Latest / The Jon Sanchez Show / The Retirement Lie That Could Cost You Everything
Transcript
- Jon G. Sanchez, CEO: Good afternoon, everyone. Welcome to the Jon Sanchez Show on Newstalk which happy Monday to you. So sorry for the technical glitch at the very beginning. Do appreciate you joining me. What a great show I have lined up for you this afternoon. You know, quite a weekend, right? Quite a weekend. Peace Talks just fell apart. Matter of fact, don't know if they even got started. 21 Hours, JD Vance and the rest of the crew said that they diligently worked at to try to bring this whole Iran conflict to an But nothing happened. Then of course, President announces on Saturday, we're taking over the Strait of Hormuz. That's right, States of America is taking over the Strait of Hormuz. We're gonna control who goes in, we're gonna control who comes out. But do we know if that's really going to work or not? It's quite a task, but no one better to do it than the United States of America. Market didn't like the news initially. Market sold off on it early this morning. Oil prices skyrocketed. Market went down. Matter fact, right before my first stock update this morning, at about 523 or so, we were down almost 500 points on the Dow futures. But amazingly, this market rebounded. Oil prices came down. And once again, I'm going to use the term as I've used almost every single day in this market as this war has gone on. You scratch your head and just go, it makes no sense. The engine that could, just, this market just will not stay down based upon what would be normally very, very negative situations. But it prompted me to create today's topic. The retirement that could cost you everything. Pretty harsh comments, right? But it's very true. And what I'm referring to is something that many people, including advisors, are taught to tell their clients, and that is this. every dime that you possibly can into one single investment. And that investment, if you save enough money, will take care of you for the rest of your life once you get into retirement. And that one investment I'm talking about is the But is the lie. If you think your 401k is to carry you through retirement, you may be in for a very, very rude awakening. So today what I'm going to do after I give you my stock market recap, I'm going to expose the retirement lie that most Americans still believe and why this lie could cost you hundreds of thousands of dollars if you don't fix it starting ⁓ now. So you don't want to miss this topic because I know majority of you listening that are hard at work, your work hopefully has provided you with a 401k. but looking at it wrong, handling it incorrectly, could be one of the biggest mistakes that you ever make. Because you see, we're brought up to tell you, and you're brought up to believe that your is gonna be the holy grail of everything. It'll provide you income for life. You just have to save a whole bunch of money. Well, part of that is true, but there's a lot of it that is not true, and that's what I'm gonna expose to you. in today's topic. right, so we'll get to that momentarily. In meantime, let us get down to today's stock market activity. So once again, we go back to what happened weekend. And this weekend was, again, a bit of a heart stopper for many of us. I know I not wait till 3 o'clock yesterday afternoon when the futures started trading, because I'm thinking, this is not going to be good. This is not going to be good. You let your imagination wander a little bit. All right, United States Navy comes in. They control every ship going in, every ship going out. There's over 1,600 miles shoreline in the Strait of Hormuz. of closer to 1,700 than it is to 1,600. A lot of bad guys sitting on those shores. Still, Iran says, I don't know, you guys haven't sunk everything that we have as far as those mini boats that can cause all kinds of damage that they've done over the years. So you sit there and you go, OK, let's think about this for just a second. The negotiations broke down. Nothing happened for the 21 hours ⁓ they all met, meaning JD Vance and Pakistan Iran and so on and so forth. So nothing happened during that period. ⁓ They walked away it ⁓ from a standpoint Iran said, your demands are just of left field, basically. Just like what I had said on Friday, what we were asking for and what they were asking for, we were miles apart. So this outcome did not surprise me one bit. But what did surprise me is the president announcing that we were taking over the Strait of Hormuz. And that became effective at 7 a.m. Pacific Standard Time today. Okay, this isn't something that happened over the weekend. This happened today. And so what I wanna kind of sit there and think about is, well, what does this really mean? What's the purpose behind it? Let's start with that. The purpose behind it, of course, is could we theoretically control all of this oil that China needs, needs, matter fact most of Asian needs that comes out of the Strait of Hormuz from the various ports. Are we now in charge of basically the whole global supply of oil? Well