The Power Of Zero Show

Dave Ramsey and other financial gurus claim that indexed universal life insurance(IUL) is expensive and a ripoff. Are they right? Suzie Orman even says you should never work with an advisor that recommends IULs as a possible investment option. According to David, when someone tells you that IULs are expensive, the first question you should ask them is, compared to what? David compares the fees you would likely pay in a traditional tax-free investment versus a lifetime IUL. David explains that judging IUL fees only makes sense if you calculate the expenses over the product's lifetime and not the first 5 years when the fees are the highest. In today's example, David uses a 40-year-old man investing $20,000 a year into an IUL and compares the fees if the same man followed Dave Ramsey's investment advice. In the first year, the man will pay $3502 for the IUL compared to $300 on Dave Ramsey's SmartVestor Pro program - maybe Dave Ramsey was right, after all. However, by the 10th year, IUL expenses will have gone down to $2702, while the SmartVestor Pro will have risen dramatically to $3962. David reveals that it gets worse for the SmartVestor Pro by the 40th year - while IUL fees remain low at $2964, SmartVestor Pro fees will have gone to an astronomical amount of $31,263. This just proves that the expenses of an IUL are higher as a percentage of the balance in the earlier years but are much lower as a dollar amount in the later years. In contrast, David explains that the SmartVestor Pro fees are much lower as a percentage in the earlier years but become much higher as a dollar amount in the later years of the plan. David points out that IULs are meant to replace bonds and not the stock portion of your portfolio, as Dave Ramsey claims. Mentioned in this episode: David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube

What are some of the most outrageous anti-IUL claims on the internet today? David debunks some shockingly misleading claims presented by social media influencer Chris Kirkpatrick. Claim #1: Indexed universal life insurance (IULs) were born from insurance companies wanting to scale down on whole life insurance policies because they could no longer pay guaranteed dividends and needed a new profit center just to break even. This is just false because IULs were a result of the stock market crash of the early 2000's. Insurance agencies created a product that allowed investors to link the growth of their cash value to the upward movement of the stock market index. Claim #2: Insurance companies lure you in with artificially high cap rates, only to reduce them once they've sucked you in. According to David, cap rates change from company to company. However, the one he uses averaged a 7.09% rate of return since 2006 - this is quite impressive considering all the chaos witnessed in the markets during that period. Claim #3: IULs are 100% guaranteed to perform worse than initially promised. This claim is just laughable considering David saw an averaged 7.09 rate of return in the IULs he currently uses. Claim #4: Insurance companies drop cap rates early in the surrender period when the sting of cashing out is the greatest. Yes, surrender charges are harsh in the first 5 years of the policy. However, what Kirkpatrick fails to mention is that this is also the period when it least makes sense to cash out because average rates of return are usually higher - over 7.5%. David admits that IULs are not perfect, but neither are whole life insurances. Kirkpatrick is just a creative agent whose main agenda is to sell you whole life insurance at the expense of an IUL. According to David, when you choose an IUL, you sacrifice guarantees for higher rates of return. In contrast, when you choose whole life insurance, you sacrifice higher rates of returns for guarantees. Mentioned in this episode: David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube

What are Dave Ramsey's thoughts on Indexed Universal Life Insurance (IUL)? David debunks the 5 myths presented in Dave Ramsey's article on why you should run away from IULs. Myth #1: IULs never perform to their full capacity because the cash portion of the portfolio gets eaten up by the super-high fees. Yes, the fees will be higher at the start of the program but will reduce dramatically the longer you keep the policy. In fact, when you average the fees over the entire program, the costs translate to less than 1% of your balance per year. Myth #2: IULs contain numerous fees ranging from surrender charges, administrative charges, premium expenses, etc. David explains that IULs only work if you keep them for life - so fees should only be calculated after the contract expires, which often translates to 1% per year. Myth #3: When you cancel your insurance policy, you give up your death benefit and almost all the cash value you've managed to build. For David, this is by far the most ridiculous of all Dave Ramsey's claims on IULs. Not only is it misleading, but it is actually opposite to how cash-value life insurances work. Myth #4: Excessive fees keep returns relatively low, so your IUL will never beat inflation. This claim is just ridiculous, considering IULs were never designed to be a substitute for the stock market portion of your portfolio. Myth #5: Market performance will affect your premiums - the higher the rates, the more likely you are to lose your policy. According to David, this is a careless and poorly researched claim. Here, Dave Ramsey's primary goal is to lead you to strategically positioned links inviting you to buy term life insurance from him. David believes the only reason Dave Ramsey is against IULs is that he wants you to drop your IULs in favor of his term life insurance policy, with no regard to the losses you might incur or where you are in the surrender period. Mentioned in this episode: David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube

