Latest / The Jon Sanchez Show / The 5 Year Retirement “Red Zone”
Transcript
- Jon G. Sanchez, CEO: Good Monday afternoon to you. Welcome to the Jon Sanchez show on Newstalk which are, should I say, good like tornado hurricane? I mean, the are crazy. Absolutely crazy. But you not too windy on Wall Street. There's a few white caps out there today. Nothing too severe by any means. I hope you had a great weekend and the Monday started off very well for you. Let me tell you what I have lined up for you this afternoon. We're going to recap today's stock market activity, and I'll tell you, I'll just tell right up front. It's going to be a bit of a quick one. there was not a tremendous amount of activity. things started off a bit on the week side. We were down a couple hundred points on the Dow futures for most of the pre-market session, of the president to basically call off this whole ceasefire, which is set to expire on Wednesday. Again, the market rallied very hard on the news on Friday that we had the ceasefire and even ⁓ previous days. Matter of fact, we snapped a 13 day wind streak on the NASDAQ. That's the longest wind streak we've had dating back to about 1992. But it all came to a screeching halt today. Again, nothing too severe by any means, but the market has kind of gone back into a wait and see type of mode. So we had this situation over the weekend where the US fired upon a Iranian flagged oil tanker, they wouldn't stop. And so they fired, put some through the engine room. And then sent in the Marines who took it over. So that was the events over the weekend. Also, ⁓ Iran has said ⁓ they were to meet over the weekend with us in Pakistan, et cetera. ⁓ somehow that got up to, I think, or Tuesday, or excuse me, Tuesday or Wednesday of this week. But now Iran is saying, don't think we're even gonna come to the negotiating table because the Strait is closed you took our ship and I mean on and on and on. So had all the makings again, especially after the big run up that we've experienced, we have all the makings for a market pullback. But what did investors decide to do? They just said, you know what, we're just gonna kind of chill out a little bit on this Monday. We're gonna wait and see what happens. See if is really the beginning of something bigger ⁓ or not. And so it's kind of been the attitude, right, recently. And so that was exactly the way our week got started. Just lackluster performance in the market overall. Got a big run up in oil prices though. But again, didn't seem to impact things. So I'll give you all those details. But let me tell you about the topic I've got lined up for you. Welcome to the 60s. That's right. For those of you that are 61 to anywhere in the 60 age range, what makes you so special? Well, if you're like a lot of people, this is the time period that you are very, very seriously thinking about retirement, right? Most people, of course, think about retirement. Oh, usually what we hear from our clients is they want to wait till at least 65. And the reason for that, of course, is Medicare. That's when you become Medicare eligible. For those, depending upon when you were born, usually like myself, 65 years, 10 months, you get your full social security benefit. So 60s are very critical in the retirement conversation. But beyond the Medicare planning side of things, there's a number of other factors that you need to know about and you need to plan for. what I thought would be a great way to start the week off is for, again, those of you in the ⁓ and hey, don't turn the channel if you're not 60, because you will be at some point, and hopefully the information I share with you and the knowledge I ⁓ you with today ⁓ prepare you for that time period, because trust me, it'll be here before you know it. And what I'm gonna be doing is I'm gonna be going through, again, a number of things. I'm calling this the retirement red zone. And I took it from the football analogy. You those of us that watch football, you we have the red zone, is, you know, usually 20 yards into the goal line. That's the red zone. Well, that's kind of the way it is in retirement planning, right? When you're in your 60s, you got about 20 yards until that retirement goal line that you're so anxiously awaiting for. But let me tell you, there's a lot of things you need to be thinking about besides just, oh, I just need to wait till 65 before I, you know, I'm Medicare eligible. A lot of different ways we have to be looking at your money at this point. And those are the different things that I'm gonna be sharing with you as we discuss the five-year retirement red zone. right, I'll be getting to that shortly, like I said, because there is not a lot of activity that was on the street today. Somewhat lackluster, as indicated, so let's get down to the details. So we started bit on a subdued note, other than in the pre-market session, like I said, things were going pretty well. then, you know, we into today, had the events over the weekend, as I'd mentioned, ⁓ and the market just kind went. know what? Let's test the waters and see if we can sell this thing off. Well, they tried this morning, like I said, and it didn't happen. Not after the stock market opened, we had a few intermittent periods of weakness on all the three major averages. But it the of mold game today. The number of shares go and then here comes a bunch of buyers to bring it back up. But