The Power Of Zero Show

In this episode of The Power of Zero Show, David McKnight talks about what you can do to protect your pension in the current rising tax environment. David explains that tax rates will rise dramatically within the next 10 years due to massively unfunded obligations like Social Security and Medicare. According to former Comptroller General of the United States, David Walker, tax rates will likely double by 2030 to keep the country from bankruptcy. Given the impending doom, David believes it's time we all start to think about protecting our taxable income streams. David highlights that the pre-tax amount on your pension might be guaranteed, but your after-tax amount is not. If you'd like to protect your pension from higher tax rates, David explains the first step would be to consider a lump sum pension distribution option. If this option is available for you, it would be advisable to move as much money into a Roth IRA to shield your dollars from the impact of higher taxes. However, when moving pension dollars into an IRA, David reveals you must move slowly enough so you don't move into a tax bracket that gives you heartburn, and fast enough that you don't get caught up with higher tax rates. David discusses the role of tax-deferred retirement accounts when combating the impacts of rising tax rates. 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

In this episode of The Power of Zero Show, David McKnight shares evidence that unless there is immediate and dramatic fiscal realignment by the Federal Government, the U.S. will be mired down in a Great Depression by 2030. Citing Brian Beaulieu, David discusses the role Baby Boomers play when it comes to Beaulieu's prediction of the U.S. undergoing a Great Depression beginning in 2030. David shares that Maya MacGuineas' recent study showed that, just to prevent the debt from growing at a rate in excess of $1trillion per year by 2025, the Government would have to raise taxes on any dollar earned above 400,00 to 102%. David brings David Walker's words into the conversation. According to Walker, on average, Americans pay about 21% of their income to federal taxes, and another 10% to state and local governments. By 2030, to pay the rising bills, that amount could be at least 45%, even higher that the average 42% that most Europeans pay. David talks about a couple of points Brian Beaulieu, David Walker, and Maya MacGuineas seem to be in agreement on: that tax rates will have to go up dramatically by 2030 and that politicians are likely to kick the can down the road. David touches upon what you can do to best prepare for the Great Depression of 2030. 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 POZ Video: How High Will Biden Have to Raise Your Taxes? Comeback America by David M. Walker Brian Beaulieu David M. Walker Maya MacGuineas

This episode of The Power of Zero Show addresses the recently-released new contribution limits for the 401(k) in 2023, as well as additional increases in other IRS thresholds. David shares that the IRS just released all their inflation-adjusted numbers for 2023. The biggest surprise is a 9.7% increase in the limits for the 401(k) contributions, which went from $20,500 this year to $22,500 next year. In addition to the contribution limits for the 401(k), the IRS has also increased the catch-up contributions for people over 50. According to David, the Roth 401(k) has become one of the real juggernauts for those looking to build huge amounts of tax-free retirement wealth. David goes over some of the additional changes and increases, as well as their repercussions on single people, married couples, and people over 50. David reiterates the fact that the 24% tax bracket is the single biggest sweet spot in the Trump tax cuts, and goes over what will happen if you aren't going to take advantage of it. 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

Today's episode of The Power of Zero Show is a segment of an interview David did with financial advisor, Ron DeLegge. They discuss, among other things, whether it's a good idea to convert your Roth IRA while the stock market is down. David shares that there's no such thing as a 0% tax bracket in the U.S. tax tables. Zero describes the condition of someone in retirement who isn't paying tax. Being in the 0% tax bracket doesn't happen by accident, says David. It's the result of planning and proactively trying to have a series of tax-free financial streams that include Roth IRA, Roth Conversions, and some form of Life Insurance Retirement Plan. Dave and Ron discuss the true cost of waiting when it comes to tax rates, and whether it makes financial sense to use the market decline to execute Roth IRA conversions to limit taxes. Having too much risk inside their investment portfolio is one of the big mistakes made by retirees – David explains why that should be a concern for those approaching retirement. 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 ETF Guide Video: The Math Behind Roth Conversion Procrastination ProPublica article Lord of the Roths: How Tech Mogul Peter Thiel Turned a Retirement Account for the Middle Class Into a $5 Billion Tax-Free Piggy Bank

Today's episode of The Power of Zero Show addresses the question 'Should the Federal Government get rid of the Roth IRA?' In a recent MarketWatch article, Alicia Munnell, founder of Boston College's Center for Retirement Research, opined that it's time to start thinking about getting rid of the Roth 401(k) and the Roth IRA – and gave three reasons why. Firstly, Munnell believes that Roth IRAs can be hijacked by Congress to pay for expensive partisan legislation. Secondly, she thinks that Roth IRAs should be eliminated because they can turn into tax dodges for high rollers like Peter Thiel. And thirdly, Alicia Munnell makes the case for Roths being an obstacle to fairer tax incentives. According to David, Munnell's points seem to overlook the fact that tax-free retirement instruments like the Roth IRA and Roth 401(k) are some of the only tools Americans have to shield themselves from the impact of higher taxes down the road. 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 Alicia Munnell's MarketWatch article - Roth IRA and Roth 401(k): the World Would Be a Better Place Without Them Boston College's Center for Retirement Research ProPublica article Lord of the Roths: How Tech Mogul Peter Thiel Turned a Retirement Account for the Middle Class Into a $5 Billion Tax-Free Piggy Bank David Walker