not the whole global supply because about 22 % of the global oil used on a daily basis comes through the Strait of Hormuz that we now control. Because remember week, Iran came out and said, okay, we're gonna start charging a toll, a couple million dollars at least per ship for any ship leaving the Strait of Hormuz. Trump did not like that idea whatsoever. So now we control it. At least on paper we do. Obviously we have a significant amount of naval assets sitting in that area. I don't think anybody wants to mess with us and guess whether or not this is gonna happen or not. Right? So we've got a situation where we are sitting there going, all right, well we control it all. Which like I said in the beginning. I still believe that this was the intention of the war, for us to control all the oil. The president also said, look at, buying from the US, which doesn't make any sense for China and other Asian countries. It's too far. They'd much rather get it from Iran. So now we find ourselves in a whole other situation, trying figure out how this whole thing is going to work. Now, I do to mention that the president did come out. Well, ⁓ let me rephrase CNN came out. That was kind of mid morning, I guess it was. The reporter Alana Treen, she posted on X that the Trump administration is discussing a potential second in-person meeting with Iranian officials before the ceasefire between Washington and Tehran expires next week. And that's all this market needed to hear. And that's what I said at the beginning of the show, and I say almost the beginning of every show. The engine that... just won't give up, meaning the United States economy, the United States stock market. live and die by the hope that this thing is gonna get resolved. You look and see what happened last week, of course, when the ceasefire was announced, and then the talks break down, the futures fall, oil prices skyrocket this morning and overnight, and then all we get is one headline saying, we're gonna be open for another round of talks. We hope that works. But as I said last week also, This is a market that is completely whipsawed by headlines. Good headlines we move up, bad headlines we move down. Good headlines you see, you know, the travel stocks and the oil producers go, you see the travel stocks go up, oil producers go down. You see all the normal things. But once again, we're just whipsawed each and every day, hour by hour, by the headlines that come out of Washington or somewhere else in the world. So the good news is we skated out of the day with some pretty good gains. Matter of fact, we picked up some excellent, excellent momentum going into the close. And so that point, the market is back to something that's going to be resolved in this whole situation. Don't know when, but it's going to be resolved. And that's the optimism that investors have at this particular time. So as long as that optimism can remain, I don't think this market's really that concerned about the price of oil. I really don't. very apparent that it's not. As long as there's a hope, there's that, as I keep calling it, the golden carrot that's out there, that this thing will be resolved and oil prices come down, then this market's gonna continue to chug higher. In to that, we had earnings season kick off officially today, had Goldman Sachs, of course, the Dow component, as I'll cover when we come back, report decent numbers that are a little bit light on fixed income and a few other areas. and they punished the stock for that one, but that was one of the big drags on the Dow Jones Industrial Average futures early this morning when the numbers came out. But they recovered a bit, still down for the day. So overall, like I said, decent day. I'll tell you exactly what those numbers are when we come back. Let's turn it over to Kristin Snow. She's in the Right Now Traffic Center. Kristin. Welcome back to the Jon Sanchez Show on New Stock which hope you had a great Monday and going to have a great Monday evening. All let me tell you how this market fared after again, pretty good sell off early this morning after news of the US taking over the Strait of Hormuz became official at 7 a.m. Pacific Standard Time today. We're controlling coming in and going out. So it's going to be interesting. Like I said, were down almost 500 in the pre-market session at about 523 or so this morning, but boy, what a rebound we had. finished the day higher by 302 points, .63%, to a close of 48,218. Nasdaq rose 281 points, 1.23%, closing at 23,183. And the S &P up 69 points, or 1.02%, to finish the day at 6,886. All right, in a moment we're gonna get to our topic, the retirement lie that could cost you everything. Let's go to oil. I don't even remember our best level, or let's see, our worst level today, worst level as far as markets concern, best level if you're long oil. I think it was probably my first update. Yeah, we were up $7.71 at 104.25 a barrel. How'd we finish? Up $2.42 to 98.97 a barrel. Gold prices were strong throughout the day, finished with a gain of $20.50, closed in at 4,766.80 an ounce. and down two basis points on the 10-year treasury at a yield close of 4.3%. All right, let's get to some of the movers that may be in your portfolio. We'll start with Oracle had a heck of a day today. Top performing stock in the S &P 500 finished up $17.54, a 12.71 % gain to $155.64. All right, then we go to Microsoft, up $13.50. It was down early this morning, rebounded nicely. 