once again, the real of the day was the ⁓ oil side. First, let me you what the market did. And then I also, by the I shouldn't forget. I don't want to forget, I should ⁓ I had some news on Apple that happened after hours, pretty significant news matter of fact. Okay, so here's how we finished up. A five point loss on the Dow. That's right, you heard me correctly. Five point loss, that doesn't happen very often. Our closing level was 49,442. The NASDAQ, as I said, snapped a 13 day win streak, finishing the day down just 64 points, .26%, to a close of 24,404. And the S &P 500 gave up 17 points, .24%, closing at 7,109. But like I said, the action, it was in the oil side of the business today. so on the oil front, this again could have gone a lot worse than what it really did. Like I we had all kinds of reasons for oil prices to really skyrocket. But in retrospect, after the big drop on Friday, which again spurred a massive stock market rally, this could have been, like I said, an excuse to really ⁓ Begin to exit things and and they really didn't not whatsoever oil finished up five dollars and 18 cents really at 89 40 I've had a lot of discussions over the weekend with friends and family and things everyone's going did I see that right that oils down, know in the 80 range I'm like, yeah, you're absolutely right. But you got to remember We got a big big fall on Friday when oil prices plummeted ten dollars and 49 cents over an 11 % loss to close at 84 22 And so yeah a little bit of a game back today based upon the news I shared with you and it's to be expected. So again, $5.18 gain, 89.40. I don't know about you, but I saw just a very, very slight improvement at the gas pump. I'm a diesel guy, so I a very slight improvement on diesel, which is significantly more than gasoline right now. So yeah, it was painful filling up my Dodge 3500 over the weekend, to say the very least. Let's go to the gold side of things. Finished down $50.40 to a close of $4,830.10 an ounce. And over to the bond market. See, this is again what we have to watch. My advice to you on Friday was take some money off the table. This is a time to take some profit. We have every reason in the world. And I went through all my reasons on Friday. If you missed the show, pick me up on Spotify, pick me up on YouTube, and you can hear what I said on Friday. You don't have to believe me here. But I said, take some money off the table. There's nothing wrong with that. ⁓ We at that point, 13 days winning going on in the market, a lot of a lot of ⁓ names that have just come back dramatically. ⁓ And this market is primed for a pullback. so lo and behold, I didn't know we were going to get the bad news over the weekend, but my timing was good. Hopefully you heated it a bit. Take some money off the table, keep the powder dry as the saying goes and get ready for the next round because we'll see what happens here. This is going to be very critical these next couple of days. know, the market is very, what's word I want to use? I guess immune to Trump's promises and then also immune to Iran saying they're not going to do this or they're not going to do that. This market is still 100 % headline driven. things can completely turn around the good or the bad, just with a true social post, with a comment coming out of Iran, very, fragile market. And I don't like that. And then you add again the number days that we have risen. I'm just going to kind of throw out today because it was, again, just a flat day. you look at overall and you go, OK, wait a minute here. We've had significant gains in this market. ⁓ These algorithms are going use any news whatsoever. And I think that's why we were down so much in the pre-market session. Algorithms going to use any news whatsoever. ⁓ to really begin to sit and go, okay, let's take some money off the table and redeploy to areas. I wanna go back to the bond market though. Again, the bond market, ⁓ remember, is driver of the bus. The stock market is the participants, the back there. So finishing again with goose egg of 4.25 % on the 10-year. So what does this tell So tells us that the bond traders are very uncommittal at this point. They don't know what direction, just like the rest of us, we don't know what direction things are gonna go at this point because again, it's a headline-driven market. ⁓ No one knows what's going to be said or written about. And therefore, let's be a little bit more on the cautious side. So think we're lucky we didn't see, again, a big run up in bond yields. Or a big run up in bond market, I should say. That would have brought the yields down. That would have showed us, again, that the institutions were more on the nervous side. But right now, at the way today's action was, ⁓ not the case whatsoever. So like I said, today we're just going to kind of throw it out the window. Not a lot of action, not a lot of committal. We don't need to change anything upon my advice I gave you on Friday as I wrapped up the week on Wall Street. Now get to the big news in the after our recession today. And it's not news as far as the performance of the stock, but it's big news from a headline standpoint. Not long after stock market closed today, Apple made a major, announcement. And this was ⁓ somewhat anticipated. We just know the exact date. Tim Cook, who has done an incredible job since he took over for Steve Jobs in, what was that, 2011? Said