The Power Of Zero Show

Tax rates 10 years from now are likely to be much higher than they are today. Is your retirement plan ready? Learn how to avoid the coming tax freight train and maximize your retirement dollars.

Vanguard--4 to 5% Stock Market Growth Over Next 10 Years (Should You Change Your Retirement Strategy?) 07/30/2025

Vanguard--4 to 5% Stock Market Growth Over Next 10 Years (Should You Change Your Retirement Strategy?) 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 4.5-5% returns, while Research Affiliates predicted an anemic 1.5-2% returns. However, from 2015 through 2024, the S&P 500 posted a Compound Annual Growth Rate (CAGR) of roughly 11.9% - proving those predictions wrong! In fact, such forecasts by stock market research institutions turned out to be off by 5-6%. David believes that financial institutions making failed predictions about the future of the stock market isn’t just the exception, it’s the rule. In the 2015-2024 timespan, we had a global pandemic that shut down entire economies, interest rates fell to zero, then spiked in record time, massive government stimulus, a tech boom, a crypto craze, and the rise of AI. - How many of those events could have been predicted in 2015? David doesn’t recommend putting too much stock in long-term market forecasts by large financial institutions because, even if they might be well-researched, they’re still guesses. For David, you shouldn’t let fear drive your investment behavior. Not only should you stay invested over the next 10 years, but you should focus on investing inside tax-free accounts. Think about a balanced, comprehensive tax-fee approach that takes advantage of every nook and cranny in the IRS tax code. David refers to tools such as Roth IRAs, Roth 401(k)s, and some properly structured cash value life insurance policies like Indexed Universal Life. What drives long-term stock market returns? “It isn’t predictions, emotions, or headlines, it’s innovation and productivity. If you look around, you can see that those things are accelerating, not slowing down,” says David. Mentioned in this episode: David’s national bestselling book: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/37452270

Should You Take Social Security Early Given the Scary Trust Fund Report? 07/23/2025

Should You Take Social Security Early Given the Scary Trust Fund Report? 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 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: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/37452190

The Vindication of Indexed Universal Life and Fixed Indexed Annuities: What the Ernst & Young Study Finally Proves 07/16/2025

The Vindication of Indexed Universal Life and Fixed Indexed Annuities: What the Ernst & Young Study Finally Proves 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 explains that by going beyond the investment-only playbook and by integrating tools like Whole Life and Deferred Income Annuities into your retirement strategy, you get higher levels of income and a higher likelihood of your money lasting through life expectancy and beyond. For years, Indexed Universal Life and Fixed Index Annuities have been misrepresented by many (inexperienced) insurance agents, have been vilified by media personalities using a “one-size-fits-all” approach, and have been ignored by investment-only advisors. In the latest iteration of their study, Ernst & Young ran three case studies: one featuring a 35-year-old couple just starting their financial journey, one involving a 45-year-old couple, and the last one looking at a 65-year-old couple on the doorstep of retirement. David asks why, if the E&Y case studies show that IULs and FIAs can dramatically improve income levels and the likelihood of money lasting through life expectancy and wealth to heirs, they have been so frequently demonized? David touches upon three distinct reasons why he believes the critiques occur. “Together, the IUL and FIA act as the stabilizers on your retirement journey,” says David. Utilized in conjunction with your investment portfolio, IUL and FIA increase your income, the likelihood your money lasts through life expectancy, and they increase the money that gets passed on to your heirs. For David, data proves that cash value life insurance and annuities work whether you’re just getting started or are stepping into retirement. Mentioned in this episode: David’s national bestselling book: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/37381815