3.64 % increase to 384.37, solid standout there. And out of Goldman Sachs, again, they released in the pre-market session the earnings numbers to kick off this earnings season. Worst level, if I remember, we're down around $34, $35 a share right around there. Finished the day down $17.00 in a penny, 1.87 % loss to $890.79. Company top earnings estimates very handsomely, by the way. But succumb to, I guess we can kind of call it sell the news, all right? The stock's been running up pretty nicely ahead of these earnings numbers. But also if you delve deep into their, into the report, They were a little bit light compared to Wall Street's expectation in a couple areas, fixed income trading, any bonds, et cetera, as well as commodities did not come in in line or better than Wall Street's expectations. So that's what the traders tended to focus on and put the pressure on the stock. ConAgro, one of the worst performing stocks of the S &P 500 after announcing their CEO is going to step down May the 31st and a new one's going to be taking over effective June the 1st. So ConAgro today was down 67 cents, 4.41 % loss. $14.51. Other than that, like I said, relatively quiet. was all just about, you know, how's this market gonna handle the new news on the Stradivar Moose? And obviously, it turned around and handled things just fine. So not gonna waste your time or mine talking any more about it. Let's get to our topic, ⁓ the lie that could cost you everything. You as told you at the beginning of the show, we were brought in this industry to tell our clients the following. Almost like to scare them. Hey, you know what, tell your clients they need to save every dollar they possibly can. They need millions and millions of dollars in their 401k when they're ready to retire if they're gonna have any kind of retirement whatsoever. It's one of the biggest lies that probably ever, created. It's not true. I've had many clients over the years that did not retire with significant sums of money. When I'm saying ⁓ I'm talking anything, ⁓ know, we'll call it over half a million dollars. Many clients retired with much less than that. But you know what? They still are living one heck of a great retirement. It's not about the size of the 401k account. It's about a few other things I'm gonna break down for you. you're probably told the same thing at work, right? Put every dollar that you have into it. Cool, like anything, you should save. But here's the problem of a ⁓ A can be a diversified investment, and that's the point I wanna get to. It can be a diversified investment, meaning most 401k plans now give you a great selection of mutual funds to choose from. yes, are, sooner later, we're going to be seeing other types of investments like alternatives and ⁓ a other things that Congress is mulling around. And ⁓ some it's been approved. We're just waiting for Department of Labor to sign off. Again, somewhat assets, quote, quote, that'll be going into your, at least being offered in your 401k, especially those of you that work for a company that has a big plan. But let's forget about that for the moment. the biggest downside or the biggest risk that you face putting all your money into a 401k? The risk is you're 100 % exposed to the stock market. You see, I've evaluated thousands of 401ks over the years. And very, very few people split their money out of the stock market and into fixed income or something that is not pure stock market related. Why? Well, it's been a pretty smart move actually because bonds haven't kept up with stocks. and some of the other like real estate investment trusts and a few other things really haven't kept up with the stock market. So people tend to manage their 401k the following way. There's an analogy I use. They drive their car by looking in the rear view mirror, not through the windshield. Meaning, when I've sat down with clients and I've reviewed their 401k and first question I ask is, how did you choose your allocation? And the number one answer that they always tell me you know, I sat down usually year or a couple years ago, And I went through the list and I chose the investments that had the highest rate of return. And I just sit there and go, oh my dear, not a good way to do it. That's driving the car by looking in the rear view mirror, right? You're buying funds that did well before. Rarely do those funds continue to do well going forward, right? Wall Street rotates. We go from small caps to mid caps to large caps to, every once in a while, it'll be everything, right? That goes up on a yearly basis, but rarely. Usually it's gonna be some areas of the market will outperform another. Well, if you're choosing your allocation based upon how the market performed