he's gonna step aside from role of CEO in, well, 1st, I gonna say, in end of August, but they've now said September 1st. So Tim Cook is assume the role of executive chairman. Who's gonna succeed him? You know, I've never heard the guy, be honest with you, but I don't know how well he's known Wall Street, but his name is Jon. a senior vice president of hardware engineering. ⁓ going to join the Apple board of directors when he becomes the chief executives. Again, Apple's non-executive chairman Arthur Levinson is going to become the iPhone maker's lead independent director at that time. The release of Apple said Cook will continue his role as CEO through the summer as he works closely with Ternus ⁓ on smooth transition. Company said in a filing that the board made the appointment on Friday. Again, this going to be the first CEO transition of Apple since Cook stepped aside. ⁓ And Cook, by the way, is now 65 years old when he succeeded Steve Jobs again back in the year of 2011, shortly after Jobs' death. Turner's will become Apple's only eighth CEO. Think about that. So Tim Cook said the following, said, it's been a great, matter of fact, not great, the greatest privilege of my life to be the CEO of Apple and to have been trusted to lead such an extraordinary company. He says, I love Apple with all my being and I'm so grateful to have had the opportunity to work with a team of such ingenuous innovative, creative, and deeply caring people who have been unwavering in their dedication to enriching the lives of our customers and creating the best products and services in the world. Amen. Apple also said that ⁓ Sorozzi will become chief hardware officer, taking over for Ternus, who has been in an expanded role. Sorozzi, who has most recently served as the company's senior VP of hardware technology, will also lead hardware engineering. Now, how Apple done under Tim Cook? Pretty remarkable. The market cap increased by more than 20 fold on Cook's watch. Again, as of today's close, was worth $4 trillion. Cook, he's been handsomely rewarded. He took home $74.6 million. Let me repeat that, $74.6 million in total comp last year. Mere of $3 million and 1 million shares or more in stock awards, according to the recent regulatory filing. ⁓ Forbes his net worth is a mere $3 billion. I don't think he needs to listen to today's show, the five-year retirement red zone. I think he's kind of got that licked. But you do, so join me when I come back and I'll get down into those details. Let's turn it over to Kristen Snow, the Right Now Traffic Center. Hello, Kristen. Welcome back to the Jon Sanchez Show on Newstalk which happy Monday to all of you. Hope you're getting it. Really, a of clusters I indicated in last report in regards to the market overall, which is fine. We will take that. No complaints on this end. Finish down five on the Dow, NASDAQ lost 64, the S &P declined by 17. All right, I got plenty of time now to get to my topic. I got a lot of things to discuss with you. The five-year retirement red zone, right? This is, again, a critical, critical time period that many of you need to think about. And please, if you're not in your 60s, which is who I'm focusing on today, listen closely because before you know it, you'll probably be there, right? Even if you're in your 40s, it seems like it's a long ways away. It is not. It'll be here, like I said, in a blink of an eye. But there's many things that you need to be thinking about of what you need to be doing worried about and so and so forth because again, it's very unique time period, right? And that's why I've called it the retirement red zone because you essentially find in a position where You can't make any mistakes, right? And again, using the football analogy that the 20 yard is the red zone in football, right? You wanna get to the goal line. Well, you got a five year windows equivalent to the 20 yard line in football, right? You gotta get to the goal line, which in this case is retirement, you can't make a lot of mistakes, right? If you do, you'll lose the ball and you won't retire when you want to. And that's a crying shame. I don't want that for anybody. So what I'm gonna be doing is I'm gonna go through a lot of areas that again, are very critical in my opinion of. ⁓ things you need to be thinking about, and most importantly, not just thinking about, but acting upon, right? It's easy just to think about something. It's the hardest thing in the world to act upon it. So let's make it something that is an action plan for you to be able to do. And again, find yourself in a position where it is absolutely necessary that you follow some of these things, because if you don't, like you've heard me say many times over the years, the stories I could share with you people that went into retirement. way too aggressive in their portfolio or their 401k, whatever the case is. We get a big market correction, which the Lord knows we have not had one in quite some time. And you know it, ⁓ the which I'll never forget, I haven't heard them luckily in a lot of years, but the are, I planned on retiring, ⁓ pick your next April, next January, whatever it And now I can't because the stock market has sold off and I can't afford retire now. I hate those words, absolutely them. Let's do our best to make sure that never happens to you. So the first thing I want to help you with on the retirement red zone is the de-risking