Expecting a Pension? Strongly Consider a Roth Conversion
Release Date: 02/12/2025
Where Dave Ramsey and Suze Orman Fit and Where They Don't
The Power Of Zero Show
David sits down with John Manganaro to unpack the advice of financial gurus like Dave Ramsey and Suze Orman. While their guidance has helped countless Americans get out of debt, David explains why their cookie-cutter approach to retirement income planning can fall short. Why “hope over math” is a dangerous foundation for retirement planning—David explains why advice built on optimistic return assumptions leaves disciplined savers exposed to massive disappointment later. Learn how Dave Ramsey’s 8% withdrawal and 12% return claims mislead investors and why following them could drain your...
info_outline
If A.I. Leads to Universal Basic Income, How High Will Taxes Have to Go to Pay for It?
The Power Of Zero Show
David explains why A.I. could make Universal Basic Income (UBI) a reality sooner than you think. As machines take over more jobs—especially white-collar ones—we may need a new safety net just to keep society stable. Why UBI is no longer a fringe idea but a serious policy being considered in Washington. It promises monthly cash payments to every adult, regardless of their job or income. David highlights the staggering cost of UBI if implemented today. At $12,000 per adult annually, the total price tag would hit $3.1 trillion a year—equal to all Social Security and Medicare spending...
info_outline
Social Security and Medicare Trustees Just Dropped a Bombshell (New Dates for Insolvency)
The Power Of Zero Show
David starts by talking about the apocalyptic headwinds facing Social Security and Medicare and what it means for your retirement plan. The Social Security and Medicare trust funds are projected to be insolvent by 2033, with the combined Social Security trust fund gone by 2034. David explains why this isn’t just a distant problem: Without intervention, roughly 70 million Americans will face major benefit cuts—23% for Social Security, 11% for Medicare. How this impacts you personally: If you're 59 today, you’ll reach full retirement age right as the trust fund runs dry. If you’re...
info_outline
Five Mathematical Reasons to Delay Retirement by Five Years
The Power Of Zero Show
How could postponing your retirement by just five years transform your retirement picture? David McKnight shares mathematical reasons that could help. Reason #1 is compounding. As David explains, “When you delay retirement, your money has more time to grow.” The second reason for considering the postponement of your retirement has to do with the fact that an extra 5 years would give you more time to save. Reason #3: Worried that your money won’t last as long as you do? Just remember that it doesn’t need to last as long. If you retired at 65 and lived to 95, you’ll need your...
info_outline
Vanguard--4 to 5% Stock Market Growth Over Next 10 Years (Should You Change Your Retirement Strategy?)
The Power Of Zero Show
In this episode of the Power of Zero Show, David McKnight looks at headlines, such as those from Vanguard, BlackRock or Morningstar, that have predicted a dismal forecast for stock market returns over the next decade. Since such articles predict 4-5% annual growth for the next decade, many investors are pondering whether they should take some chips off the table. Back in 2015, those same institutions and companies stressed that valuations were too high and that, since the markets had a great run, it couldn’t possibly continue anymore. Vanguard forecasted 4-6% returns, BlackRock predicted...
info_outline
Should You Take Social Security Early Given the Scary Trust Fund Report?
The Power Of Zero Show
The 2025 Social Security Trustees Report is out and the news is bleak. This episode of the Power of Zero Show looks at the potential repercussions if nothing changes by 2033. If things don't improve, Social Security will face a cash flow deficit that triggers a 23% across-the-board benefit cut - and that's one year earlier than predicted. But that's not all… in fact, it gets far worse, says host David McKnight. The system is already $72.8 trillion in the red, an unfunded liability that's twice the size of the national debt and $10 trillion worse than 2024. This is by no means a temporary...
info_outline
The Vindication of Indexed Universal Life and Fixed Indexed Annuities: What the Ernst & Young Study Finally Proves
The Power Of Zero Show
Ernst & Young recently came out with a new updated study, which is likely to scandalize mainstream financial experts like they did with their 2021 study. Back then, they asked the question, “Is the stock market-only retirement approach really the strategy that gives you the highest levels of income and the best outcomes over a 30-year retirement?” In their new study, on the other hand, they substituted Indexed Universal Life for Whole Life, and Fixed Index Annuities for Deferred Income Annuities – a move that led to unexpected and spectacular results. Host David McKnight...
info_outline
Can Republicans Actually Make the Trump Tax Cuts Permanent?
The Power Of Zero Show
President Trump’s proposed Big Beautiful Bill (BBB), which has been getting everyone’s attention of late, is the topic of this episode of The Power of Zero Show. Host David McKnight points out that the “crown jewel” of the BBB is the extension of the 2017 Trump tax cuts. The 2017 Tax Cuts and Jobs Act (TCGA) brought about cuts to individual income taxes, corporate taxes, and a dramatic expansion of the estate tax exemption. While corporate tax cuts were made permanent – going from 35% to 21% – the tax cuts for individuals and estates had an expiration date. If the status quo...
info_outline
Doug Andrew: Consider Rolling Your IRA into an IUL (Good idea?)
The Power Of Zero Show
David McKnight addresses Doug Andrew’s recommendation of turning your IRA into an IUL. David agrees with some of Andrew’s views, including his objection to rolling a 401(k) into an IRA, and then leaving it there until you die. Given the exploding national debt, most experts predict that taxes 10 years from now will have to rise dramatically to keep the U.S. solvent… Doug Andrew lists Indexed Universal Life as his “favorite financial vehicle because of liquidity, safety, predictable rates of return, and tax-free growth”. David is skeptical of advice that denigrates every tax-free...
info_outline
Financial Collapse in 3 Years?
The Power Of Zero Show
This episode of The Power of Zero Show revolves around a recent Ray Dalio video in which he issued warnings about the U.S. debt crisis. In the clip, Dalio appears to be giving America three years to get their act together and to right the fiscal ship of state. Dalio mentions the draft of his new book that goes through the mechanics of the debt – and highlights the supply-demand problem he believes will occur if the deficit doesn’t go from the current 7.2% of GDP to about 3% of GDP. Dalio touches upon what people should do when there isn’t an adequate supply-demand balance. He believes...
info_outlineDavid 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
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