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Video Transcript
Cynthia de Fazio 00:20
And welcome to On The Money with Secure Money. My name is Cynthia De Fazio and I’m joined today by Brian Quaranta of Secure Money Advisors. Brian, how are you?
Brian Quaranta 00:28
Good to see you. As always,
Cynthia de Fazio 00:31
It’s so good to see you. I was so excited to know that you’d be in the studio today and that we’re together talking about important things surrounding retire.
Brian Quaranta 00:39
I know. And there’s been a lot going on when it comes to retirement planning, especially with how volatile the markets have been. Yeah, we’re just going through a tough time right now as a country, aren’t we?
Cynthia de Fazio 00:48
We definitely are. So, I have to ask you, what types of questions do you hear right now more than anything else? Yeah.
Brian Quaranta 00:54
Well, the main questions I hear all the time are, you know, am I going to be able to retire? You know, am I going to be able to have enough money to retire? Is this the market losses that I’ve recently taken? Are they going to cause me to have to delay retirement? And, you know, those questions can be answered by looking at the probability of success of your portfolio. And one of the things that I like to do at our office is look at whether or not the plan still works by running a model that determines the probability of success, too many people focus on returns, we really need to focus on probability of success. So, if you’ve lost money, right, you may still be winning the game. The question is, is your probability of success still high? Meaning do you have a 95%? or higher probability of your plans still succeeding?
Cynthia de Fazio 01:41
Okay, Brian, I should ask you, obviously, with all of your experience all the years that you’ve been in the industry helping others, let’s talk today about some common pitfalls that you see with retirement. Let’s start off with that. What are some of the common pitfalls? Yeah,
Brian Quaranta 01:55
well, that’s a good question. Because a lot of people don’t understand the difference between the accumulation phase of retirement versus the distribution phase. And a lot of times they’re working with a generalist, meaning they’re working with a financial advisor that maybe they’ve been working with for a long time that focuses on just investing the money and trying to get it to grow. Well, when you get close to retirement, what we call the retirement redzone. So, let’s say the age 55. And into retirement, we go into what we call the distribution phase. And I think one of the biggest mistakes is not working with an advisor that focuses on that that distribution phase, because it’s strategies and techniques that you use during these accumulation years, during your investing years when you still have a lot of time. Right. So, if the market goes down, you still have a lot of time before you’re gonna need that money. A lot of people if they’re at that retirement red zone, they’re going to need their money very soon, or they need their money right now. And so, working with an advisor that specializes in and preservation of your assets, but also focuses on and specializes in income is the most important thing. And I think the biggest mistake is seeking the wrong advice or getting the wrong advice from the wrong person. Yeah.
Cynthia de Fazio 03:04
Let’s talk a little bit about that. Because obviously, sometimes when someone has started out working with someone who specializes in the accumulation phase of life, it can be kind of a set it and forget it philosophy, meaning you don’t think about it, you push it aside until you come in and you sit with someone such as yourself a professional that helps in the distribution years, part of that portfolio X ray that you do, do you ever uncover hidden fees?
Brian Quaranta 03:29
All the time. Yeah, I’m especially in the annuity marketplace. I mean, you’ve got a lot of hidden fees, and variable annuities, mutual funds, and 401K plans. A lot of people think they’re not paying a whole lot in fees. But when you do a discovery with them, you call the companies and you find out what they’re really paying, people are paying quite a bit. I just did a review with an individual the other day that had money in a variable annuity. And he had said to me, at one of my educational events that he wasn’t paying any fees at all. We came to the office, we called the company that he had his money with, not his broker, we call the company directly. And we found out that he was paying almost 4% a year in fees almost 4%, almost 4% a year in fees. So, there are a lot of hidden fees. And I call that hidden fees, because if you looked at his statement, they don’t show any deduction of those fees at all.
Cynthia de Fazio 04:17
Yeah, Brian, let’s talk about how those can be termites in someone’s portfolio, if you will. Yeah, be like eating away at the overall.
