Should You Take Social Security Early Given the Scary Trust Fund Report?
Release Date: 07/23/2025
Two Experts Debate When You Should Take Social Security—But here’s the TRUTH!
The Power Of Zero Show
Today’s episode revolves around one of the biggest financial debates among pre-retirees and retirees: When should you take Social Security? Host David McKnight touches upon the recent debate of two of the smartest voices in the field – Dr. Laurence “Larry” Kotlikoff and Dr. Derek Tharp – on this exact question. Dr. Tharp, out of the University of Southern Maine, notes that economists commonly recommend delaying social security benefits until age 70. Boston University’s Dr. Kotlikoff agrees and explains that delaying can give you a 76% higher monthly benefit compared to taking...
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What REALLY Happened with Kyle Busch's $8 Million Lawsuit against Pacific Life
The Power Of Zero Show
David McKnight looks at what happened when NASCAR legend Kyle Busch reportedly lost $8+ million in what was supposed to be a tax-free retirement plan. The plan Busch relied on was built around an indexed universal life insurance policy. According to Kyle and Samantha Busch’s lawsuit, they paid more than $10.4M into several IUL policies issued by Pacific Life Insurance between 2018 and 2022. While these policies were pitched as a safe, self-funding, tax-free retirement plan, things didn’t go as promised… Poor design, unrealistic expectations, a delayed 1035 exchange, and poor...
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The Financial Guru Hall of Shame--Who's Leading You Off a Cliff?
The Power Of Zero Show
David McKnight focuses on three of the biggest names in personal finance – Dave Ramsey, Suze Orman, and Ken Fisher – and why you should be careful with following their advice. David emphasizes that anyone trying to wring the most efficiency out of their retirement savings should focus on advice that’s backed by math… not soundbites. While David Ramsey is the right person for people who are making less than they are spending, the same can’t be said for his retirement planning advice. For instance, he claims that 100% of cash value life insurance sucks 100% of the time. For...
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Suze Orman Says 3%, Bill Bengen Says 4.7%--Who’s Right on Sustainable Withdrawal Rates?
The Power Of Zero Show
David McKnight compares the approach of some of the biggest names in personal finance: Suze Orman, and William “Bill” Bengen (the man who invented the 4% Rule). In a recent interview covered by MSN, Suze Orman declared flat out that the 4% Rule is dead since markets are volatile, interest rates fluctuate, and people are living longer. David shares the “origin story” of how the 4% Rule came to be – and its creator Bill Bengen. Interviewed by MSN, Bengen updated his research and concluded that, based on current data, a 4.7% withdrawal rate is now sustainable. David compares Orman’s...
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Why Dave Ramsey’s Roth Conversion Advice Could Cost You a Fortune
The Power Of Zero Show
David McKnight discusses one of the most destructive pieces of retirement advice he has ever heard: that you should never do a Roth conversion in retirement or within five years of retiring. Dave Ramsey believes you should forego doing a Roth conversion if you’re within five years of retirement or are already retired – because of the so-called Five-Year Rule. The problem with this approach, according to David, is that Ramsey is misinterpreting what that rule actually means, in addition to confusing multiple rules and applying them to the wrong people. Ramsey’s advice, continues David,...
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Four Ways to Pay Tax on Your Roth Conversion
The Power Of Zero Show
David McKnight addresses something that can make or break your Roth conversion strategy: how you actually pay the tax. David kicks things off by sharing that Federal and state estimated tax payments are usually made in four equal installments: April 15th, June 15th, September 15th, and January 15th of the following year. Did you know that doing a Roth conversion in December, like many people do, will lead to the IRS pretending that income was earned evenly throughout the year? If you don’t account for that, you could get hit with an underpayment penalty (8% of the underpaid amount)....
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I’m 52 Years Old and Have No Bonds in My Portfolio (Smart or Dangerous?)
The Power Of Zero Show
David McKnight explains why he has chosen to avoid bonds entirely and why you might want to rethink how you protect your portfolio as you approach retirement. David kicks things off by illustrating the so-called sequence of returns risk. According to conventional wisdom, bonds tend to be less volatile, so they help smooth out the rough years in the stock market. However, bonds aren’t the safety net they used to be. And over long periods of time, bonds tend to underperform stocks by a wide margin. David warns against “stuffing your portfolio with bonds just to be safe.” The...
