want to do as early as you can. So again, go to RightTrackMyTaxBill.com and start getting your own customized tax report today, or call 1-888-382-1298, and you can schedule an appointment right now. My team’s standing by to take your call and schedule a complimentary appointment. Come in. You can sit down with the team, go over your tax report with us, and we can get you on the right track.
Rebecca Powers 09:01
And he also has a wonderful book, Right Track Your Retirement and that is also free. All right, stay with us. We’re going to talk more about not just diversifying your portfolio, but diversifying your entire retirement plan. Powerful stuff. We’ll be right back.
Brian Quaranta 09:15
See, 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 09:29
The last thing you want to do is have a really good job in your 60s, retire, be looking for work again in your late 70s,
Brian Quaranta 09:36
The average person might say, well, a good portfolio would be a good mix of stocks, bonds and mutual funds. No, no, no, a good portfolio is all designed around the five key areas, income taxes, investments, health care and legacy planning.
Neil Major 09:52
We’re not just product pickers, here. What we do best here is we build retirement plans.
Brian Quaranta 09:57
Nine out of 10 people when they walk through the door would ask this: 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 10:08
People, you know, can actually see a vision once we start to really build out their plan.
Brian Quaranta 10:12
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 opinion. The difference at Secure Money Advisors, as a fiduciary firm, we help you manage the risk, build the income, and give you the retirement you dream of.
Rebecca Powers 10:43
All right, thanks for staying with us. Now, once you’ve gone to RightTrackMyTaxBill.com and you see those big red numbers, then you make the appointment to come and get some advice of how to save money on taxes in the future. There are many different tools that Secure Money Advisors will show you, right? You always make the choice, the decision, but they’ll show you the different tools. Can we touch on some of those tools? You mentioned an annuity, and I love this analogy. If you go to a Chevy dealer, they’re not going to show you the Fords and Toyotas. They’re only going to be able to show you the Chevys. But as an independent I’m talking about the big boxes that have just a few things they can show you. As an independent, you’re going to look at everything from Miatas to Maseratis. That’s the difference.
Brian Quaranta 11:30
I think the real definition of an independent, and especially an independent fiduciary, is to be able to work with every investment vehicle that’s out there, right, and not to be biased towards any specific one or handcuffed or handcuffed, that’s right. And so, every investment tool out there has its pros and cons. It just depends on what problem you’re trying to solve for, right? And that’s all I want to do, and has ever wanted to do when we built Secure Money Advisors is to build a firm that you know when you step through that door and you sit down with our team, nobody’s judging you for what you’ve done. Up into that moment we’re looking at things, and what we’re trying to do is identify, are you doing everything you could be to be positioned as efficiently as you can be, is everything that you’re doing aligning with your goals. When you sit down, you ask people, What are some of the concerns that you have right now that you’re trying to solve for example, a lot of people will tell us, you know, they’re at a point in their life where they just can’t afford to lose a lot of money anymore, and that losing a lot of money to them would create a lot of anxiety, where they’ll tell us they’re not sure when to take their Social Security, right? They’re not sure, you know- you know, how to start withdrawing money from their retirement accounts. They don’t have a pension. They’d like to know how to create one. These are all the things we hear over and over again. The big one I always hear: Yeah, I don’t know if we’re doing the right things. Are we even on the right track? Which, again, is the reason why we name the book Right Track Your Retirement. So, by understanding that most people going into retirement have these basic concerns, and we all do as humans, think about it. Every one of us, what’s your biggest concern? I don’t ever want to run out of money
Rebecca Powers 13:25
Right.
Brian Quaranta 13:26
Neither do you.
Rebecca Powers 13:27
And that’s 99% of every year in the AARP does a study, What’s your number one fear in retirement? People don’t even say death. They say running out of money. That’s so sad.
Brian Quaranta 13:38
That’s right, that’s right. And unfortunately, it does happen. Rebecca, yeah, there’s a- there’s a percentage of people that will run out of money before they die, and a lot of those people will have to go back to work, or family members will have to take care of them. So, you want to have a plan that’s comprehensive, you know, somebody that really understands the, what I call the five key areas of planning, your income, your investments, your taxes, your health strategy and your estate strategy, because all of that plays in to one comprehensive plan. And if you make a move over here, it can, it can affect this over here, and you move over here, and this can affect this over here. So, it’s really about financial engineering things to your particular situation, which is so different for everybody, because everybody has- Some people have kids, some people don’t have kids, some people were business owners, some people were not business owners, they work for corporations, some people have pensions, some people don’t have pensions.
Rebecca Powers 14:41
And everyone has different dreams and goals. That’s right. That’s why, when the big box or Wall Street tells you, Well, it used to be the 3% rule, you should be able to take out 3% of your savings every month, and you should be okay. Then it was moved to the 4% rule, well, you should be okay if you take up- Where is the word should? That should not even be part of a plan.