Brian Quaranta 04:25
Yeah, well, one of his biggest complaints was he says, I don’t understand why these accounts aren’t growing. Yeah, well, that’s because the fees are eating into the gains. And so, you know, fees, reduce your gains, and they compound your losses. Remember that fees are taken out whether you win or lose. So, you know, in his case, almost paying 4% in fees, that means his account had to earn over 4%, just for him to start earning interest. And then of course, let’s say the market went down. You know, let’s say he lost 10%. In that account, he still had to pay the almost 4% in fees. So now he’s down almost 14%. So again, fees, reduce your gains and compound your losses.
Cynthia de Fazio 05:03
Okay, when we open the shop, is he talking about how sometimes people can set it and forget it? And let’s talk a little bit about procrastination is that one of the pitfalls that you see people fall into,
Brian Quaranta 05:14
of course, yeah, kicking the can down the road. And we talked about this a lot on this show, right? People tend to get put their head in the sand and not pay attention to what’s going on. And, of course, I can understand or they’re trusting people to handle that, you know, I remember when I was growing my practice, I was working with an accountant, and, and she was really great at her work. But as the company grew, and the needs started to change for the company, what I found was that I was still getting the taxes done, but I really wasn’t getting the advice or the strategies that I needed. And so the I think people experienced that a lot, even with the financial advisory market, right? I mean, just like this accountant might have been good at one point in time. She’s not the best for me right now. And that’s why we’ve had to make a switch to a better accounting firm that provides more services based on where we are as a company. Because we’ve grown, we’ve matured, and so does the investor, the investor grows and the investor matures. And they get to a point to where they need someone that specializes in what secure money advisors specializes in. And that’s the distribution phase where we talked about protecting the money. And we also talk about providing income with the money because 85% of the people out there today, Cynthia are not going to retire with pensions, and their primary need with that money is going to be income, I always ask at my office, there’s four things money can do. It can either provide you with growth, it can provide you with safety, it can provide you with income, or it can provide liquidity. When I ask people to rank those in order from one to four, most people will always choose that the purpose of that money, the number one goal, that money is to provide income. But then when you look at their portfolio, it’s not really invested for income, it’s invested for growth, it has a lot of potential risk if the markets go down, and they can lose a lot of money. And this is not a dress rehearsal. And we don’t get a second chance at this.
Cynthia de Fazio 06:59
Well, and that ties into working with someone who is specialized in the accumulation years, if you’re because that’s the time of your life, when you are like working, working, you’re willing to take risk, because you have time that’s right for the market to recover. But it’s so crucial for someone to come in and sit with someone like you that specializes in distribution, because you may not have all of that time to wait for the market to recover.
Brian Quaranta 07:21
Yeah, and this is why you know, in my book, right track your retirement, I’ve written about our three bucket approach. And the reason why we think about money in buckets, because your money has to do different things at different times. And since you know, we’re at a point in our life, most people are at a point in life, when they come see us where they don’t have the time to recover. If the markets go down, we want to make sure that we protect the retirement. So, by separating the money into different buckets, we protect that first phase of retirement, let’s call it the first 1015 or 20 years of retirement. And by protecting the first 15 to 20 years of retirement, what we’re doing there is we are creating time with any money that we have in the market. So you know, you know when you when you when you approach it that way, if the market is volatile, you’re not concerned about it, because you have plenty of time for your money that you’ve put in, let’s say your growth bucket or your risk bucket, you have plenty of time for that money to recover, and do what it needs to do. The problem is that people keep all their money in one bucket, right? And that becomes a problem because everything needs to go in the right direction. The market needs to cooperate, tax rates need to cooperate, everything needs to cooperate in order for that one bucket to work. But when we separate the money into three separate buckets, if the markets not cooperating, it’s completely fine, because we have a bucket that’s protecting that first 15 to 20 years of retirement.
Cynthia de Fazio 08:43
Wow. Well, Brian, I know you have a very special offer to present to the viewers at home today. Let’s talk about what that is before we open the phone line.