What is ChatGPT? David starts the conversation by explaining what ChatGPT is and the things that make it so revolutionary. ChatGPT is so advanced it has Google worried about its search engine's future. Will the advanced AI chatbot ever replace retirement advisors? David tests the chatbot by asking it a series of questions designed to stretch its basic retirement planning capabilities. When David asks ChatGPT whether tax rates will go up in future, the chatbot replies that it's tough to predict what future tax rates will be - a response David feels is rather "diplomatic." David tries to push the chatbot further by asking it what a life insurance retirement plan is. He is impressed with its answer, which is much more specific and descriptive than what you'd normally find online. After playing around with ChatGPT for over an hour, David believes the AI is not auditioning to replace financial advisors. The even more impressive thing about the chatbot is that its answers are much more balanced and devoid of emotions. Although the technology is not a replacement for financial advisors in the near future, David feels you can still use it to learn more about retirement planning. Mentioned in this episode: David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube

Learn the 12 rules of tax-free investing in a rising tax rate environment, including strategically shifting surplus funds to tax-free accounts. Discover the value of Roth accounts for tax-free withdrawals and the importance of avoiding higher tax brackets. Explore effective strategies for tax-free investing in retirement and the differences in life insurance retirement plans. Gain insights into the need for multiple streams of tax-free income.

David kicks off the conversation by laying out the 3 basic Life Insurance Retirement Plans (LIRP) and how you can find the best one for your particular situation. For David, an LIRP is like marriage - it's a long-term commitment that you only ever consider if you're willing to keep it until death. If you are looking for absolute guarantees, David explains that no product compares to whole life insurance. The promise to pay a death benefit if the premium has been paid, plus the option of a very stable and safe savings plan, make it attractive for most investors. David points out that the potential to borrow money from a policy is one of the reasons some people buy whole life insurance. However, whole life insurance has its drawbacks. For example, David reveals that unmonitored policy loans can derail your retirement plans or leave you with a significant income tax gain. In the case of Variable Universal Life Insurance (VUL), David explains how the policy has investment subaccounts that allow the insurer to invest the cash value of a policy. Although you may enjoy better-than-average returns with a VUL, your cash value can be significantly reduced due to poor performance of your investment options. The thing that makes Indexed Universal Life Insurance (IUL) attractive is its ability to generate greater upside potential, flexibility, and tax-free gains. However, David explains that the IUL is not designed to be a stock market replacement, nor can you experience the type of return you could get from a VUL. When it comes to ILRPs, David is convinced there is no one perfect solution because all three have distinct attributes. Your job is to find the best one for your situation while protecting yourself against potential downsides. Mentioned in this episode: David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube

David kicks off the conversation by revealing that tax rates will revert to where they were in 2017 - you have only four years to take advantage of the historically low tax rates and do a Roth conversion. David explains that most people will try to accelerate their Roth conversion efforts before the 2026 deadline. The problem with this is that trying to accelerate your conversions could bump you into the dreaded 32% tax bracket. You don't have to be a mathematician to realize that the 32% tax bracket is a 33% increase over the 24% - and an unnecessary expense to your Roth conversion strategy. According to David, the 24% tax bracket is the sweet spot in Trump's tax cuts because for an additional 2% on the margin, you can convert an extra $160,000. David points out that the people who accelerate their Roth conversions and end up in the 32% tax bracket will be paying more to the IRS than is absolutely necessary. David explains why the 32% tax bracket is the riskiest region of our current tax laws. David believes the easiest way to get ahead of the 2026 deadline is to extend your Roth conversions past 2026 to 2028 - the three more years will guarantee that you stay in the 22 and 24% tax brackets. Although taxes are going up in 2026, David believes you don't need to move heaven and earth to complete your Roth conversions. As long as you remain in the future versions of the 22 and 24% tax brackets, you will be safe. Regardless of who takes office in 2024, David maintains that Trump's tax cuts will likely be extended, and the taxes for the American middle class will likely stay the same. David explains why the year you should be worried about is 2030 and not 2026 when it comes to the risk of rising taxes. Mentioned in this episode: David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube

David starts the conversation by pointing out that more and more financial experts are convinced that tax rates will rise dramatically to pay for unfunded obligations in the future. One way to protect yourself against rising tax rates is to do a Roth Conversion. Taxes will be on sale for another 4 years before they go back to the 2017 highs. If you are serious about retirement planning, David believes you would be wise to take advantage of what he calls "The Tax Sale of a Lifetime." The second way would be to contribute to your Roth 401K. It may make sense for you to stop contributing to your 401K and direct those contributions to a Roth 401K because now is arguably the best time in the history of the US to be making contributions to tax-free accounts. The third point would be to max out on your Roth IRA. As of 2022, you are allowed to contribute $20,500 per year to a Roth IRA and an additional $6500 for catchup if you are above age 50. Point number four is taking advantage of a Health Saving Account. A Health Savings Account allows you to set aside pre-tax dollars to pay for qualified healthcare expenses. Contributions are tax-deductible, grow tax-deferred, and can be distributed tax-free. Last but not least is making contributions to a cash-value life insurance. David explains that Dave Ramsey and Suze Orman may preach against permanent life insurance, but the more experienced financial experts are all for it. A great example is America's IRA Expert, Ed Slott, CPA, who went on live television to declare permanent life insurance as the single most valuable benefit in the IRS tax code. David agrees with Ed Slott that making money from investments is harder than it ever was. The last thing you'd want to do is share your hard-earned gains with the government. Mentioned in this episode: David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube

David starts the conversation by describing the changes you can expect from SECURE Act 2.0 and what these changes will mean for your retirement plans. According to David, too many workers retire without enough savings to comfortably live. However, SECURE Act 2.0 may change all of that by expanding coverage, increasing amounts on savings, and simplifying the current retirement system. David explains why SECURE Act 2.0 enjoys broad bi-partisan support. Although SECURE Act 2.0 still has a long way to go before being passed into law, the Senior Vice President of NAIFA, Diane Boyle, said she is "optimistic" the bill will be passed into law in 2022. David highlights how one of the more notable changes in the proposed bill will move the date for required minimum distribution from 70 and ½ to 75. Under current law, if you fail to take the right amount in a required minimum distribution, you will be forced to pay a 50% exercise tax. However, with the SECURE Act 2.0, the penalty gets reduced to 25% and down to 10% if you get everything corrected. David believes, if passed into law, SECURE Act 2.0 will encourage more retirement participation. For the workers still paying their student loans, David reveals how the bill will allow employers to match the amount employees pay towards student loans. Several politicians have expressed the desire to get the bill passed before the end of the year. David believes now is the ideal time to get your affairs in order because some changes will come into effect as early as 2023. Mentioned in this episode: David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube

David starts the conversation by explaining why financial gurus like Dave Ramsey and Suzzie Orman hate permanent life insurance. With all the financial information floating around on the internet, who do you follow for advice on where to invest your money? David believes everybody's situation is different, but the best people to follow are the ones who are consistent with their messaging. David calls out The White Coat Investor for misleading people that interest rates won't go up, only for him to change his mind when Biden's tax proposals threatened to raise taxes. According to David, there are two sides to every investment advice on the internet. Instead of stubbornly following one narrative and muting everything else, your job as an investor is to listen to both sides of the story and decide based on your current situation. When meeting with an investment advisor, David believes the least you can do is ask as many questions as possible. There is so much controversy around permanent life insurance because gurus like Dave Ramsey and Suzzie Orman have continuously peddled lies that life insurance doesn't compare well to the stock market and that the expenses are too high - both of which are false. For David, permanent life insurance is like marriage; you should only invest in one if you plan to keep it till you die. Although most financial advisors agree that interest rates will go up, David feels they need to take more action. Believing is one thing, but taking action to mitigate the risk of higher tax rates is a whole different story. When asked what advice he would give to people approaching retirement, David explains they only need to plan for two things - higher taxes and outliving their money. For the younger people who are not that close to retirement, David notes that tax rates will undoubtedly be higher in the future. So now would be a good time to take advantage of all the tax-free savings tools at their disposal. Mentioned in this episode: David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube Comeback America: Turning the Country Around and Restoring Fiscal Responsibility by David M. Walker