Brian Quaranta 15:04
That’s right, that’s right. Yeah, and the plan should never have a should in it exactly, especially when it comes down to how you’re going to maintain your lifestyle, when it comes to replacing your paycheck. That should never be a should, you know, should the market go in the direction we think it’s going to go, you should be fine, but that is not how you want to build a plan. You should never build a plan around a market that you can’t control, because that means that you must have the market cooperate 100% of the time in order for you to be successful with your investments. And that’s one thing that you want to happen. The other thing is, taxes. We’re talking about that quite a bit right now, and making sure that your plan is tax efficient is critical. Because what people don’t realize is, if you think about your account balances that you have in your retirement accounts, a lot of that money is not yours. Look here. I’ve got this stack of gold coins here. Okay, imagine this. Can we get a close up shot on this here? Imagine this was your stack of money.
Rebecca Powers 16:12
Hold one by your face, I’m the TV person. Let me direct him. Hold it by your face.
Brian Quaranta 16:16
I’ll hold it by my face. Here we go. Here we go, here we go. So, imagine that this here was how much money you had. Okay, now let’s suppose that this is the money that you have in an IRA account or a 401(k) account. Now, if that’s the case, and it’s a traditional IRA or a traditional 401(k), let’s do this. We’re going to take about half of this money here, and that’s about what you really own, because the rest of that is going to go to the IRS. And that’s why tax planning is so important, yeah, because just by taxation alone, your wealth is reduced Exactly. So, if you don’t figure this part out right, right, and we can’t control what tax rates are going to be, what are things going to look like for you in the future? So, I want you to go to Right Track My Tax Bill right now. RightTrackMyTaxBill.com. Go there right now and get your tax report so you understand what your tax problem is going to be and then, if you’re like most folks, when you see the difference between what your tax problem is, or- and what the solution could look like with tax planning, you’re probably going to want to hit the next button- that is, to schedule a complimentary appointment with our team to come in and sit down and investigate your situation further so that you can eliminate the IRS from taking those coins that we just talked about. So, the other thing you can do is you can call 1-888-382-1298, the team is standing by to take your call and get you scheduled for your complimentary meeting. Nobody from my team is ever going to try to sell you anything. We’re not going to pressure you to do anything if we can’t help you solve a problem, if we can’t help you get better at what you’re currently doing with your money, there is no point in us presenting you with a solution. What I want to do is present you with a handshake and say, great job. Keep what you’re- keep on doing what you’re doing, because you are on the right track. So again, RightTrackMyTaxBill.com or call the 800 number 888-382-1298,
Rebecca Powers 18:28
Awesome. More retirement information and some great advice from Brian Quaranta right after this.
Speaker 1
18:34
We know the market is going to get worse from here. This is the biggest monthly decline in 10 years. People’s 401(k)s took a major hit.
Speaker 2 18:43
My investments are tanking. My retirement isn’t going as planned. Can’t believe I let my kid talk me into buying crypto. I mean, what is that anyway?
Speaker 1 18:51
This was the fourth worst contraction in history.
Speaker 3 18:57
So how are you two doing?
Brian Quaranta 18:58
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 19:30
Welcome back. Success through education, That is the entire goal for all of us here. And Brian Quaranta is our fearless leader, because he always talks about it’s those who know and those who don’t know. We all have the same tax codes, the same tax laws, but the big box would have us convinced that, oh, you’re all basically the same cookie cutter approach, 4% you should be okay. But did they ever talk to us? They didn’t, for me, about the difference between accumulation and distribution, completely different ball games.
Brian Quaranta 20:03
Completely different ball games. Yeah, because accumulation is pretty simple. I mean, you’re growing your money, you’ve got time to take risk. You can, you know, diversify amongst mostly individual stocks or individual mutual funds or ETFs or a combination of all. But if the market goes down, you got plenty of time to recover. You’re never going to hear a 25-year-old or a 35-year-old, or even a 45-year-old be upset about the markets going down, but you’ll hear a 55-year-old pretty upset about it, right? Because that’s going to delay their retirement.
Rebecca Powers 20:38
Because nobody stopped them and said, Okay, you’re 50. Now it’s time to completely change the way we’re thinking.
Brian Quaranta 20:43
Yeah, that’s correct, yes. And all of us, regardless of age, should always be thinking about what the end goal is, right? And it’s not about, you know, remember, there was a commercial a long time ago that would, people would be walking around, they would say, what’s your number? What’s your number,
Rebecca Powers 20:59
Yeah, was it cholesterol, I think..?
Brian Quaranta 21:01
Well, no, it was actually, I believe it was. It wasn’t cholesterol. It was, I think it was like Prudential or ING that had this commercial that was like, What should your retirement savings number be?
Rebecca Powers 21:16
Oh, gotcha. What a blanket statement.