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Dave Ramsey is Right About Bonds, but Not for the Reasons He Thinks
The Power Of Zero Show
David McKnight addresses something Dave Ramsey has been saying for years: “You should NEVER own bonds in retirement!” David points out that the tool that actually solves the problem Ramsey has been trying to avoid is the same one he spent years mocking on his call-in show: the Fixed-Indexed Annuity. Ramsey’s argument is that stocks outperform bonds over time – hence, bonds should be avoided as they’re “slow, underperforming, and risky.” David indicates what Ramsey is half right about, as well as something he’s missing the mark on… David discusses how bonds can act as a sort...
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What is the Power of Zero Retirement Philosophy?
The Power Of Zero Show
David McKnight walks you through what he believes to be the retirement strategy of the future: the Power of Zero approach. Congress recently passed the One Big Beautiful Bill Act, which makes the Trump tax cuts permanent. The brackets were set to expire in 2026, but now we’re told they’re here to stay… By 2035, the U.S. will need massive infusions of cash just to cover the interest on the debt of $37 trillion, not to mention Social Security, Medicare, Medicaid, and defense. When the Government needs money and no one else will loan it the money, it does the one thing it’s always done in...
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Greatest Retirement Mistake
The Power Of Zero Show
While on the golf course with his son, David McKnight got asked a question, by a couple of men in their early 70s, every pre-retiree and retiree wonders at some point: “What’s the biggest mistake people make when preparing for retirement?” Many people spend their entire career saving money in tax-deferred accounts like 401(k)s and IRAs. As that balance grows larger every year, it’s easy to get the illusion that all that money belongs to you, while a larger portion actually belongs to the IRS. How much of that sum you ultimately get to keep depends on what tax rates happen to be...
info_outlineThe 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 funding glitch, it's a permanent structural crisis.
The first finding of the 2025 Social Security Trustees Report is that the Trust Fund goes insolvent a year earlier than anticipated in last year's report.
And there's no wiggle room: Absent intervention on the part of Congress, benefits will drop automatically by 23% for all recipients.
The next noteworthy aspect is the program's unfunded obligations, the present value of future benefits not covered by future taxes.
That gap is a staggering $72.8 trillion, which is $10 trillion more compared to 2024.
The cause for this $10 trillion jump? The removal of some pension offsets and benefit boosting by last year's Social Security Fairness Act…
The final revelation of the report is that trustees chose to focus on the 75-year deficit and ignored the infinite horizon that is so relevant in a pay-as-you-go system.
The main tool to try to change the status quo and fix the issue is either cutting benefits, raising taxes, or some combination of the two.
David addresses all three scenarios. The first one revolves around Congress permanently okaying a 30% across-the-board cut starting today - alternatively, they could wait until 2033 and implement a 23% cut by default.
The second scenario sees an increase of the Social Security's FICA payroll tax from 12.4% to 17.6%.
Thirdly, a combination of smaller tax increases and moderate benefit cuts.
David touches upon the possible consequences of not addressing these issues immediately.
The 1983 Greenspan Commission only patched half of the long-term hole in Social Security, leading to the problem being 2.5 times bigger today and requiring even more aggressive solutions to create a permanent fix.
David explains that, if you count all the government's off-the-book promises, Medicare, defense, debt service, the fiscal gap is around 7% of GDP.
That translates to the country having a fiscal shortfall year in and year out of 7% of GDP FOREVER.
How bad is the situation? "You'd have to fire every federal employee, cancel every NASA mission, basically shut everything down… and you still wouldn't plug in the hole in our long-term fiscal outlook," says David.
David is very clear on what's needed: Major structural reform to healthcare entitlements, taxes and benefits.
David shares two things to consider before you decide to draw your Social Security benefits early.
A quote by Dr. Larry Kotlikoff highlights the fact that taking benefits early won't protect you from reduced benefits later, and that the reduction could indeed be less for those who waited in order to provide equity with those who collected early.
David recommends saving as much as you can so that you can compensate for any future cuts to Social Security, as well as modeling multiple scenarios (drawing now vs. drawing later), keeping an eye on Congress and the news, and to focus on other risks your retirement may face - think longevity risk and tax rate risk, for instance.
In conclusion: notwithstanding all that bad news from an actuarial standpoint, it still makes sense to push off Social Security just as long as you can.
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