Brian Quaranta 08:51
Yeah, well,since you know I created the right track retirement system, because the number one question I would get all the time is am I on the right track? Am I doing the right things? Am I making the right moves with my money? Am I going to have enough money? If we do need to generate income? How do we do it? And folks, I really want you to get this right track retirement review because it is going to make things so much more simple for you to understand. It’s going to give you peace of mind and security in retirement. And we’re going to walk you through a system a process that I’ve worked with for over 20 years to truly help you build a plan that is sound and can weather multiple market conditions. All you got to do to take advantage of this for the next 10 callers who call in. We’re going to call 1-888-382-1298 We’re going to give you a complimentary right track retirement review. Don’t procrastinate on this. This is not the time to kick the can down the road. Come in and see us it’s not very often you get to sit down with a fiduciary firm. Call 1-888-382-1298 and schedule with us today.
Cynthia de Fazio 09:52
Brian, thank you so much to the viewers at home. The phone number call is on your screen and that number is 888-382-1298 We know you have a lot of questions for Brian about how to plan your perfect retirement, he has the answers for you, all you have to do is call in today 888-382-1298, we’re going to take a very short commercial break, but don’t go anywhere. When we come back, we’re going to uncover more of the common pitfalls that people can make going into retirement. Stay tuned.
Brian Quaranta 10:20
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 10:35
The last thing you want to do is have a really good job and you’re in your 60s retire, be looking for work again, in your late 70s.
Brian Quaranta 10:43
The average person might say, well, a good portfolio would be a good mix of stocks, bonds, mutual funds can have a good portfolio is all designed around the five key areas, income, taxes, investments, health care and legacy planning.
Neil Major 10:57
Because we’re not just product pickers here, what we do best here as we build retirement plans,
Brian Quaranta 11:02
nine 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 11:13
People, you know, can actually see a vision once we start to really build out their plan.
Brian Quaranta 11:19
This is about you. If you’re not getting what you need and you feel that when you walk out of the advisors 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.
Cynthia de Fazio 11:49
And welcome back to On the Money with Secure Money. My name is Cynthia De Fazio and I’m joined today by Brian Covanta. He’s founder and president of secure money advisors. Brian a great show we’re having today talking about a very important topic, some common pitfalls that people make going into retirement. This is a big one: not having a written plan. Let’s talk about that.
Brian Quaranta 12:12
Well, most people have a POS, that stands for pile of stuff. Yep. Right, lots of statements, pile of stuff. And they don’t really know how to have all of that stuff working together. And then the reason is, is nobody’s laid out a written plan for them. Let me tell you a little bit about what our written plan looks like. Number one, most importantly, it needs to start with a cash flow worksheet. And the reason is, is because we have to look at all your sources of income coming in everything you have coming in while you’re working. And then of course, now we can look at everything you would have coming in while you’re when you retire. And what we can see is we can see the difference of the income while you’re working versus the income that you’re going to have when you retire. And typically for a married couple, there’s a drop off, right. So, if they leave their place of employment, and they go into retirement, there’s a big drop off, we call it the income cliff. And what happens is, typically when they retire, they’re only going to qualify for Social Security, meaning they’re not going to have a pension, most people don’t. So now you’ve got a huge gap between what you were earning while you were working and what you’re going to be getting in retirement, that you ask a lot of people whether or not that’s going to be enough money, and they’re going to most people tell you no, we’re not going to be able to live off of that. And they’re going to go into need to be able to take money out of their retirement accounts to be able to live off of. So, it’s very challenging for people when they’re when they’re when they’re building this out. Because they’ve never looked at what this looks like on a written plan. Right. The next thing we have to do in the written plan is if we have to take money from the retirement accounts, we have to look at how different interest rates will impact the withdrawals. And so, when you come into secure money advisors, we lay out the model. And we look at three different interest rates to start to figure out how to problem solve for this income cliff that you’re going to be dealing with. We look at the spend down rate, the preservation rate, the legacy rate, which I’ll talk to you about more, a little bit later in the show. But those rates are very important because then what we can see is, is let’s say the client needs $20,000 a year in income, we can ultimately start to gauge what rate of return we would need the portfolio to do to have a 95% or 99% probability of success. And that’s what we’re looking for. We’re looking for plans that have a high probability of success under any market condition.