Can Republicans Actually Make the Trump Tax Cuts Permanent? 07/09/2025

Can Republicans Actually Make the Trump Tax Cuts Permanent? 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 stays unchanged, those tax rates will revert back to their 2017 levels on January 1st, 2026. David goes over how Republicans could make the tax cuts permanents through some outside the box accounting techniques. Since Republicans don’t have a supermajority in the House or Senate, they would have to rely on a special Senate process known as Budget Reconciliation. A few fiscal conservatives such as Representative Thomas Massie and David Schweikert, as well as Senator Susan Collins and Rand Paul may not be on board with such an approach… Their main concern? The fact that making these tax cuts permanent would add between 4.6 and 5.5 trillion dollars to the national debt over the next 10 years. David addresses the single greatest obstacle preventing Republicans from making the Trump tax cuts permanent: the Bird Roll. The Bird Roll states that budget reconciliation bills cannot increase the federal deficit beyond the budget window, which is typically 10 years. In other words, to make the tax cuts permanent, Republicans would have to find a way to pay for them. Cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP, formerly known as the Food Stamps Program), as well as tariffs on imports are how Republicans are trying to go about things. Some Republicans suggest that the tax cuts won’t increase the national debt over the next decade and beyond, for the fact that they’ll actually spark economic growth. According to the Congressional Budget Office, the cost of the 2017 tax cuts was $1.9 trillion over an eight-year period, while the tax cuts themselves only increased revenue by about $400 billion. As David stresses, “The Tax Cuts and Jobs Act of 2017 ended up increasing the debt by about $1.5 trillion, meaning that the tax cuts were in no way self-financing.” If Trump tax cuts were to be made permanent, it will almost certainly increase the likelihood that taxes will have to skyrocket by the year 2035. According to a Penn Wharton study, when the country’s debt-to-GDP reaches 200%, we’ve passed the point of no return. If that were to happen, no combination of raising taxes or reducing spending would arrest the financial collapse of the nation. Former Comptroller General of the Federal Government, David M. Walker, has even suggested that tax rates could have to double to keep the U.S. solvent. This means that even if Republicans make the tax cuts permanent, they will have to raise taxes eventually… For David, this may lead to Congress being forced to raise taxes in dramatic fashion in 2035 in an effort to avoid a financial apocalypse in 2040. David believes that, if you have the lion’s share of your retirement savings swirling away in tax-deferred accounts like 401(k)s and IRAs, you should take advantage of what’s likely going to be 8 to 10 years more of historically low tax rates. Mentioned in this episode: David’s national bestselling book: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/37315115

Doug Andrew: Consider Rolling Your IRA into an IUL (Good idea?) 07/02/2025

Doug Andrew: Consider Rolling Your IRA into an IUL (Good idea?) 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 alternative within the IRS tax code in an attempt to glorify the IUL – which happens to be the product Andrew sells. While David recognizes some admirable qualities that are unique to IUL (and that no other financial tool has), he doesn’t recommend having an IUL as the only prong in your tax-free strategy. David’s preference is for you to opt for an approach that takes advantage of every tax-free nook and cranny within the IRS tax code. Many gurus are “married” to and recommend only one strategy. David, on the other hand, prefers “multiple streams of tax-free income, none of which show up on the IRS’ radar, that contribute to you being in the 0% tax bracket.” David lists the unique qualities of financial tools such as Roth IRAs, Roth 401(k)s, Roth Conversions, and IULs. If you’re someone who’s looking for advice, David recommends being careful whenever someone recommends you liquidate a retirement account you’ve been saving into your entire life and move it wholesale into an IUL! Your ideal goal should be to have multiple tax-free income streams that will land you in or near the 0% tax bracket in retirement. Why is that so important? Because even if tax rates were to double, two times zero is still ZERO. Mentioned in this episode: David’s national bestselling book: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/37226470

Financial Collapse in 3 Years? 06/25/2025

Financial Collapse in 3 Years? 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 that looking back at history will show you that the current problems are the results of history repeating itself. A recession isn’t the one thing Dalio is afraid of… the breakdown of the monetary order is! Host David McKnight talks about the bid other countries may have on the U.S. fiscal debt, as well as the related crisis of confidence of sorts. According to a recent Penn Wharton study, if the U.S. doesn't right their fiscal ship of state by 2040, no combination of raising taxes and/or reducing spending will arrest the financial collapse of the nation. David believes that in the next 10 to 15 years, the U.S. is likely to need huge infusions of capital to avoid a financial collapse, the likes of which we haven’t seen since the Great Depression. What should you do? If you have the lion’s share of your Retirement Savings, IRAs or 401(k)s, you need to act now while tax rates are historically low. Since we’re on the cusp of Trump extending his tax cuts for another 8 years, it’s important to know that, if you count 2025, we’ll have historically-low tax rates for another 9 years. David is in favor of taking action before tax rates increase, also because he believes that, come 2034, tax rates aren't going to simply revert back to what they were in 2017. If the American fiscal ship doesn’t get right on time, we could go back to seeing high tax rates that were part of the past – such as 94% in the last two years of World War II, or 89% as it was throughout the entire decade of the 70s. Mentioned in this episode: David’s national bestselling book: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/37097045

Will Safe Harbor Rules Protect You If You Do a 4th Quarter Roth Conversion? 06/18/2025