Brian Quaranta 21:18
What a blanket statement. So many people, Rebecca, think that, how much should I have saved? Should I have $900,000 saved? A million saved, two million saved. That’s what we’ll see. A lot of people go, do I have enough money saved? I’m not concerned about how much money you have saved. I am concerned about how much of that money you need on a monthly basis, right? Because if you have $500,000 saved, and you tell me that you only need $1,000 a month from that account, well, that’s pretty easy. That’s awesome, yeah. I mean, you only need at a 3% rate of return on $500,000 I mean, that’s $15,000 a year in interest. If you only need $1,000 a month from there, you can see that we’re earning 15,000 at 3% and I’m taking 12, I’m still growing my money. But if you said I have $500,000 saved, and I need $50,000 a year…
Rebecca Powers 22:23
And I still owe a million on my house. Different story.
Brian Quaranta 22:28
$50,000 a year from your investments of 500,000 that’s a 10% withdrawal rate. Yeah. I mean, you’re going to deplete that account really quick. And it’s a lot of people that feel behind or feel like they don’t have enough are those that tend to take a lot more risk than they should be.
Rebecca Powers 22:49
And make emotional decisions.
Brian Quaranta 22:50
Make emotional decisions
Rebecca Powers 22:51
Usually mistakes.
Brian Quaranta 22:52
It’s a big mistake. It’s a big mistake. Yeah, and this is why you have to, you’ve got to sit down with someone that’s going to help you put together a plan that you can actually see visually what the math looks like. And one of the things that we do at Secure Money Advisors, and as you know, if you’ve been watching the shows, especially with this new tax calculator that we’ve created at RightTrackMyTaxBill.com. I believe in in the math, I believe, in showing you the numbers, because the numbers are part of the solution, they’re also part of the problem, right? And also, in my book, Right Track Your Retirement, I talk about three very important numbers. Matter of fact, there are three very important interest rates. It’s the spend down rate, the preservation rate, the legacy rate. And these are, these are all numbers that are determined to figure out, if you needed a certain amount of money, what rate of return would you need if you were taking money out every year and spent that money down to, let’s say, zero by the age of 95 the other one is preserving your capital. The other one is growing your capital, but by figuring these numbers out, it’s also giving you a target interest rate to shoot for to be successful with whatever your goals are going to be. There’s a lot of people out there that are just investing to invest, without a target goal of what rate of return they need, and they’re also trying to figure out, how do I get my 500 to go to 1.2 what we should be figuring out is, how do I preserve that? Or, better yet, they should be figuring out how much additional money they’re going to need when they retire and work from how much income they’re going to need. So, I know someone says, Well, I need $30,000 a year in income. I know I can convert that to how much they’re actually going to need in savings. And we teach you how to work backwards like that, from how much income you’re going to need to how much savings you’re going to need. A lot of people are working with how much do I need to save, and then trying to go to the income. You go from income to savings.
Rebecca Powers 24:58
Nice.
Brian Quaranta 24:58
You go the other direction, and we do that through the calculators that we have and the spreadsheets that we’ve built. And we work through all these spreadsheets with you. We actually sit there up on our big screen. We got these big, 85-inch screens, and we start diving in these numbers together. We actually let you control the keyboard and control the mouse, so that you can plug the numbers in, and you start to see what happens. And then we can run all kinds of different scenarios. What if we do this tax strategy? What if we do this tax strategy? What if we were to, what if we were to position this money in this type of account rather than this type of account? What happens if you had a health event? What happens if you needed to take a large sum of money out for an unexpected expense, maybe a child needed something. What if you wanted to pay your mortgage off? These are all the scenarios that we run through with you so that it starts to give you clarity of how your money behaves under all these different circumstances. So, I first want you to go to RightTrackMyTaxBill.com where you can get a copy of your own personal tax report so that you understand what your tax liability is going to be. And then you can call 888-382-1298, and you can schedule a time with the team to come in and sit down and go over your situation.
Rebecca Powers 26:14
And you can wait till you come in to get a copy of the free book. Or if you’re really eager and you want it now, you can go to OnTheMoneyOffer.com. We’ll put it in the envelope. Brian pays the postage. His wife Katie even bought beautiful gold envelopes for you. We want you to really think it’s special, because it is. Only a minute left, but you reminded me of chapter two. Will I- do I have enough to be retired? That’s everyone’s question. Do I have enough? And your biggest advice is to think like a pensioner, not a gambler. Stop gambling and risking money that you’ve already made. It’s the opposite of how we should be thinking.
Brian Quaranta 26:49
That’s right. When you’ve won the game, why are you going to keep playing? You know, the house always wins. Unless you’re somebody that just likes roller coasters. You like the thrills of the highs and lows and highs and lows. Look, I’m not against the stock market as a fiduciary planner. I actually like the stock market quite a bit, but I like it with money that you have a longer-term time horizon on. And this is why, one of the things you’ll learn, if you read my book, is about this split allocation strategy that we do so that actually frees you up to take the risk with your money that you need to take without the worries and anxieties if there’s volatility. And the way that we position your money is if the markets do go down, you’re never going to be in a position where you’ve got to come out of retirement or delay retirement. And that’s why you want to call us right now today and go to OnTheMoneyOffer.com. RightTrackMyTaxBill.com. It’s too much to say, but we’ll see you again next week with On the Money with Secure Money.
Rebecca Powers 27:53
Thanks for joining us. See you next time