Cynthia de Fazio 14:26
Sure, that makes perfect sense. Brian, what about people that take advice from the wrong people, like Uncle Joe, about how to retire? Is that a pitfall that you see people walking into and falling into, I guess I should say.
Brian Quaranta 14:39
Yeah, cocktail advice. We call that, right? I’m at the cocktail party. And, you know, someone’s telling me about some, you know, some stock they’ve bought and, you know, they’re telling you about all the money they’ve made, you know, or you’re sitting at the Christmas table or the Thanksgiving kitchen table and Uncle Joe is talking about all his investments he’s purchased and so on and so forth. Nobody tells you about their horror stories, they only tell you about their wins. That is true. But a lot of times, even when you look at, you know, the talking heads on TV, and they’re talking about what to invest in, they’re not talking about the other millions of dollars that they have protected and guaranteed, they’re only talking about money that they’re they can afford to take risk with what I have found is that very wealthy people do not take risk with 100% of their money, they usually have assets in other areas, such as real estate, or cash or things along those lines, the average person is who takes risk with 100% of their money. So, when the market doesn’t cooperate, that individual can be hurt very badly. And so, taking the wrong advice from the wrong person, especially someone that doesn’t focus on the retirement planning side of things, you might be invested like a 30 year old, when really, you’re looking to invest more for retirement and for income, but your portfolio is pretty aggressive. And we’ve got a very powerful software that we use, that can evaluate that risk and quantify that risk. So that you can figure out where you are right now, and where you need to go. And what’s nice about that software is when we run that your current stock positions through that software, you’re getting an unbiased opinion, it’s just black and white math of where you are and where you need to go. And then people are smart, they can make an informed decision.
Cynthia de Fazio 16:17
Okay. Brian, what about working with someone who’s not a fiduciary? Why could that be a pitfall? And let’s dive into that a little bit further.
Brian Quaranta 16:26
Well, first off, you know, I mean, we are a fiduciary firm, and, you know, we are held to a high standard to do what’s in the client’s best interest. We are a fee-based firm. And you know, our fees are structured in a way that when the clients do well, we do well, when the clients don’t do well, we don’t do well. But you know, at the end of the day, my hopes are that even if a client if an individual was not working with a fiduciary, that they would be at least adhering to a fiduciary responsibility, meaning, I would hope that any advisor out there would have the client’s best interest in mind. Unfortunately, we don’t see that sometimes, you know, a lot of times we see very poor planning, we see unsuitable recommendations, and then people are just in the wrong things. Or they think that a product that they have works a certain way, but in fact, it works in a completely opposite way. And there’s been many times when people just don’t know what they have and how it works and how to utilize it. Because what good are your investments if they don’t start working for you, because the whole purpose of putting money away was for that money to start working for you in your retirement years? Right, whether that be right away, or later on in life, the job of that money was to provide you with something, whether it be additional monthly income, or provide you with money on an as need basis to take trips, buy vehicles, do things with your children, your grandchildren. It’s always designed to do something. And so most people have never worked with somebody that truly shows them how to leverage and use that money and maximize it for them and their families.
Cynthia de Fazio 17:59
Well, Brian, I really have a very special offer to present to the viewers at home today. Why don’t we talk a little bit more about what that is in detail before reopening the phone line?
Brian Quaranta 18:07
Cynthia, you know, I built this right track Retirement System, out of what people were telling me they needed to know if they were on the right track. Every time I would do an educational event or I would do a radio show people would call and say, Brian, how do I know if I’m on the right track. And so, I developed the system around five key areas income, taxes, health care, and, and investments and legacy planning. And those five key areas are what truly make up a good retirement plan. And we go through those with people when they come in. So, folks for the next 10 callers who call in right now, we are going to give you a complimentary no obligation, right track retirement review. All you’ve got to do is pick up the phone and call us. It’s a very simple process that will bring you through that will give you peace of mind and clarity of what a real retirement plan should look like. Don’t procrastinate on this, pick up the phone and call us for the next 10 cars. Again, that’s a complimentary right track retirement review. No Obligation dial 1-888-382-1298.
