The Power Of Zero Show

Today's episode of The Power of Zero Show features part of David McKnight's conversation with Caleb Guilliams and Tom Wall, PhD. David kicks things off by addressing the liquidity issue. Handing a chunk of your retirement savings over to an insurance company in exchange for a stream of income that's guaranteed to last as long as you do sounds great in principle, but people often have consternation about it… The thought of losing liquidity on a significant portion of their net worth is what prevents some Americans from opting for SPEAs and DIAAs. David explains why a fixed index annuity can be a valuable resource to leverage. David discusses what the annuity industry tends to do. In his book, Tax-Free Income for Life, David illustrates the so-called "piecemeal" internal Roth conversion. An internal Roth conversion allows you to convert your annuity into a Roth IRA – with an amount of your choosing and over a timeframe your financial plan calls for. Tom Wall discusses the two phases of an annuity, the accumulation and distribution phases, as well as the repercussions of the perceived loss of liquidity. Mentioned in this episode: David's national bestselling book: The Guru Gap: How America's Financial Gurus Are Leading You Astray, and How to Get Back on Track DavidMcKnight.com DavidMcKnightBooks.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube Get David's Tax-free Tool Kit at taxfreetoolkit.com

This episode of The Power of Zero Show is part of David McKnight's conversation with Caleb Guilliams and Tom Wall, PhD. David touches upon the "dangerous partnership" between the American people and the IRS. David is an advocate for a balanced, comprehensive, approach to tax-free retirement – he explains why that's the case. One of the things David likes about IULs is the fact that they can perform specific applications that no other stream of income, such as Roth IRAs and Roth 401(k)s, can do. David goes over the unique trait of each of the streams of tax-free income he sees as key components of "the Holy Grail of financial planning". A Roth IRA, for example, gives you immediate liquidity, while a Roth 401(k) gives you a match. A Roth Conversion allows you to convert an unlimited amount of assets to tax-free. Taking money out of your IRA up to your standard deduction allows you to get a deduction on the front end, grow your money tax-deferred, and take your money out tax-free. An IUL, on the other hand, enables you to get a death benefit in advance, for the purpose of paying for long-term care. A balanced, comprehensive, approach to tax-free retirement capitalizes on all the nooks and crannies in the IRS tax code. David is in agreement with a recent Ernst & Young study inviting people to have 30% of their retirement savings go towards cash-value life insurance. Mentioned in this episode: David's national bestselling book: The Guru Gap: How America's Financial Gurus Are Leading You Astray, and How to Get Back on Track DavidMcKnight.com DavidMcKnightBooks.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube Get David's Tax-free Tool Kit at taxfreetoolkit.com TikTok Ernst & Young

In this episode of The Power of Zero Show, David McKnight addresses different strategies for tax-free retirement planning in 2025. Most Americans are a little nervous when it comes to the fiscal trajectory of the U.S.. According to expert forecasts, the likely extension of the 2017 Trump tax cuts would take the current $36 trillion of national debt beyond the estimated $54 trillion by 2034 – taking it all the way to $59 trillion. A recent Penn Wharton study predicts that if the U.S. doesn't right its fiscal ship of state by 2034, no combination of raising taxes or cutting spending will arrest the financial collapse of the nation. "Former Comptroller General of the Federal Government David Walker says that we may have to double tax rates within the next 10 years in order to keep our country solvent", says David McKnight. Something important to consider is how to best shield your retirement savings from the potential tsunami of higher taxes down the road. David recommends creating a balanced, comprehensive strategy that takes advantage of all the "nooks and crannies" in the IRS tax code. The cost of getting money into tax-free vehicles is that you have to be willing to pay a tax. The next nine years represent a historical opportunity to pay those taxes while they're on sale. The approach David suggests thinking about can incorporate as many as six different streams of tax-free income – none of which shows up on the IRS' radar but all of which contribute to you being in the 0% tax bracket. A tax-free investment means no taxes at all: no federal income tax, no state income tax, or no capital gains tax. When taking distributions, tax-free investments should not count as provisional incomes – meaning that they don't count against the thresholds which cause Social Security taxation. The Roth IRA is the first truly-tax free retirement account David believes you should be contributing to in 2025. The second truly tax-free account worth considering in 2025 is the Roth 401(k). The potential for a company match is the one thing that makes Roth 401(k) impossible to ignore – and turns it into an instant return on your investment. After a Roth IRA and a Roth 401(k), the third tax-free alternative you should think about this year is a Roth conversion. David discusses the ideal scenario in which you should opt for a Roth conversion. Your IRA or 401(k) is the fourth stream of tax-free income David touches upon. Tax-free distributions from your IRA or 401(k) are what David refers to as "the Holy Grail of financial planning" – since they do something no other strategy can do. The life insurance retirement plan and tax-free Social Security are two additional strategies David dives into. Tax-free Social Security is unique because it shields you from several risks, including tax rate risk, inflation risk, long-term care risk, sequence of returns, and longevity risks. Mentioned in this episode: David's national bestselling book: The Guru Gap: How America's Financial Gurus Are Leading You Astray, and How to Get Back on Track DavidMcKnight.com DavidMcKnightBooks.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube Get David's Tax-free Tool Kit at taxfreetoolkit.com Donald Trump David Walker Mitt Romney