of the portfolio. Now, you know, this is a really tough area. I'm going to, I hate to say this, but I'm going to talk out of both sides of my mouth when I discuss this. Because if you read all the, you know, Wall Street jargon, you know, there's so many crazy, I was going to say stupid because in my opinion, they are like the one I'm going to mention here in a second, stupid rules that magazines and websites will tell you you should follow, and let tell you, from real life experience, it's not true. And the one that just gets me the most is take 100 ⁓ minus your and that difference is you should have in the stock market. simple math, ⁓ 100 minus, let's 60 years old, ⁓ then you should have 40 % in the stock market. Well, good luck on that. That ain't gonna happen, right? You're gonna get no growth out of your portfolio. ⁓ Yeah, you're gonna have a very low beta or what we call low risk portfolio, but at the same time, are not gonna be growing whatsoever because that means that everything else is either in income producing or ⁓ principal preservation of assets, which again, feels good when the market's down, feels terrible when the market's going up, and feels really terrible when you wake up at 80 years old and you don't have enough money to live, right? Because you haven't grown in the last, ⁓ you 10, 15 years. So throw that one out the window. So how do we de-risk the portfolios? And let me talk on the other side of my mouth. You can still have a very large equity exposure, dependent upon the balance of your portfolio. So let me give an example of how we do it. we will take, we'll kind of start off in our minds when we write a financial or a retirement plan for a client, we'll of start off in our minds as saying, all right, could a 50-50 portfolio work for this? Meaning 50 % in the stock market, 50 % into other investments, right? And we to use fixed indexed annuities, we like to use many things that produce income. that are non-correlated to the stock market. So if the market goes down, we're not having to call the client up and go, hey, guess what? We need you to cut back on your paycheck every single month. Never wanna do that. it depends upon a lot of different factors. It depends upon how much money the client has. Obviously their age comes into play, what their risk tolerance is, ⁓ are their sources of income, ⁓ So we also have a whole group of clients. Matter of fact, the majority of our clients, like I said, we start with that 50-50, but the majority of our clients, I would say, ⁓ are right around that 70-30 allocation. 70 % in the market, 30 % in more of the safe income producing investments. Now that's a pretty high allocation. Why are we so confident in doing that? one, we've been doing it a long time. Between Jason and I, we've been doing it over 50 years. We're pretty good on spotting when there's gonna be problems in the market, problems in the economy. We prepare, we go defensive with our clients. Second is we're a manager of managers, right? We manage institutional managers. ⁓ We have money that we manage in-house, but the majority of our assets under management, We subcontract to the best institutional money managers in our opinion, they're the best in the country. so I'll give you the best analogy on that is when go to build a house, what do you do? You hire a general contractor after your architect, right? You hire a general contractor. What does that general do? ⁓ He she then goes out and hires subcontractors, the concrete, framers, the landscapers, et cetera. We do the same thing. We act as the general contractor. We then go hire the subcontractors, meaning those institutional money managers, ⁓ which frankly, Many of them you would not have access to if it were not for us or other advisors that have this type of program. Most of them have, shouldn't say most, but a lot of them have 25 million to actually a couple hundred million dollar minimums. We get in significantly cheaper, in many cases, as low as $10,000. And ⁓ my favorite manager, which is just the Premier one, only $250,000 minimum. But these are levels. So what we do is we design the plan, and then we'll go out ⁓ and we'll... will subcontract with these managers, but not one manager, but an entire stable of managers. So if we feel that you need, I don't know, 50 % of your portfolio in large caps, then we'll hire a large cap manager or managers, right? That's all they do is manage the large cap portion. If we feel we need international exposure in your portfolio, we'll then go hire an international manager or managers. Maybe that's 10, 15%. Same thing with fixed income, same thing with alternatives, same thing with hedges, right? We can do all these different things. So based upon that, and again, we watch these things day in and day out, hour by hour, day by day. We're not afraid to fire a manager. We've only had to fire one in the roughly seven years we've been in this program. so these managers, they're vetted going into the program. They're literally every day by the platform that we use that provides this list to us. And so we're confident in the managers and their abilities. And frankly, they're, in my opinion, doggone good at what they do. So you factor all that in, and that's why we are more comfortable taking a higher allocation percentage of a client's portfolio than let's say someone that says, let's say you just go invest your money at an