or what sectors or what holdings performed best years ago, again, you're driving the car looking at the rear view mirror instead of through the windshield. So that is what brings me to my point, the reality check. The reality check is most of you have, your home, your 401k is your biggest asset. But the 401k be a very, very powerful vehicle if handled correctly. It can be a very, very dangerous vehicle if handled incorrectly. Meaning, that first option I just gave you, you're choosing your investments based upon how they performed in years past. That's one of the biggest mistakes that I see. The other mistake I see the following. Everything in the stock market. And what many people do not realize is that 401k, I can't the word, it can be actively managed, but it can be managed. And most people do not manage their You said they'll make an allocation, again, ⁓ they're doing it on a quarterly basis, which they at least should be. But usually, like I said, it's a year or two ago that they did the allocation. But what they don't generally do is they don't make any changes. So as the markets and the economy changes, they just stick with the same thing. And years past, that's been okay. That's kind of the buy and hold mentality. But my job is to caution you and prepare you for when the norm does not occur. What happens to your 401k, to your life savings, to the account that you're relying upon to provide you with retirement income? What happens if that thing drops 10, 20 %? What will that do to your retirement plans? So especially for those of you that are within a five to 10 year window of retirement, It can take many years to get back to where you were. It wasn't your fault. You thought, hey, I own whatever, 10 mutual funds, 15 mutual funds, whatever it is. But they're mutual funds. They're equity mutual funds. They tend to all do the same thing. They're like a herd of cattle. They all go in the same direction, either up or they go down. Life is great when they're going up, but life is painful when they're going down. So that is one of the biggest risks and the biggest lies that people will tell you and Wall Street will tell you is, Look at, just put everything you have into the 401K. Forget about everything else. Because you're putting money in pre-tax, it's growing tax-deferred, and then you're gonna have a big ol' lump sum of money when you're ready to retire. Well, there's a better way to do it, and I'll share with you how that is when we come back. Let's turn it over to Ryan Nutter. He's got news, and weather. Hey, Ryan. Welcome back to the Jon Sanchez Show on Newstalk 780K, which thank you so much for joining me this Monday afternoon. I do appreciate it. Once again, it turned out to be a decent day. Finished up 302 on the Dow, 0.63%. NASDAQ rose 69, or 1.02%, and the S &P higher by 280, or excuse me, the NASDAQ up 280 points, 1.23%. So once again, Dow 302, NASDAQ up 281, and the S &P higher by 69. All right, we're just getting into our topic, the retirement lie that could cost you. everything, right? This big misconception. People think that I make, I need, I save for retirement all has to go into my ⁓ Well, 401k has lot of advantages, but also it has a lot of disadvantages. ⁓ And I to point these out and then I'm going to come back with to a solution with you because putting, as the goes, all of your eggs into one basket. I'm not talking all of your eggs into one investment, one mutual fund, two mutual funds inside your 401k. I'm talking about putting all of your retirement money into your 401k could be one of the most costly and biggest mistakes that you ever make. Okay, so what's the problem? Again, you have a limited number of investment choices in a 401k. Again, I'll tell you, the industry has done a phenomenal job over the years since I got into this business back in 1993. There were, you know, even big plans had a very small number, 10, 15 funds. Now some plans, I mean, geez, 50, 100, believe it or not. So you have great selection. You also have things called lifestyle or target date funds where if you don't feel like trying to choose, you know, certain percentage to go into large cap and small cap, et cetera, the fund will do that for you. we've come a long ways. But again, one of the biggest concerns that I have with people is every dollar they have towards retirement is going into there and they're not managing it. They're not changing as market and economic conditions change. If their personal risk tolerance changes, they're really not changing it for any reason. ⁓ And choosing their investments based upon maybe what was going on a year or two ago. Your folks, again, remember, for most of you, it's gonna be either your largest or second largest asset compared to your home. So it needs tender loving care, it needs professional management, it needs to make that again, it changes as times change. Because trust me this, there will come a time, even though many of you don't remember it, especially those of you that are young I'm talking about, there will come time. where this market will go down year after year after