How to Avoid the Roth Over-Conversion Trap 06/11/2025

How to Avoid the Roth Over-Conversion Trap In today’s episode, David McKnight focuses on whether you should do a Roth conversion, how much you should convert per year, and whether it’s possible to over-convert to Roth. David explains that an effective tax rate is the actual percentage of your income that you pay in taxes after accounting for deductions, exemptions, and credits. For David, the only reason you should do a Roth conversion is if you believe that your effective tax rate in retirement will be higher than your marginal tax rate today. David touches upon a couple of reasons why your effective tax rate in retirement could be higher than your marginal tax rate today. Remember: the national debt is projected to be $57 trillion by 2035. If Trump extends his tax cuts, you can layer another $5 trillion right on top of that… According to a recent Penn Wharton study, if the U.S. doesn't right its fiscal ship of state by 2040, no combination of raising taxes or reducing spending will arrest the nation’s financial collapse. Before undertaking your Roth conversion strategy, you have to remember that in retirement, absent any other deduction, the IRS will give you a deduction called standard deduction. The standard deduction is $30,000 if you retired today as a married couple and $15,000 as a single filer. David illustrates a scenario that can lead you to fall into the Roth IRA over-conversion trap. Your goal should be to keep your balance in your IRA or 401(k) low enough that required minimum distributions in retirement are equal to or less than your standard deduction, but also low enough that they don’t cause Social Security taxation. David has done the math: if you don’t have a pension or other residual taxable income, you want to keep between $300,00 and $400,000 in your 401(k) or IRA in retirement. Got a sizable pension or another significant source of taxable income? Then, your ideal balance would be much closer to zero. It’s crucial that, when converting your money, you do it slowly enough that you don’t rise into a tax bracket that gives you heartburn, but quickly enough that you get all the heavy lifting done before tax rates go up for good. If Trump ends up extending his tax cuts, they’ll expire at the end of 2033. That means that somewhere between 2034 and 2040 tax rates will likely rise in dramatic fashion. By including the 2025 tax year, that gives you nine full years during which you can execute your Roth conversion strategy. Mentioned in this episode: David’s national bestselling book: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/36923355

The Problem with Target Date Funds 06/04/2025

I've Maxed Out My 401(k), Now What? 05/28/2025

I've Maxed Out My 401(k), Now What? In this episode of the Power of Zero Show, host David McKnight discusses the scenario in which you have maxed out your 401(k) and are wondering where you should invest the rest of your money. The episode kicks off with David addressing the type of 401(k)s you should be investing in first. There are two types of 401(k)s: the traditional pre-tax 401(k) and the Roth 401(k). Should you go for a traditional 401(k) or a Roth 401(k)? It all depends on whether you think your tax bracket is likely to be lower or higher in retirement… With the national debt set to hit $62 trillion by the year 2035, David believes that, “There isn’t any way the Federal Government can service that type of debt without increasing taxes.” Planning on retiring past 2035 and you’re currently in the 24% tax bracket? Then, David recommends opting for a Roth 401(k). This year, you can put $23,500 into your Roth 401(k) if you’re younger than 50, and $31,000 if you’re over the age of 50. David talks about what to do if you’re married and have maxed out your Roth 401(k), as well as what you can do if your modified adjusted gross income is less than $246,000 as a married couple, or $161,000 as a single filer. David illustrates the scenario in which relying on a LIRP (Life Insurance Retirement Plan) would make sense. According to a recent Ernst & Young study, if you can save between 3 and 5 years worth of living expenses in your LIRP by day 1 of retirement, you can increase the sustainable withdrawal rate of your stock portfolio from 4% to as high as 8%. David points out that there’s no limit on how much you can put into your LIRP and, unlike with what happens with Roth contributions, you are not constrained by your modified adjusted gross income level. Another point in favor of opting for a LIRP is the fact that it grows safely and productively – the growth of the money in your LIRP is linked to the upward movement of a stock market index. Whatever that index does in any given year, you get to keep up to a cap that’s typically between 10% and 12%. Index going down? Then, you’re simply credited a zero. Mentioned in this episode: David’s national bestselling book: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/36718120

Why Does the Incoming SEC Chair Paul Atkins Have 54 Life Insurance Policies? 05/21/2025