online brokerage firm, right? And you're trying to do it yourself, you have an advisor that is more static in his or her money management, meaning that it's more of the buy and hold, or we're more tactical. Yeah, then maybe that 40 % is the right number. But again, everybody's different. So that's how we kind of like to do it. The thing that you have to look at is, is de-risking meaning you're lowering your equity allocation? Well, potentially, but it also means what type of investments, right? You could have retired, you could be retired, you could have 100 % in the stock market. But you know what, is that the same equivalent if you owned, let's say a portfolio of really stable blue chip stocks, high dividend yield, names that have been around hundreds of years, that type of thing, versus that same retiree that put that 100 %... into software stocks and AI driven stocks and technology and so on and so forth? Absolutely not. So you see, de-risk is really just a generic term. You have to boil it down or as I say, peel the layers of the onion back and really get down to what are the managers? What's the allocation? What sectors are they in? What type of management style, again, meaning buy and hold or more tactical where there's activity going all the time. ⁓ You got factor all that in. But the bottom line is when you get into this red zone area, please take a look at the portfolio. I'm not saying de-risk of it by no means, ⁓ again, you gotta stay ahead of inflation. And remember folks, you may like it or not, I some clients that's like, no, don't wanna live longer than, you know, ⁓ you know, or so. Well, we all are, God willing. So you gotta let, have that money last for you. And that means you need stock market exposure. How much again, depends upon your personal situation. All right, we'll continue discussion on the red zone. Now, next one, I come back. I want to get into some social security strategies with you, because this is really important in this five year red zone area. Let's turn it over to Jack Saban. He's got news, and weather. Jack. Back to the Jon Sanchez show on news talk 780 k which once again a five-point loss whoo the Dow Jones the national average today that's that gloss 64 s down 17, you know I failed to mention one thing there was actually one really bright spot today It was the little guys the Russell 2000 actually another record closed today. It was up point five eight percent or about sixteen points So there go. We don't need those big boys a little guys did it did all the hard lifting today All right. get back to our topic today the five-year retirement red zone, right? This is really, really a critical time period, to give you some great information to prepare for that time period. I give you a little stat ⁓ before get back to the strategies here. know, JP prepared a really interesting report, JP Morgan Asset Management. what I'm gonna you, or share with you, should say, you're, I'm gonna give you JP Morgan is estimating based upon your salary, age 60 or 65, and how much money they estimate that you should have saved by those specific ages based upon your income. So this assumes a 10 % savings rate for households with gross income of 100,000 and 5 % for those earnings less. Lower assumed savings rate means households under 100,000 should have saved more to be on track. Okay, big deal. So just look at it this way, 100,000 income, and again, 10 % savings rate. All right, so here's what JP Morgan says you should have. So I'll just kind of hit the entire table. I'm just gonna hit some of common areas. All right, if you make 100,000, JP Morgan says if you're age 60, you should have 745,000 saved up. If you're age 65, you should be knocking on the door of a million at 925,000. If you make 150,000, JP Morgan says you should have 1.065 million if you're age 60 and 1,335,000. in 1,515,000 if you are age 65. And if you're higher income, 300,000 in salary, by age 60 you should have 2.225 million saved, or if you're age 65, 2.78 million saved. I know, don't cuss me out. I know what many of you are saying. Oh my God, I'm in a world of hurt, I have nowhere near that. It's all right, these numbers again, I don't care about. They don't really mean anything to me because. Once again, you heard me say it a million times on this show. It's about the sources of income that you have coming in. It's not the amount of money that you have saved. So don't stress by any means. But if you're way behind the savings curve, you need to listen closely to what I'm talking about. Okay, so let's continue down. What do we need to be doing if we're in that five-year retirement red zone, right? We're in our 60s. So let's talk a little social security strategy here, something I know many of you are really starting to think about at that age, 60 and beyond. So remember, those born in what, 1960 or later, you're gonna get your full promised social security benefit starting at age 67. So if you don't have it already, please go to ssa.gov, create your account, get your statement, see where you are. Okay, they got, it's an excellent website, all kinds of things you're gonna find out there. So what happens though if you're like, okay Jon, I'm one of those, I don't have nowhere near that amount of money and I need income coming in and I'm 60, I'm gonna retire in two years, what do I do? Well, again, people always ask me, do I claim my social security