David McKnight discusses a couple of really good reasons for doing a Roth conversion when you're expecting a pension in retirement. David sees the American tax system functioning in a similar way as a graduated cylinder. Your income goes in and flows all the way down to the bottom. Some of your money gets taxed at 10%, at 12%, 22%, some at 24%, 32%, at 35%, and some at 37%. Jeff Bezos, too, has some of his earned income taxed at 10% (only for about 3 seconds, though!). If you're planning on receiving a pension in retirement, understanding how this "tax cylinder" works will be crucial for maximizing your after-tax spendable income. David shares an example showing that your pension and the taxable portion of your Social Security will consume all of your 10% bracket, and most of your 12% bracket – and that's before you draw $1 from your IRA or 401(k). When you take money out of your IRA or 401(k) in retirement, those dollars will flow into your cylinder and land right on top of all your other income and get taxed at 22%. David explains that after the expiration of Trump tax cuts, the 22% will become 25% and, over the next 10 to 15 years, your personal tax bracket could be even higher! If that scenario were to play out, the portion of your IRA or 401(k) that you get to keep could get smaller and smaller… In case the Trump tax cuts extension does go through, then you could convert your IRA or 401(k) to Roth over nine years of historically low tax rates. David likes to refer to the Trump tax cuts as the "tax sale of a lifetime" – he shares an example that illustrates why. David touches upon what you can do, until 2034, to maximize your after-tax spendable income. Mentioned in this episode: David's national bestselling book: The Guru Gap: How America's Financial Gurus Are Leading You Astray, and How to Get Back on Track DavidMcKnight.com DavidMcKnightBooks.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube Get David's Tax-free Tool Kit at taxfreetoolkit.com Jeff Bezos

In this discussion, financial nuances take center stage as David McKnight challenges one-size-fits-all advice from financial gurus like Dave Ramsey. He dives into the pros and cons of Roth vs. traditional 401(k) plans, emphasizing that personal tax situations matter. The looming tax increases in the next decade raise the stakes for retirement planning. David also shares strategies to extend the longevity of your savings while critiquing conventional wisdom and advocating for a more tailored approach to managing money.