Why Does the Incoming SEC Chair Paul Atkins Have 54 Life Insurance Policies? In this episode of the Power of Zero Show, host David McKnight addresses the claim that sees Paul Atkins owning 54 life insurance policies for an astounding 10% of his $327 million net worth. Someone may ask themselves why someone with such a massive net worth would own so many life insurance policies…and even why someone who has equity in Chinese tech giant Alibaba, holdings in cryptocurrency, and stakes in venture capital firms would also want their wealth growing in cash value life insurance policies. Looking at Atkins, who’s President Trump’s nominee to chair the Securities and Exchange Commission, can help understand how the ultra-wealthy view taxes and wealth accumulation. One possibility could be that Paul Atkins may have exhausted all of the usual sources of tax-deferred and tax-free growth available to him through government-sponsored retirement plans. Something worth remembering: Cash Value Life Insurance policies don’t have any income threshold, and they have no contribution limits at all. A second potential scenario that has led Atkins to have over 50 life insurance policies is that he might be looking for a way to diversify his holdings. David points out to the fact that owning shares in single stocks like Alibaba – like Atkins does – can be a fairly risky proposition. Cash value and life insurance policies like whole life or IULs, on the other hand, aren’t exposed to market risk. There’s yet another possibility: Atkins may not be the insured on all the policies. According to the ethics filings, the cash value of the policies in question ranges from as low as $1,000 to well over $1 million. For some experts, that may be a sign that Atkins is investing in life settlements. The final potential scenario is the one in which Atkins owns all the policies for the purpose of estate planning. David points out that there are many more efficient ways to purchase life insurance policies than buying 54 separate contracts David shares that he understands the concept of wanting to spread your risk out among multiple carriers, but feels that doing so through the purchase of 54 different policies is a bit extreme. David points out that diversifying away from the stock market with some of your portfolio is, typically, a good idea. Want safe and productive growth without the risks associated with traditional bond allocations? Look at cash value life insurance policies, says David. Remember: cash value life insurance can also be beneficial because many carriers allow you to receive your death benefit in advance of your death. While it’s true that cash value life insurance isn’t for everyone, Paul Atkins ethics disclosure shows that it can play a critical role in someone’s long-term wealth-building strategy. Mentioned in this episode: David’s national bestselling book: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/36636230

The 8 Taxes You Could Pay When Doing a Roth Conversion (Is it worth it?) 05/14/2025

The 8 Taxes You Could Pay When Doing a Roth Conversion (Is it worth it?) In this episode of the Power of Zero Show, host David McKnight looks at every possible tax or cost that may result from a Roth conversion. The first tax you’ll have to pay when executing a Roth conversion is federal income tax. Whatever portion of your IRA you convert to Roth is realized as ordinary income and piled right on top of all your other income. David is an advocate for not converting to Roth unless you think your federal tax rate in retirement is likely to be higher than it is today. The second tax you could end up paying when doing a Roth conversion is state tax. The situation will vary depending on where you live – in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming, you don’t have to pay state tax, including on Roth conversion. Do you live in Illinois, Iowa, Mississippi, or Pennsylvania? Then, you’ll have to pay state tax, but Roth conversions are exempted. If you’re thinking about moving to one of these states to avoid paying these taxes, just know that, while they may not charge income tax on Roth conversions, they do make up for it in other ways (sales and property tax, for example). IRMAA – the Income Related Monthly Adjustment Amount – is the third cost you could end up paying when doing a Roth conversion. IRMAA represents an additional charge you could be required to pay on your Medicare Part B and Part D premiums. The next potential tax you could pay as a result of doing a Roth conversion is Social Security taxation. The fifth cost you could incur because of a Roth conversion is NIIT (Net Investment Income Tax) – also known as the Obamacare surtax. NIIT is a 3.8% surtax on the lesser of your net investment income or the amount of your modified adjusted gross income that exceeds the threshold of $200,000 for single filers and $250,000 for married filing jointly. The sixth tax you could potentially pay as a result of doing a Roth conversion is an indirect one and results from the phase out of certain credits or deductions. The list of credits and deductions includes child tax credits, student loan interest deductions, the saver’s credit, and education credits. Underpayment penalties is the seventh tax you could potentially pay by doing a Roth conversion. David explains that many people opt to pay taxes on their Roth conversion in the fourth quarter. The problem, however, lies in the fact that when you pay the taxes on your Roth conversion out of cash in the fourth quarter, the IRS expects you to have paid taxes on that Roth conversion evenly throughout the year. The eighth and final tax you could end up paying as a result of doing a Roth conversion applies to those who are getting health insurance through the Affordable Care Act. Does your Roth conversion push you above the subsidy threshold? If so, know that you could have a partial or total loss of subsidies or may have to repay subsidies at tax time. “Think of all of these additional taxes or costs as tradeoffs, not problems or unintended consequences,” says David. For example, you may pay increased Social Security taxation during your Roth conversion period, but will then eliminate Social Security taxation altogether by the time your conversion is complete. If President Trump extends his tax cuts, then the national debt will grow to $62 trillion by 2035. Most experts believe that the only way we can service this massive debt load is to dramatically increase income tax rates. According to a recent Penn Wharton study, if the U.S. doesn't right its fiscal ship by 2040, no combination of raising taxes or reducing spending will prevent the nation’s financial collapse. Remember: while it’s true that Roth conversions do cause you to pay additional taxes and expenses in the short term, they do dramatically reduce those costs over the balance of your life, once your conversion is complete. Mentioned in this episode: David’s national bestselling book: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/36540300