Cynthia de Fazio 19:04
Brian, thank you so much to the viewers at home that phone number call is once again on your screen and that number is 888-382-1298. We know you have a lot of questions for Brian about how to plan your perfect retirement and how to avoid making some of these common mistakes. Again, all you have to do is call in today 888-382-1298 We’re going to take a very short commercial break, but don’t go anywhere. I have so much more with Brian when we return.
Announcer 19:32
As a good saver you’ve been putting away money during your working years. Studies find that the biggest fear of retirees is running out of money. Market volatility isn’t just a downward movement of stock prices. It’s the size and frequency of change. The more dramatic the ups and downs, the higher the volatility. This can put savers who are newly retired or a few years away from being retired at greater risk. Today’s generation of retirees is not receiving traditional pensions as our parents or grandparents did. Instead, we have retirement accounts such as 401 KS or 403. B’s. These accounts typically expose your money to market risk. The last thing you want right before retirement is to lose a portion of the money you need for income. But how do you turn these accounts into a retirement income? Is it safe to keep all your retirement money sitting in the stock market, the last thing you want is to lose a portion of the money you need for income due to market loss. By working with a financial professional, you can learn how to turn a portion of your savings into an income stream for life and income for the life of your spouse if you’re married. We all have moments in our lives when we wish we had taken action sooner. Don’t let procrastination rain on your retirement parade. Act now before it’s too late. Please call our office to set up your no cost no obligation retirement income review today.
Cynthia de Fazio 21:01
And welcome back to on the money with secure money. My name is Cynthia De Fazio and I’m joined today by Brian Covanta. He is founder and president of secure money advisors. Ryan, a great show we’re having today talking about a very important topic, common pitfalls to avoid, if you will, well going into retirement. Let’s talk about this next one. This is a big one for a lot of people that are in the viewing audience today. And they’re probably thinking to themselves, gosh, what do I do? What time? How do I do this? Social Security a big one? What about people who take their social security benefits at the wrong time? What happens then?
Brian Quaranta 21:34
Yeah, well, this is a this is a big question. We get quite a bit. And I think it’s different for everybody. You know, the question I ask all the time, when somebody’s trying to figure out when would be the best time to take their Social Security is first off, I want to know how’s your health, right? How’s your health because if we knew the date of the date, you were gonna die, we could actually have the best Social Security Strategy ever, right? That is very true. The problem is we just don’t know when the good Lord is gonna take you home. So, but you know, if you if you have somebody that says, Look, you know, I’ve had a heart attack, and I’ve got, you know, other medical issues, probably taking that Social Security sooner than later would probably be in their best interest. If you’re very healthy, and you have longevity in your family, maybe delaying might be a good idea. But here’s what I have found in over 20 years of doing this, when I run the numbers, and I build out most of our clients’ models in our software. And we look at taking Social Security now versus later, what we have found is that by taking Social Security now versus later, okay, we actually preserve the client’s retirement assets, meaning if they’ve got a million dollars sitting in a 401 K, and they want to retire, and they’re going to need, you know, let’s say $60,000 a year in income, if I don’t turn Social Security on, then I’ve got to take all $60,000 a year out of that 401 K plan. And that puts a lot of pressure on that money very early on. Whereas if I turned the Social Security on, let’s say, between husband and wife, we get $40,000 a year in Social Security. That means I only have to take $20,000 a year out of the 401 K plan, right or the retirement accounts. So, it’s much less money coming out. And it preserves that money for later on in life when you’re going to need more money as the cost of living goes up, and so on and so forth. So, I always find that, if you most in most situations, what we find is that by turning Social Security on, you get more leverage, because Social Security now subsidizes your income, and it’s less money you have to withdrawal from your accounts.