In this episode, David tells the truth about Suze Orman, who's been giving financial advice for the last 25 years and has some pretty black and white positions on most financial subjects. Suze Orman doesn't seem to be a fan of cash value life insurances because of its perceived high expenses. The problem of her approach, according to David, is the fact that it looks at the annual expenses in the early years of the life insurance contract and projects those out over the life of the policy. However, that isn't how things typically work. In real life, the longer you keep your policy, the lower the average internal expenses go. For David, whoever is dealing with a financial advisor recommending that their clients roll their entire IRA into life insurance policies should run the other way. The fundamental issue David sees is the one-size-fits-all financial planning advice dispensed by some mainstream financial gurus. The problem lies in wealthy people not wanting to have a generic financial plan, rather a customized, comprehensive and balanced approach to retirement planning. David calls out mainstream financial gurus like Dave Ramsey, Clark Howard, and Suze Orman for being generalists, instead of experts on specific facets of financial 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 Suze Orman

David had been skeptical about reverse mortgages and now considers himself a "late convert." Don Graves sees reverse mortgages as a financial planning tool cleverly disguised as a mortgage. Using a football analogy, think of a reverse mortgage as the 11th player on the team (along with income, pension, social security, etc.), which will increase the chances of you winning. Don explains why reverse mortgages should be considered a tax-free stream of income, right along with Roth IRAs, Roth 401ks, Roth conversions, LARPs, and so forth. The idea is that, when you take income by way of a reverse mortgage, it's a true tax-free stream of income. This income does not count as provisional income, thus not counting as a threshold that causes Social Security taxation. Don shares a couple of examples of how reverse mortgages can lead to great outcomes. Don describes the profile of the typical person for whom the reverse mortgage strategy may apply. 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 HousingWealth.net AskDonGraves@gmail.com Ed Slott

David suggests avoiding the shift of everything out of your IRA or 401k into the tax-free bucket because, by doing so, you would then have a standard deduction in retirement that sort of sits idle. $25,900/year is the standard deduction for a married couple. According to David, what you want to do is to be very careful about not converting too much money from the tax-deferred bucket. Most retirement savings are in tax-deferred vehicles, says David. Roth IRAs are the one thing that both consumers and the Federal Government like because they lead to you using after-tax dollars and it gives more revenue to the Federal Government – and it does so today, not in 20 years. For David, the Federal Government has several tools to deal with inflation. Raising interest rates as a possible solution can create a scenario where both interest rates and the cost of servicing the national debt go up. 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 The Wealth & Freedom Nexus Podcast David Walker Stephanie Kelton

David's latest book, the 75,000-word novel The Infinity Code, is set to be released on September 27th. David says that the U.S. is facing a math problem of gigantic proportions: they have promised way more than they can afford to deliver in regards to Social Security, Medicare, and Medicaid. The issue is caused by a democratic glitch in the sense that the Baby Boomer generation has far fewer children than their parents had – leading to fewer people putting money into the government programs than those taking that money out. According to several experts, David discusses, tax rates will have to double sooner or later to keep the system working. The problem is that most Americans who are putting money into 401k and IRAs are living in the old paradigm of "putting money into these types of tax-deferred programs to get a tax deduction today, and postpone the payment of those taxes to tomorrow". When people "obsess" over wanting to convert every last dollar in their 401k or IRA to a Roth 401k or Roth IRA, they run into the risk of not having any income left in retirement, would they pay taxes on all those dollars. A standard deduction of $25,900 is all a married couple in the scenario described above may be left with in retirement. David talks about the fact that most people don't realize that their Social Security can be taxed. When they find out, they're mad because it feels like a double tax. David debunks a sort of myth: it isn't true that the same limitations that apply to a normal Roth IRA apply to Roth 401ks and Roth conversions. 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

Today's episode addresses claims by the likes of Suze Orman, The White Coat Investor, and Clark Howard that financial advisors are a rip-off. After 25 years in the industry, David can say without a doubt that not all financial advisors are created equal. A good financial advisor will increase the likelihood that your retirement savings will last through life expectancy. According to a Vanguard study, tapping into the services of a financial advisor could help you improve your results by as much as 3% points annually. They can do so through three things: 1) By helping you stick to your plan and avoid making emotion-driven investments. 2) By setting you up with a sensible asset allocation that incorporates quarterly rebalancing. 3) Help you keep fees low by guiding you to low-fee alternatives. David talks about the fact that most Americans don't have a CPA and use software like TurboTax or services such as H&R Block to do their taxes. The problem with this is that these types of services are not paid or motivated to advise you on taxes you might pay on retirement distributions 20 or 30 years down the road. CPAs themselves are not very motivated to save your taxes on your 401k IRA distributions, as their main goal is often to help you save on taxes today. David shares three key things a good financial advisor can help you with: 1) to increase the rate of return on your investments. 2) to help you save on taxes at a time when you can least afford to pay them, like retirement. 3) to completely purge longevity risk from your retirement picture. For David, a qualified financial advisor, through sophisticated retirement planning software, can help you anticipate what your tax burden might be years down the road and set up a plan that helps you maximize your after-tax cash flow in retirement. David discusses the Longevity Risk, a situation in which investors go at it alone, seeking to neutralize longevity risk by attempting to follow the 4% Rule. The 4% Rule states that if you never take out more than 4% of your retirement savings in a given year, you have a reasonably high chance that your nest egg will last through life expectancy. The 4% Rule has recently been downgraded to the 3% Rule because some experts believed that the 4% Rule was built around overly optimistic and outdated variables. For David, things aren't as easy as they may appear because of what he calls the "Illusion of Liquidity." Having money sitting around – as per the 3% Rule – can often lead to it being seen as an emergency fund or even a slush fund. Mentioned in this episode: Suze Orman The White Coat Investor Clark Howard Vanguard Are Financial Advisors Worth It? - The Motley Fool (table included) TurboTax H&R Block 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