Should You Take More Risk in Your Roth Accounts Than Your Other Investments? 05/07/2025

Should You Take More Risk in Your Roth Accounts Than Your Other Investments? This episode of the Power of Zero show explores whether you should be taking more risks in your Roth accounts than in your other investments. Host David McKnight kicks things off by stating that if you have Roth IRAs or Roth 401(k)s in your portfolio, you should be allocating 100% of these dollars to a stock allocation. That’s because these are your most tax-efficient investments and they’ll remain tax-free right up until your death – and even 10 years beyond. Remember: you want the biggest returns in your portfolio to take place in a tax-free environment. David explains which of your assets you should be allocating towards bonds. David isn’t a huge fan of bonds because of three words: fixed index annuities. He uses a study by the University of Chicago’s Dr. Roger Ibbotson to illustrate his preference for fixed index annuities over bonds. Ibbotson’s research showed that the stock FIA portfolio did not just increase, but it did so with less risk, while also protecting the investor to some extent from irrational investment behavior that erodes returns over time. David is all in favor of allocating your Roth IRAs to your most aggressive investments, as he thinks you should want your tax-free accounts to house your most explosive investments. While conventional wisdom advises people to allocate the rest of their assets to bonds, David believes in a better alternative: incorporating a fixed index annuity into your overall strategy. By doing so you’ll increase your return, lower your risk, lower the standard deviation of your entire portfolio, and give yourself a better outcome over time. David concludes by pointing out that you don’t have to love annuities for this strategy to work – you just have to love the idea of increasing the likelihood that your money will last as long as you do. Mentioned in this episode: David’s national bestselling book: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/36446005

Debunking Doug Andrew’s Roth IRA Hit Job Video 04/30/2025

Debunking Doug Andrew’s Roth IRA Hit Job Video In this episode of The Power of Zero Show, host David McKnight looks at Doug Andrew’s recent video in which he implored his audience to never use a Roth IRA or a Roth 401(k) again. Andrew sees Indexed Universal Life insurance (IUL) as far superior and believes it should be the source of the vast majority of your distributions in retirement. While David likes IUL in certain circumstances, he isn’t a fan of sales strategies that debase every other viable tax-free alternative in an effort to exalt IULs. For David, the video is riffed with errors, exaggerations and omissions. Moreover, Andrew’s video appears to have an obvious pre-commitment to persuading you to reposition the lion’s share of your retirement savings into an IUL. In the video, Doug Andrew’s liking for IUL as the top investment vehicle is evident. At the beginning of his video, Andrew says that he will explain why the IUL is far superior to the Roth IRA. David believes that the choice should never be between a Roth IRA and an IUL or between a Roth 401(k) and an IUL. Remember: your tax-free strategy can incorporate as many as SIX DIFFERENT STREAMS of tax-free income, not just the IUL… And every one of these tax-free income strategies has unique qualities that set them apart from all the others. Don’t forget about what your #1 goal should be: to take advantage of every tax-free nook and cranny in the IRS tax code. David lists the qualities that tools such as Roth IRAs, Roth 401(k)s and Roth conversions have and that IULs do not have. One of the unique things about IULs is that they give you a death benefit that doubles as long-term care and helps grow your money safely and productively. David touches upon what he considers “wild claims” featured in Doug Andrew’s video. An example of inaccurate or untrue information shared by Andrew is that the IUL’s expenses will be paid out of the money that would have otherwise gone to pay a tax… which is wrong! Contributions to Roth IRAs and IULs are both made with after-tax dollars. “If anyone ever debases a Roth IRA or a Roth 401(k) in an attempt to sell you an IUL, you should run – not walk – the other way,” concludes David. Mentioned in this episode: David’s national bestselling book: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at Doug’s video - /episode/index/show/powerofzeroaudio/id/36346965

What Percentage of Your Retirement Savings Should You Have in Traditional IRA vs. Roth? 04/23/2025