Today's episode is a podcast guest interview David McKnight did for Josh Jalinski's The Financial Quarterback Podcast. David gives Josh's audience a quick bio that spans from his early days in the financial services space in 1997 all the way to his latest book The Guru Gap. The premise of The Guru Gap is the difference between the 1990s when people had very few options to vet out financial planning advice and today, where they have plenty of ways to vet out. Nowadays, whenever David makes a financial recommendation, 90% of his clients take to the internet to vet that recommendation. In The Guru Gap, David focuses on financial gurus Dave Ramsey, Suze Orman, Ken Fisher, Clark Howard, and Ramit Sethi – and their advice. Since financial gurus aim at taking important and complex financial principles and distilling them down into 10-second sound bites, they tend to give short shrift to a lot of details David's clients would need to protect and grow their retirement savings. The #1 goal most Americans have is to have their money last as long as they do. Financial gurus have had an adversarial stance toward financial planners like David and Josh Jalinski. Some of David's clients who seem to put more stock into what these gurus have to say tend to forget that their advice typically isn't undergirded by math and actuarial science… Josh Jalinski shares a couple of stories that really tick him off when it comes to financial gurus and the consequences of their advice. David believes that America is better off with people like Dave Ramseys and the like in it than without them. "If you're making $50,000 and spending $60,000 Dave Ramsey is precisely the person you should be talking to," says David McKnight. David sees people like Dave Ramsey be "good for bad investors, and bad for good investors". Wade Pfau thinks that following Ramsey's advice of taking 8% withdrawal rates on your assets in retirement and putting 100% of your allocation in stocks, you'll run out of money in advance of life expectancy 63% of the time. David touches upon the so-called Dave Ramsey circle of poverty: he gets you out of debt on the road to financial success, and then he promptly bankrupts you by taking an 8% withdrawal rate. Josh shares his thoughts on Dave Ramsey and explains that some people never save. Citing former Comptroller General David Walker and Penn Wharton David talks about what could be waiting for the U.S. in the near future. David gives out a couple of reasons why you should think about doing a Roth conversion. David and Josh talk about saving future taxes when someone passes away. A key question to ask yourself: Why not pay the tax today at 22% or 24%, so that your kids can inherit that money tax-free regardless of when they liquidate it? David reveals that, because of The Guru Gap, he has received a cease and desist from one of the financial gurus mentioned in the book. Josh and David dissect "the Ken Fisher approach" – including its key flaws and shortcomings. In Josh's opinion, one of the negative traits of financial gurus is their lack of availability for debate. For David, the least expensive way to purge the longevity risk from your portfolio is an annuity. Josh and David bring up financial advisors dispensing advice on TikTok into the conversation. The overwhelming amount of tips shared by gurus leads to people making bad decisions or not making a decision at all. Of the five financial gurus mentioned in The Guru Gap, Suze Orman (the only CFP of that group) is the one David McKnight likes the most, also because her advice is most in line with the mainstream financial planning consensus. Ramit Sethi is the financial guru that seems to have the most adversarial approach toward financial planners. David used to be a fan of Clark Howard who now has a strong opinion about cash-value life insurance and fixed-income annuities. David lists steps people should be taking with their money from a tax and retirement perspective. According to David, if ever there were a time in the history of our country to be undertaking a Roth conversion, it's over the course of the next nine years. Josh and David discuss a balanced financial plan that includes annuities to counter longevity risks, insurance to protect one's family, money as a volatility buffer, equities to beat inflation, some Bitcoin, a little gold, and cash for emergencies. Mentioned in this episode: David's national bestselling book: The Guru Gap: How America's Financial Gurus Are Leading You Astray, and How to Get Back on Track DavidMcKnight.com DavidMcKnightBooks.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube Get David's Tax-free Tool Kit at taxfreetoolkit.com Josh Jalinski, The Financial Quarterback Al Gore Dave Ramsey Suze Orman Ken Fisher Clark Howard Ramit Sethi How to Get Rich (Ramit's Netflix special) I Will Teach You to Be Rich: No Guilt. No Excuses. Just a 6-Week Program That Works by Ramit Sethi Tony Robbins Financial Peace University Wade Pfau How to Spot a False Prophet in the World of Finance (episode of The Financial Quarterback) David Walker Penn Wharton DOGE – Department of Government Efficiency Elon Musk Vivek Ramaswamy Tom Hegna American Equity Investment Life Insurance (AEL) Chris Hogan Bill Gross MSCI World Index Michael Finke David Blanchett The White Coat Investor Grant Cardone Humphrey Yang Tori Dunlap Jeremy Schneider Tiffany Aliche Anthony O'Neal Dasha Kennedy Graham Stephan Delyanne Barros ChatGPT Ernst & Young's study on life insurance and annuities Dalbar QAIB Donald Trump Maya MacGuineas Committee for a Responsible Federal Budget Buckley Broadcasting iHeartMedia

Dive into the debate over annuities as Suze Orman’s criticism sparks a lively discussion. The disappointing growth of a listener's annuity raises eyebrows, with alternative comparisons to other investment options. Explore how index annuities may outperform bonds with less risk. Discover the hidden tax implications that can affect retirement savings, and unravel common misconceptions about annuities, including their potential benefits for guaranteed income. This episode promises insights for smarter financial decisions!

