What Are the Creditor Protection Rules for Roth IRAs and Roth 401(k)s?
The Power Of Zero Show
In today’s episode, David McKnight breaks down the creditor protection rules for Roth IRAs and Roth 401(k)s, as well as why more and more Americans are turning to tax-free accounts to insulate themselves from creditors… and the Government itself. In theory, under Federal Law, all IRAs traditional or Roths receive a certain level of bankruptcy protection under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. However, that protection is specifically tied to bankruptcy proceedings. If you’re sued in civil court, the Federal bankruptcy statute doesn’t automatically...
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Top Five Reasons to Pick a Roth 401(k) Over a Traditional 401(k)
The Power Of Zero Show
This episode features David McKnight sharing the top five reasons why a Roth 401(k) is far superior to a traditional 401(k). Something important to keep in mind: the decision you make today will determine how much of your retirement money your future self actually gets to keep. David touches upon the fact that choosing the wrong 401(k) could cost you hundreds of thousands of dollars in unnecessary taxes in retirement. Tax rate risk is the first big reason why you should consider investing in a Roth 401(k) over a traditional 401(k). David lists a series of key questions people who invest in a...
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Suze Orman Says Roth IRAs Are Great — But Here’s What She’s Missing
The Power Of Zero Show
This episode sees David McKnight look at Suze Orman, who, despite being one of the most widely recognized financial voices in America, shares what appears to be incomplete advice. David believes that Orman has done a lot of good for a lot of people thanks to her financial discipline-centered approach (in addition to being a big proponent of Roth IRAs). He agrees with Orman: “Roth IRAs are powerful, no doubt about it. You contribute after tax dollars, your money grows tax-free, and, provided you meet the requirements, you can withdraw those funds in retirement 100% tax-free”. The U.S....
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The 3 Questions You MUST Answer BEFORE Doing a Roth Conversion
The Power Of Zero Show
David McKnight addresses three key questions you must be able to answer before executing a single Roth conversion. Too many people go for Roth conversions without a game plan – this is something that can lead to overpaying taxes and running out of money sooner than anticipated. David points out that if you can’t answer the three key questions, you should stop and reevaluate because guessing here can cost you big. “What’s the total amount I should convert from my IRA or 401(k) to tax-free?” is the first and most critical of the three questions. Remember, the goal of a Roth conversion...
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Five Roth Conversion Myths Busted: What Most Americans Get Wrong
The Power Of Zero Show
David McKnight busts some of the most common Roth conversion myths that are costing retirees hundreds of thousands – if not millions – of dollars over the course of retirement. The “Don’t worry about Roth conversion, you’ll be in a lower tax bracket when you retire” myth is based on two flawed assumptions. The first one is that your lifestyle will drop significantly in retirement, while the second is the one related to future tax rates being the same or lower than they are today. David points out that, in retirement, people want to maintain their lifestyle. In some cases,...
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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,...
info_outlineFor many people, an approach that incorporates whole life insurance has become part of their broader retirement strategy. Is that a good way to go? That’s what David McKnight addresses in this episode.
While Whole Life has some legitimate applications, especially for people who are risk-averse and are looking for guaranteed steady accumulation, there’s an option that does the job more effectively: Indexed Universal Life (IUL).
David touches upon why you may want to opt for IUL instead of Whole Life, including the fact that, with IUL, you can access your cash value in retirement without having to pay loan interest.
That gives you more flexibility and more efficiency when using IUL as a source of income.
David compares Whole Life and Indexed Universal Life.
If your goal is to shield your retirement portfolio from market downturns, then Whole Life is like taking the scenic route: You’ll get there. but it will cost you more time, fuel, and money.
IUL, by contrast, is like taking the express lane: Same destination, just faster, cheaper, and more efficient.
“If efficiency matters to you, and you’re trying to increase the likelihood that your money will last as long as you do, then Indexed Universal Life is the superior alternative”, says David.
David goes over what happens when you borrow money from your Whole Life policy vs. from your IUL.
It’s good to know that some IUL policies have wash loans or zero-cost loans that make accessing your money more predictable and sustainable.
David believes that, when it comes to retirement income and the volatility buffer concept, the IUL is more efficient and effective, as it gives you higher growth potential and more favorable loan features.
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