What Percentage of Your Retirement Savings Should You Have in Traditional IRA vs. Roth? What percentage of your retirement savings should you allocate toward traditional IRAs and 401(k)s vs. Roth IRAs and Roth 401(k)s? That’s what this episode explores. Traditional financial guru advice says that it’s impossible to predict where tax rates are going down the road. Therefore, you may hear that your best bet is to simply have 50% of your money in tax-deferred and 50% of your money tax-free. David is somehow perplexed by the guru’s point of view about the future of tax rates being an unknown. However, signs that things won’t be the same appear to be evident. The current national debt is at $37 trillion and the U.S. will be layering another $2 trillion per year over the next 10 years – excluding the $4.6 trillion that will be added to the debt if the Trump Tax Cuts get extended. That means the debt could grow to over $60 trillion by the time 2035 rolls around! Former Comptroller General of the Federal Government David Walker has stated that tax rates would have to double to keep the country solvent. And if the American fiscal ship doesn’t get right by 2040, no combination of raising taxes or reducing spending will arrest the financial collapse of the nation (source: Penn-Wharton). Experts have already weighed in, and there seems to be general unanimity on the subject: in 10-15 years, tax rates are likely to be higher than they are today. David believes that, if tax rates are likely to double in the near future, allocating the vast majority of your retirement savings to tax-free is the way to go. Why not put 100% of your retirement savings into tax-free accounts? Because you’ll still have a standard deduction available to you in retirement. That’s $30,000 if you’re married and retired today, half that amount if you’re single. Remember: if you don’t have a pension, employment, or other residual income in retirement, the ideal amount is $400,000 if you’re married and about half if you’re single. Have a sizable pension? In that case, the ideal amount goes all the way down to zero. David suggests moving your money slowly enough that you don’t rise into a tax bracket that gives you heartburn, but quickly enough to get the heavy lifting done before tax rates increase in 2034. The goal? To stretch that tax obligation out over as many years as possible, so you can stay in as low a tax bracket as you can. Generally, David recommends never bumping into a higher tax bracket than 24% as you execute your Roth Conversion strategy. Instead of reflexively allocating money in a 50-50 split between traditional IRAs and Roth IRAs, David encourages a more surgical approach. This will shield you from the impact of higher taxes down the road and increase the likelihood that your money will last as long as you do. Mentioned in this episode: David’s national bestselling book: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/36243345

The Five Cardinal Rules of Roth Conversions 04/16/2025

The Five Cardinal Rules of Roth Conversions David McKnight goes through his five cardinal rules for doing a Roth conversion. The first principle is simple: don’t do a Roth conversion that bumps you into a tax bracket that gives you heartburn. Not sure about what a heartburn-inducing tax bracket looks like? David shares a simple “rule of thumb” you can follow. In your zeal to get your Roth conversion done before tax rates go up for good, don’t bump into the 32% tax bracket along the way. The second cardinal rule ties into the almost certainty that Congress will extend the Trump tax cuts through 2033 – make sure to stretch your tax liability out between now and then! There’s a strong likelihood that, once Trump’s second round of tax cuts expire, taxes will rise dramatically in 2034. The reason for that? The trajectory of the national debt and over $200 trillion in unfunded obligations for Social Security, Medicare, and Medicaid. The third principle is “Don’t lose your sleep over IRMAA (Income Related Monthly Adjusted Amount) during your Roth conversion period.” Many people are reluctant to do Roth conversions because they don’t want their Medicare premiums to increase. Remember: your premiums would only go up over the period in which you’re executing your Roth conversion strategy – that’s nine years or less… David recommends having a “rip the band-aid off” approach when it comes to both IRMAA and Roth conversions. Cardinal principle #4: whenever possible, pay the tax on your Roth conversion out of your taxable investments like a brokerage account or cash. David sees six months of basic living expenses as the ideal balance in your taxable bucket. The fifth and final cardinal rule is “know your ideal balance in your tax-deferred bucket before executing your Roth conversion strategy”. David shares a good mathematical reason for not converting 100% of your IRA to Roth even if you think that your tax rate down the road is likely to be higher than it is today. A cheat code to help you establish the ideal balance in your tax-deferred accounts: if you’re married, it’s about $400,000 (if you don’t have a pension or other sources of residual income). Are you single? Then, it’s about half that amount. Keep in mind that a lot will depend on how much Social Security you’re planning on receiving in retirement. Over at DavidMcKnight.com you can find a calculator to help you with all of this. Following these five principles will help insulate your money from higher taxes, pay less taxes along the way, and increase the likelihood that your money will last as long as you do. Mentioned in this episode: David’s national bestselling book: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/36152550

How to Take Advantage of the Retirement Income Valley for Roth Conversions 04/09/2025