year. That's historically what it's done. But it's been so long since that's happened, people think, you know what, I can be 100 % aggressive in my 401k and everything's gonna be fine. I hope it is for you. But that's not my job. My job is to look at a worst case scenario. So do we need to do? We we need to save. There's no other investment vehicle without getting very complicated retirement plans that we offer. There's no other that allows you as an employee to save such a large amount of money on a pre-tax basis, grow it tax-deferred, be able to take a loan against it if your plan offers it, and then at some point roll it over into your own IRA when you're ready to retire to have it professionally managed or maybe you want to self-manage it. Nothing else out there like it. And again, I'm not gonna go over all the contribution limits. I've covered that the last couple weeks with you. So they're significant, especially if you're age 50 or older and really significant if you're age 60 to 63. Great catch up contribution amounts. But let's focus on everybody else. All right, so let's recap what I've said. Great savings vehicle, great way to save for retirement, but very high risk. Why? Because again, very simple. We're putting all of our eggs into one basket. So what's the solution? You may be asking. What would I do? If I were in your situation, and especially if I'm, again, you within five to 10 years of retirement, and especially if I'm over age 50, I would make a phone call to my plan provider tomorrow. And here's the question I would ask. Does our plan offer in-service withdraw feature? And you may be saying to yourself, wait a minute here, what the heck is this thing? An in-service withdraw feature, what is that? Folks, an in-service withdraw can be one of the most powerful retirement savings vehicles ever created, in my opinion. very few people know about it. Why? Because most plan administrators, and including your employers, don't want you to know about them. You see, your plan likes to have you have all of your money inside of there. You're playing custodian. They definitely love it because they're charging you internal expenses. Not very much, but they're charging and you're making a lot of money. But we don't care about them, we care about you. So what is an in-service withdrawal? Again, one of the best kept secrets out there besides the back door Roth, which I'll cover in another show. An in-service withdrawal allows you to take money out of your while are still employed. Let me repeat that. An in-service withdrawal allows you to take money out of your 401k while are still employed. You may be thinking to yourself, wait a minute here. I was told that I could never take any money out unless I died, don't like that option, become disabled, don't like that option, or I leave the company and then I can roll it over to an IRA. Well, those are the quote traditional ones that everybody tells you about. But I'm telling you about a better strategy, an in-service withdrawal. So how does it work? the first thing you have to do is check with your plan provider and ask them, does your plan allow this? What I am finding is more and more plans Do allow it. It used to be very uncommon. Now it's very, very common. On a local basis, those of you that work for Envy Energy, they offer it. And there's a handful of other local employers that offer it. But again, just call up your plan provider and say, it available? All right, so let's assume the answer is yes. Here's the rules. Typically, you have to be age 59 and 1.5. in order to be eligible for an in-service withdrawal. But what does the in-service withdrawal allow you to do? It allows you to eliminate the problems that I've spent almost the majority of this show talking about, meaning having all of your eggs in one basket in a 401k. with an in-service withdrawal, A, if your plan allows it, B, you're over age 59 and a half, what you can do is you can move money from 401k, again, ⁓ while are still working there still alive. and transfer it to an IRA account. tax liability, zero. Now it's sitting in an IRA account that you or you and your advisor get to manage. Well guess what? That IRA, which I'm gonna be doing some shows on this, I promise, but we're not quite ready to make our announcement, what we're doing in our firm, but it's That IRA can be invested into anything. You see, a lot of people don't realize that either. An IRA, if you look at the tax codes, an IRA can be invested into anything other than collectibles, which are defined as stamps and rugs and life insurance. That's right. That IRA, called a self-directed IRA, can be invested into real estate in all forms and aspects. Single-family rentals, industrial, raw land, you name it. It can be invested into businesses. hold another show on that area. But I just wanted to let you know that now you take it out of the 401k you have a, it's like going, the analogy I always tell clients. ⁓ You to a restaurant, ⁓ the hands you a menu and you go, ⁓ okay, this looks good, this looks good, looks good. Boy, I really wish I could create