early or do I wait? And my answer is, it depends upon your circumstances. Obviously, as you'll find out here in a second, the longer you wait, the more money you're gonna have. But life is life. If you don't have a lot of income sources coming in and you wanna retire relatively early, then you gotta take social security, no big deal. So remember, if you claim social security at the earliest age, age 62, it's gonna reduce your benefit by roughly 30%. compared to those that claim it at the full retirement age. Again, this example age is 65. So 30 % reduction, okay? But if you wait until age 70, then your payout increases by 8 % a year from full retirement age, in this example age 67 to age 70. You're guaranteed to go up in your payment, it's 8 % a year. What other investments gonna give you a guaranteed 8 %? Not too many of them out there. So you coordinate that decision with your spouses. And again, the higher earner may want to wait a little bit longer to claim their social security benefits so it grows again, can better support a surviving spouse. Again, ⁓ strategies many of you thought about ago, my wife's gonna start, then I'm gonna start, then I'm gonna stop, and then she's gonna, those are all gone. Remember, all those loopholes are closed now. It's pretty cut and dry. you take it you can at 62, take that 30 % hit, wait till full retirement age, get that full benefit. or wait till age 70 and increase by 8 % a year from full retirement age until age 70. Okay, pretty simple, pretty simple. Okay, now let's get into one of my favorite areas, the tax tips. So the other thing you need to do in this five-year red zone area is you need to model out your distributions. I still find that many of you think that you have to do required minimum distributions at 70 and a half. Remember that changed during the pandemic. your required minimum distribution, which again, for those of you not enough to even care about it, ⁓ RMD is what that is, this the government's way of saying we're going to force you to take money out of your traditional IRA accounts, not Roths, but your traditional IRA accounts, because we've let you grow this money pre-tax all these years. It's kind of a penalty for getting older, if you can believe that. So remember, the RMD age is 73. So most people will taking their required minimum distributions, they'll postpone it as long as they can, but again. We're talking, back to real life, very of our clients have to take RMDs. Why? Because they're taking income already from their IRA. ⁓ This another misconception, people think. ⁓ Do have to take my RMD above and beyond my normal withdrawal? So let's say you're taking 6 % of your IRA, and again, you're 73 or older. So what you have to do is then let's say that dollar amount equates to ⁓ $60,000 a year. Generally, an RMD is gonna start around 4 % of your account value. So if you have a million bucks, 4%, that's $40,000. Well, in my example, I said you're taking out 60. So RMDs are not applicable to you. But if you're not taking any money out of your IRA, and again, back to my example, and you're 73 years old, then that's when the RMD calculation will come into play. And again, it of starts right around 4%. And it does increase as time goes on. We find most of our clients, they don't even want their RMD. They have to take it, we have to give it to them. But what most of them will do is turn around and throw it back into a taxable account. But you need to plan for this, right? This can get really messy if you don't plan for it very carefully. And the reason being is because that RMD is income, right? And so if you're kind of right on the cusp of bumping up to a higher tax bracket or Medicare or Social Security, mean, there's a lot of things in retirement that... the amount you're going to receive or the amount of taxes you're going to pay is dependent upon where you fall in the income brackets. So you got to be careful, especially if you have a IRA. That can really ⁓ mess up. So again, very important that you plan for that. So I to go to the next one, is same in the IRA side of things, but I'm going to call this mind your Roth. This is another that upsets me about Wall Street. They're so very adamant about telling you the public Oh, you need to convert all of your IRAs to Roth IRAs because taxes are never going to be lower than where they are now. I've heard this line a million times over my career. Don't buy it. Look at your own situation. Because remember, if you convert a traditional IRA to a Roth IRA, that becomes a taxable event. Again, talking about doing this in your early 60s can really screw up some of these benefits that we've been talking about. So remember, at age 65, you're going to be enrolling in Medicare, right? and probably Medicare, Part B, Part D, the drug side of it, et cetera. Well, your premiums go up with the higher income that you have. And what they do is they look back over the tax returns over the last two years to determine what those premiums in Medicare are gonna be. So if you, again, find yourself in a couple years before retirement or before age 65 where you're gonna go Medicare, you have to be very careful because if you convert, like I said, a bunch of IRAs or large IRAs and really bump up your income, That could cost you a lot more in your Medicare premiums. remember, since the Roth conversion increases taxable income in the year of the