In What Order Should I Spend Down My Assets in Retirement? 04/02/2025

Suze Orman Says Have 3 to 5 Years of Living Expenses in CASH During Retirement (Good Idea?) 03/26/2025

Suze Orman Says Have 3 to 5 Years of Living Expenses in CASH During Retirement (Good Idea?) Today’s episode of The Power of Zero Show looks at a recent podcast episode in which Suze Orman recommended having three to five years of living expenses in cash during retirement. Experts have long debated the rate at which retirees can draw down their assets while maintaining a high likelihood of not running out of money before they die. Since the early ‘90s, the gold standard for sustainable distributions has been the 4% Rule. According to the 4% Rule, whether the market goes up or down, you can reliably withdraw 4% each year with high confidence that you won’t outlive your money. David McKnight points out that Orman’s advice – keeping money in a volatility buffer account – is at odds with her stance on sustainable withdrawal rates. For Suze Orman, you shouldn’t be taking 4% withdrawals from your retirement portfolio. Instead, she recommends a 3% distribution rate. Studies show that if you withdraw only 3%, regardless of market conditions, you have a near 100% chance of never running out of money. David believes that by promoting the 3% rule AND encouraging people to keep 3-5 years of living expenses in a savings account, Suze Orman is doing a disservice to her listeners. The first problem with Orman’s advice is that, while she got the volatility buffer concept right, she failed to adjust her sustainable withdrawal rate accordingly. Following Orman’s approach could result in massive loss of purchasing power by keeping a significant portion of your net worth in a low-yielding savings account over an extended period. David explores whether there’s a “safe and productive” way to grow your money during retirement. Cash value life insurance, specifically in the form of Indexed Universal Life (IUL), is a financial vehicle that protects against market loss and grows at a rate of 5-7% (net of fees) over time – within a tax-free environment. David wraps up with some final words of advice for Suze Orman. Mentioned in this episode: David’s national bestselling book: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/35851425

5 Huge Benefits of the Roth IRA! 03/19/2025

5 Huge Benefits of the Roth IRA! Today’s episode addresses five reasons why a Roth IRA is one of David KcKnight’s favorite tax-free investments. Unlike other retirement accounts, Roth IRAs give you 100% liquidity on all contributions. While David isn’t necessarily suggesting that you use your Roth IRA as an emergency fund, it’s nice to know that you won’t have to wait until age 59 ½ to be able to access those funds. If you happen to take out your Roth IRA contributions, you can put that money back within 60 days as long as your Roth IRA was not involved in a rollover during the 12 months preceding the date of distribution. Tax regrowth is a second reason why David is an advocate for Roth IRAs. For David, going for a Roth IRA could be the right move if you believe that your tax bracket in retirement is likely to be higher than it is today. The Penn Wharton School of Business recently said that if the U.S. doesn’t write its fiscal ship of state by 2040, no combination of raising taxes or reducing spending will prevent the financial collapse of the country. Some experts are even predicting that tax rates could have to double in order to honor the nation’s massive financial obligations. A third huge benefit of a Roth IRA is that whatever money you don’t spend during your lifetime passes to your heirs, 100% tax-free –though they’ll have to liquidate those dollars within 10 years. Thinking about Roth IRAs? Just know that distributions from Roth IRAs don’t count as provisional income. In other words, they don’t count against the thresholds that cause Social Security taxation. David explains what can cause up to 85% of your Social Security to become taxable at your highest marginal tax bracket – leaving a huge hole in your Social Security. David has done the math hundreds of times: when you pay tax on your Social Security, you run out of money five to seven years faster than people who don’t pay tax on their Social Security. Finally, Roth IRAs are a tool worth leveraging for the fact that Roth IRA distributions don’t count as income-related monthly adjustment amount (also known as IRMAA). That translates to distributions from your Roth IRAs not counting against the thresholds that cause your Medicare Part B and Part D premiums to go up. David sees the Roth IRA as one of the crown jewels in the IRS tax code. Mentioned in this episode: David’s national bestselling book: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/35722365

Two Huge Problems with Whole Life Insurance 03/12/2025

Academics LOVE Annuities – Why Do Investors HATE Them? 03/05/2025

How IUL Fits in a Balanced Approach to Tax-Free Retirement 02/26/2025

Your Authoritative Guide to Tax-Free Retirement Planning in 2025 02/19/2025

Your Authoritative Guide to Tax-Free Retirement Planning in 2025 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: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/35307875

Expecting a Pension? Strongly Consider a Roth Conversion 02/12/2025

Expecting a Pension? Strongly Consider a Roth Conversion 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: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/35236225