my own menu. Well, that's what happens with a self-directed IRA. You now get to design your own menu. Just don't put on there stamps, rugs, and meeting collectibles. and life insurance and pretty much everything else it can be invested into. there are some very strict rules which I'll cover later down the road when it comes to buying single family rentals ⁓ other types of rentals and renting them back to family members. I'm talking all lineage, right? There's specific rules that you have to follow. But just make it really, really simple that you I want a rental property. But you're 401k, your employer and current plan's not gonna allow that. But let's say you go, hey, know, I listened to that guy on the radio and he said, I need to diversify my 401k. So therefore, how would you like to know that that money that used to be in your 401k is now in your IRA that you control and you go out and you buy a single family rental and you've got rental income coming in? How's that for diversification and not having all of our eggs in one basket? Okay, so that's called an in-service withdrawal. Again, I'll do a whole nother show on all the specifics, but I just wanted to kind of whet your appetite and let you know. that that is available. Again, the rules, your plan has to offer it. Number two, you gotta be 59 and a half or older. And number three, you wanna roll it into an IRA account. Zero tax consequences. If you wanna get into things like I just mentioned, the self-directed side of it, give me a holler because a lot of firms do not offer that. They'll just give you traditional stocks, bonds, mutual funds, et cetera. Okay, now, ⁓ final rule I wanna mention very quickly before we go to break ⁓ what's the downside? Because everything has a downside. The downside, as I always tell people, is this. Don't do the in-service withdraw if you like that ability to be able to borrow against your 401k. Because remember, once it's in an IRA, you can't borrow against it. While it stays in your 401k, you can borrow up to 50 % of the value to a maximum of $50,000, as I've shared with you many times. Once it's in the IRA, you can't borrow against it whatsoever. if you have a current loan and let's say you're maxed out 30%, 40 % of your ⁓ balance, same thing. You don't want to. screw that up and move it over to a self-directed IRA because they could show that as a default and it could be taxes and penalties and a whole other mess. But if you just have a 401k sitting there, no loans against it, you got plenty of liquidity elsewhere in your life, and you're like, hey, you know what? I need to get this thing out as much as I can. I'm move it over. When we come back, I'll tell you approximately what percent of your 401k can be moved in an in-service withdrawal. Let's wrap it up with Kristen Snow, right now, Traffic Center, Kristen. Welcome back to the Jon Sanchez Show on Newstalk 780KOH. Well, I hope you've enjoyed today's topic. If it can be of interest to you, if you're concerned about having all of your eggs in one basket, meaning in your 401k, give us a call at Sanchez Gantt Capital Management, 775-800-1801, or send me an email personally, johnjowinn.sanchezgantt.com. Let's see what we can do to help you out, because again, especially those of you that have accumulated significant sums of money, I just had a situation, gosh, what was it, two or three weeks ago. And this is really where I like to get involved our clients ⁓ the standpoint, this young woman was ⁓ getting to retire in about the next year, had over million dollars accumulated in her 401k, and we able do an in-service withdrawal. Now we have it professionally managed for her, and it's not just sitting in a 401k susceptible to market ups and downs. Sure, it's going to go up and down with us, but we were able to diversify it among various investments and provide professional management. That's the real advantage of not having all of your eggs in one basket, just in your 401k. But again, to recap, have to make sure that your plan allows it. You're age 59 and a half, you don't take a direct distribution, you don't have loans against it, nor do you wanna be able to take loans against it. That's ⁓ really most important thing. Here's a other negatives to it. Again, don't ever the money directly, because it'll be taxable to you and potentially a penalty. Also remember loss of or protection. ⁓ In the state of Nevada, look at NRS code 21.090. protects your 401k to a million dollars from creditors. And under most circumstances, there's some ⁓ little there you need to talk to an attorney about. But IRAs protected up to about $500,000. So you lose a little bit of ⁓ creditor protection that's of any concern to you. So once again, it's very formidable strategy. It takes all that money out of the ⁓ 401k, diversifies it, gives professional management. and you can buy a lot of different things in that self-directed IRA that you can't buy inside your Again, we can be of service to you, by all means reach out to us. God bless, have a great afternoon. We'll see you tomorrow on the Jon Sanchez Show. Take care.