transfer, converting at age 63 ⁓ again, trigger that higher initial premium. So if you're going to do it, you probably want to do it before age 63 or afterwards. again, you've got to run the numbers. So be very I see that as a big trap a lot of people are not aware of. All right, when we back, I'm going to give you one of the best retirement savings pieces of advice that Some of you may not even be aware exists. It's a new rule that came out this year and it can dramatically enhance your pre-tax contributions. Cover that and wrap it up on our five-year retirement red zone topic. Let's turn it over to Kristen Snow. She's gonna wrap us up in the Right Now Traffic Center. Hello, Kristen. Welcome back to the Jon Sanchez Show on Newstalk which we're talking about the retirement red zone, the five year ever so critical period that you can't make any mistakes. You got to maximize everything if you want that comfortable retirement. All Let's talk about socking away as much as you possibly can. Obviously, I have enough time to go through all the details of everything, but let's just hit some of the basics. So remember, your still way too people not aware. It's been a long time since I've seen someone maxing out their IRAs, to be honest with you. But let's go over the rules again, right? Whether it's pre-tax, meaning tax deductible, or after-tax contributions, depends upon whether you're eligible to go into a 401k, what your income is, et cetera. Don't have time to go through that. But just remember, if you're under age 50, you can put in $7,500 this year into your traditional or your Roth. Over age 50, you can put in the 70, the, $7,500 and you get to add a thousand dollar catch-up, making, or $1,100 catch-up, excuse me, obviously making it $8,600 that you can put in. Again, pretty substantial if you and your spouse are doing that, right? So, $8,600 there. Okay, but here's what a lot of people are not aware of, a new rule that came out at the beginning of this year. It's on the 401k side. So, on our 401k, remember the new contribution limits this year? $24,500 if you're up to age 50. Age 50 to 60. You get to add in another 8,000 catch-ups, so that brings you to what, 32.5. But here's the new rule. If you're age 60 to 63, you get to do what's called a super catch-up. This is a new one that came out this year. So instead of the $8,000 catch-up that I mentioned a moment ago for those 50 to 60, you get to add in $11,250. So you're talking $35,750 that you could be socking away, hopefully all pre-tax, into your 401k. But here's the caveat. If you make more, so again, I'm gonna focus on you super savers, where you can put in an additional $11,250. Listen closely. If you make more than $150,000 in wages in the prior year, that super saver catch up, that $11,250, that money is gonna have to go into a after-tax Roth option. So once again, you can't put your catch-up, your super catch-up into pre-tax money like the old days. Effective this year, you gotta put that 11,250 into the Roth portion of the 401k, again, if you make more than $150,000. So you really need to pay close attention to that, but my goodness, you know, again, between the IRAs and the 401ks, And again, folks, as I've done many shows and I'll do many more on these, that contribution limits I just mentioned on the ⁓ 401k of things, that's just what you know about. I mean, there's other ways that, again, just for the average person, you can save a total of 70,000, not all of it pre-tax, of course, into a ⁓ if you're Massive numbers that you sock away. You just have to, again, learn about it, and that's what we do. So keep in mind, a of money you can save. You want to save as much as you can. HSA is another great way, pump as much money as you can into the HSA, because you don't have to spend all that. the time you retire, you always have the ability to either leave it in there or you can take it out and roll it to an IRA. So it's like another savings account there. ⁓ you have lots and lots of abilities to save a tremendous amount of money for retirement that's right around the corner this five year. And then last thing of course, update your financial plan. You need to sure that you financial plan. If you don't have one, get one. contact us, contact a financial advisor, a plan done. ⁓ get you ⁓ focused in and you'll feel so much better knowing where you are going from point A to point B. ⁓ five-year retirement red zone is critical. You can't sustain long-term market downturns. You have a diversified portfolio. Got to understand the taxes. I haven't got into ⁓ estate planning importance, proper insurance, et cetera. So there's a lot of moving parts to that five-year red zone. We'd be more than happy to work with you ⁓ talk to you about it. Because again, if you don't, Worst thing in the world that can happen is retirement rolls around at 65, you're ready to go, money's not there, cash flow's not there, you go through market decline, whatever the case may be, and then you gotta postpone it. And I've seen way too many people, folks, that have had to postpone it for various reasons. Unfortunately, health issues arise or they lose a spouse, and that retirement is nothing like they thought it was. I don't want that to be the case for you. So plan for it, and hopefully, again, we can be a part of that planning process. God bless, have a great afternoon. We'll see you tomorrow on the Jon Sanchez Show.