Cynthia de Fazio 23:29
All right, Brian, what about failing to plan in advance for health care costs? Yeah, how is that a pitfall? What happens then? Yeah,
Brian Quaranta 23:37
budgeting is very important. And you know, on our cash flow worksheet that we build out. And this is this is part of the written plan that the client receives when they when they hire us, is we want to look at scenarios where a health event were to take place, I always say let’s make bad things happen on paper, so that we have a plan. And when they do happen, we know exactly what we’re going to do. And so, you know, a lot of people don’t realize that there’s certain there’s certain investments that you can purchase in the marketplace today that can help mitigate some of that risk if a health event were to take place. But the first thing to look at is okay, if a health event did happen? Are we able to self-insure? Would there be enough money that we could take out larger sums of withdrawals and pay for that health event taking place? If the answer is yes, then we may not want to consider using an alternative product or investment that would help mitigate that risk by paying for long term care. And I’m not referring to Long Term Care Insurance here by any means, because I think it’s too expensive. But planning for those events on paper are very, very important. And that’s what that right track Retirement System is all about. It truly is about getting clarity around all of those things that can happen. Remember, income is definitely going to happen. All right, whether you need it now or later. It’s going to be the driving force behind the retirement plan. Taxes are absolutely going to happen. The question is how much taxes are you going to have to pay if you talk to Most people, they’ll tell you taxes are going up, not down, right? Number three is making sure you have the best investment mix. Four is the health care plan and five is that we want to let good legacy strategy because when the good Lord decides to take you home, we know none of us are getting out of here alive. We want to make sure our families and our charities are the biggest beneficiaries and not the IRS.
Cynthia de Fazio 25:18
Absolutely. And Brian, I know we only have a couple minutes left of the show this week, but you explain this. So crystal clear, and you’re so easy to speak with. So, I guess my question to you would be, why are some people apprehensive to meet with a financial advisor, especially when you make it look so approachable and so easy?
Brian Quaranta 25:36
Well, I think they’re just fearful. I think they’re fearful that they might be sold something, I think they’re fearful that they might be judged, based on what they’ve saved at this point. Or they might be judged for what they currently own. They may not want to deal with having to break the relationship with the current advisor, a lot of people have a hard time breaking relationships. So, you know, these are there’s all different challenges that cause people to be fearful. And, you know, I think the other thing too, is that, you know, they’re walking into a financial advisor’s office, they’re not really sure, is this going to be a high-pressure environment? What is it going to be like, you know, secure money advisors, the reason why we develop the right track retirement system is so that there is no selling involved, we’re truly problem solving. If we can’t solve a problem for the individual, there’s no reason to implement that plan with us. There’s, there’s nothing that makes me feel better when I sit down with somebody, and we run the analysis for them in our right track system. And I’m able to tell them that your advisor is doing a great job, just keep doing what you’re doing. Now, here’s what they’ll typically tell me though, they’ll say, I know you say he’s doing a good job, but we’re not getting advice in all these other areas. They’re not talking to us about taxes, they’re not talking to us about estate planning, they’re not talking to us about solving for a health event. And that’s where we differ in our servicing model and what we do on a week to or a year-to-year basis with our clients and monitoring these types of accounts. And that’s why I want people to have this right track system. Cindy, I really do. It is so powerful. And it’s so simple, folks, it really was designed to take all the guesswork out of this complicated thing called retirement planning. It boils it down into its most simple form and gives you exactly what you need to make the decisions that you need to make. And it’s not our opinion, we’re going to give you a black and white facts so you can make an informed decision that I want you to have this Right Track system. So, for the next 10 callers who call in right now, we’re going to give you a complimentary no obligation, right track retirement review, all you have to do is call 1-888-382-1298. Again, that’s 1-888-382-1298
Cynthia de Fazio 27:40
Brian, thank you so very much to the viewers at home. Thank you for spending time with us today. That number is 888-382-1298 Thank you for watching On the Money with Secure Money. Be safe, be happy, be blessed. We’ll see you back one week from today.