This episode looks at whether you qualify or not for the $200 billion Social Security benefits approved by the U.S. Congress. Host David McKnight shares that, with the current status quo, the Social Security Trust Fund is on pace to go bust by 2033. If that were to happen, only about 83% of benefits would be paid out… If signed into law by President Joe Biden, the Social Security Fairness Act would provide an additional $200 billion in Social Security benefits to nearly 2.8 million Americans over the next 10 years. The Social Security Fairness Act would eliminate two policies that have reduced benefits for public service employees: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). The people most likely to be affected by the elimination of these two provisions are about 28% of state and local government employees who are covered by alternative retirement systems and permanent civilian federal employees hired prior to January 1, 1984. U.S. Senators Sherrod Brown (Ohio) and Susan Collins (Maine), co-sponsors of the Social Security Fairness Act, believe that the WEP and GPO have historically penalized people for choosing to serve their communities by dramatically reducing Social Security benefits. While David believes that Americans should get their due when it comes to their Social Security benefits, he wonders whether this is something that America can really afford… According to the Nonpartisan Committee for a Responsible Federal Budget, the passage of the bill in question will accelerate the insolvency of the Social Security Trust Fund by six months. David sees the Social Security Fairness Act and its repercussions on Americans as "yet another unfunded obligation on the balance sheet of the Federal Government." Mentioned in this episode: David's national bestselling book: The Guru Gap: How America's Financial Gurus Are Leading You Astray, and How to Get Back on Track DavidMcKnight.com DavidMcKnightBooks.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube Get David's Tax-free Tool Kit at taxfreetoolkit.com Congressional Budget Office President Joe Biden U.S. Congress U.S. Senate Senator Sherrod Brown (Ohio) Senator Susan Collins (Maine) CBS News Committee for a Responsible Federal Budget

In this episode, host David McKnight tackles a question about the tax bracket at which you should stop contributing to the Roth IRA and start contributing to the traditional IRA. The inspiration for this episode was a recent episode of The Money Guy Show. David believes that advice such as that shared on The Money Guy Show doesn't consider most of the people asking questions like the one addressed in the episode. Those are people whose combined marginal tax rates fall between 25% and 30%. Generally, David likes the idea of having a rule of thumb tax bracket that helps you determine whether or not you should go Roth or traditional. However, he warns against providing advice that ends up confusing a huge swath of investors. In fact, David sees the particular rule of thumb like the one shared on The Money Guy Show as something that isn't going to be all that helpful to many Americans. David breaks down the power of zero rule of thumb when it comes to deciding between Roth or traditional. Your state tax in retirement is likely to be very similar to what your state tax is now. David's rule of thumb: if you're in the 24% federal tax bracket or lower, then go Roth all day. That's because your current 24% bracket is still lower than the future version of the 22%, which is 25%... Remember: if you're in the 24% or lower in the federal marginal tax bracket, go Roth. If you're in the 32% bracket or higher, then go tax deferred. Generally, David DOESN'T recommend filling up your entire tax-free bucket and ignoring tax deferred altogether if you decide to go Roth. Simply allocating your match to the tax deferred portion of your 401(k) is a great way to accumulate the required amount in your tax deferred bucket. David tends to like the Money Guy Show, but he feels that, in this instance, they should simply ignore state taxes in the Roth vs. traditional calculus and draw a red line at the 24% tax bracket. Mentioned in this episode: David's national bestselling book: The Guru Gap: How America's Financial Gurus Are Leading You Astray, and How to Get Back on Track David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com DavidMcKnightBooks.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube Get David's Tax-free Tool Kit at taxfreetoolkit.com Brian Preston Bo Hanson The Money Guy Show

David McKnight looks at a recent study on retirees that seems to tell a different story compared to what many people in the U.S. tend to believe. Americans often view guaranteed lifetime income annuities skeptically – they're perceived as a drag on the growth of their stock market portfolio. According to the study by retirement researchers David Blanchett and Michael Finke, retirees with guaranteed lifetime income spend about twice as much as their counterparts who rely on stocks and bonds alone for income in retirement. Those who rely purely on investments alone in retirement end up spending less because they fear running out of money in advance of life expectancy. David explains that "retirees with annuities spend more, not because they are wealthier, but because they have a form of wealth – a guaranteed income – that encourages them to spend." Comparing two couples, a risk-averse couple with a risk-tolerant couple, Blanchett and Finke's study found a 1.1% difference in them taking an annual withdrawal rate from their portfolio. David couldn't have been any clearer: "If you want to spend more in retirement, taking an investment-only approach is usually the worst way of going about it." Mentioned in this episode: David's upcoming book: The Guru Gap: How America's Financial Gurus Are Leading You Astray, and How to Get Back on Track David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com DavidMcKnightBooks.com PowerOfZero.com (free 3-part video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube Get David's Tax-free Tool Kit at taxfreetoolkit.com David Blanchett Michael Finke