Dave Ramsey: Fire Your Tax Advisor for Recommending a 401(k)! 02/05/2025

Dave Ramsey: Fire Your Tax Advisor for Recommending a 401(k)! This episode of the Power of Zero Show sees host David McKnight address Dave Ramsey’s advice – inviting a member of his audience to fire his tax advisor for recommending a 401(k). The problem with “financial gurus” like Dave Ramsey and the call-in shows they host is that they provide one-size-fits-all prescriptions that are delivered in very stark black and white terms. While David is an advocate for accumulating money in tax-free retirement vehicles, he also recognizes the importance of nuance with these types of recommendations. David explains that contributing to a Roth 401(k) is a good avenue to explore if you believe that your tax bracket in retirement is going to be higher than it is today. David believes that taxes will rise dramatically over the next 10 years. Following one-size-fits-all advice shared by financial gurus puts you at risk of running out of money faster because you may pay a tax along the way that you didn’t necessarily have to pay… David discusses when you should go for a traditional 401(k) and when it would be wiser to opt for a Roth 401(k) instead. According to a recent Penn Wharton study, if the U.S. doesn't right its fiscal ship of state by 2040, no combination of raising taxes or reducing spending will arrest the financial collapse of the country. David goes over a couple of strategies that could help your money last five to seven years longer. The fact that there are huge benefits to investing in tax-free accounts shouldn’t necessarily translate into you reflexively pouring all your retirement contributions into your Roth 401(k), says David. David shares his thoughts on when it may be a good idea to listen to Dave Ramsey and when it isn’t a clever move to follow his advice. Mentioned in this episode: David’s national bestselling book: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/35145290

The Guru Gap: How America’s Financial Gurus Are Leading You Astray and How to Get Back on Track 01/29/2025

The Guru Gap: How America’s Financial Gurus Are Leading You Astray and How to Get Back on Track 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: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/35034275

Suze Orman: Here’s Why Annuities Are So Bad! (Avoid Them at All Costs!) 01/22/2025

Suze Orman: Here’s Why Annuities Are So Bad! (Avoid Them at All Costs!) David McKnight takes a closer look at Suze Orman’s take on annuities – and at why she recommends her audience avoid them at all costs. Suze Orman labels the 5.4% compounded annual rate of growth one of her audience members (Janet) has had over the last six years as “horrific in today’s market.” David believes that the main issue with Suze Orman’s approach is that it engages in a classic case of apples to oranges comparison. According to David, index annuities are a bond alternative and were never meant to be a stock market replacement. David makes the case for index annuities performing far better than bonds – with a lot less risk. The average return on corporate bonds is between 4% and 5%, the one for treasury return is 3-4%, while the average return on municipal bonds is 2.12%. In David’s opinion, Janet should only feel bad about her 5.4% return over the 6 year time frame if the advisor who sold it to her sold it as a stock market alternative. Suze Orman’s audience member Janet purchased a so-called non-qualified indexed annuity, which tends to get a “last in, first out” treatment for tax purposes. David isn’t big on non-qualified annuities for the fact that a person purchasing them will have to pay tax on the growth before they’re able to access the principal tax-free. Another flaw in Orman’s assessment: she doesn’t tell you that you can hold an annuity in an IRA and pay ordinary income, or you can hold an annuity in your Roth IRA and pay no taxes at all… Something financial gurus like Suze Orman have in common: they DON’T have the luxury of nuance. Dollars earmarked to retirement accounts generally have a 10% penalty when you access them pre-59 and a half. David points out how Suze has wittingly demonized all forms of annuities – even the IRA and the Roth variety. While Suze is right saying that most annuities have surrender charges, she misses the entire point of why people usually get annuities: to get a guaranteed stream of income they can never outlive. 401(k) has a surrender charge that’s far more punitive than any annuity David has ever seen. Mentioned in this episode: David’s national bestselling book: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/34925955

Congress Approves $200 Billion in Additional Social Security Benefits: Do You Qualify? 01/15/2025

Congress Approves $200 Billion in Additional Social Security Benefits: Do You Qualify? 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: (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/34848905

At What Tax Bracket Should I STOP Contributing to Roth: Responding to The Money Guy Show 01/08/2025

At What Tax Bracket Should I STOP Contributing to Roth: Responding to The Money Guy Show 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: David's : Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code (free video series) on Twitter on Instagram on YouTube Get David's Tax-free Tool Kit at /episode/index/show/powerofzeroaudio/id/34738935

The Power Of Zero Show

TOPICS