The Power Of Zero Show

In this episode, David tells the truth about Suze Orman, who's been giving financial advice for the last 25 years and has some pretty black and white positions on most financial subjects. Suze Orman doesn't seem to be a fan of cash value life insurances because of its perceived high expenses. The problem of her approach, according to David, is the fact that it looks at the annual expenses in the early years of the life insurance contract and projects those out over the life of the policy. However, that isn't how things typically work. In real life, the longer you keep your policy, the lower the average internal expenses go. For David, whoever is dealing with a financial advisor recommending that their clients roll their entire IRA into life insurance policies should run the other way. The fundamental issue David sees is the one-size-fits-all financial planning advice dispensed by some mainstream financial gurus. The problem lies in wealthy people not wanting to have a generic financial plan, rather a customized, comprehensive and balanced approach to retirement planning. David calls out mainstream financial gurus like Dave Ramsey, Clark Howard, and Suze Orman for being generalists, instead of experts on specific facets of financial planning. Mentioned in this episode: David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube Suze Orman

David had been skeptical about reverse mortgages and now considers himself a "late convert." Don Graves sees reverse mortgages as a financial planning tool cleverly disguised as a mortgage. Using a football analogy, think of a reverse mortgage as the 11th player on the team (along with income, pension, social security, etc.), which will increase the chances of you winning. Don explains why reverse mortgages should be considered a tax-free stream of income, right along with Roth IRAs, Roth 401ks, Roth conversions, LARPs, and so forth. The idea is that, when you take income by way of a reverse mortgage, it's a true tax-free stream of income. This income does not count as provisional income, thus not counting as a threshold that causes Social Security taxation. Don shares a couple of examples of how reverse mortgages can lead to great outcomes. Don describes the profile of the typical person for whom the reverse mortgage strategy may apply. Mentioned in this episode: David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube HousingWealth.net AskDonGraves@gmail.com Ed Slott

David suggests avoiding the shift of everything out of your IRA or 401k into the tax-free bucket because, by doing so, you would then have a standard deduction in retirement that sort of sits idle. $25,900/year is the standard deduction for a married couple. According to David, what you want to do is to be very careful about not converting too much money from the tax-deferred bucket. Most retirement savings are in tax-deferred vehicles, says David. Roth IRAs are the one thing that both consumers and the Federal Government like because they lead to you using after-tax dollars and it gives more revenue to the Federal Government – and it does so today, not in 20 years. For David, the Federal Government has several tools to deal with inflation. Raising interest rates as a possible solution can create a scenario where both interest rates and the cost of servicing the national debt go up. Mentioned in this episode: David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube The Wealth & Freedom Nexus Podcast David Walker Stephanie Kelton

David's latest book, the 75,000-word novel The Infinity Code, is set to be released on September 27th. David says that the U.S. is facing a math problem of gigantic proportions: they have promised way more than they can afford to deliver in regards to Social Security, Medicare, and Medicaid. The issue is caused by a democratic glitch in the sense that the Baby Boomer generation has far fewer children than their parents had – leading to fewer people putting money into the government programs than those taking that money out. According to several experts, David discusses, tax rates will have to double sooner or later to keep the system working. The problem is that most Americans who are putting money into 401k and IRAs are living in the old paradigm of "putting money into these types of tax-deferred programs to get a tax deduction today, and postpone the payment of those taxes to tomorrow". When people "obsess" over wanting to convert every last dollar in their 401k or IRA to a Roth 401k or Roth IRA, they run into the risk of not having any income left in retirement, would they pay taxes on all those dollars. A standard deduction of $25,900 is all a married couple in the scenario described above may be left with in retirement. David talks about the fact that most people don't realize that their Social Security can be taxed. When they find out, they're mad because it feels like a double tax. David debunks a sort of myth: it isn't true that the same limitations that apply to a normal Roth IRA apply to Roth 401ks and Roth conversions. Mentioned in this episode: David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube

Today's episode addresses claims by the likes of Suze Orman, The White Coat Investor, and Clark Howard that financial advisors are a rip-off. After 25 years in the industry, David can say without a doubt that not all financial advisors are created equal. A good financial advisor will increase the likelihood that your retirement savings will last through life expectancy. According to a Vanguard study, tapping into the services of a financial advisor could help you improve your results by as much as 3% points annually. They can do so through three things: 1) By helping you stick to your plan and avoid making emotion-driven investments. 2) By setting you up with a sensible asset allocation that incorporates quarterly rebalancing. 3) Help you keep fees low by guiding you to low-fee alternatives. David talks about the fact that most Americans don't have a CPA and use software like TurboTax or services such as H&R Block to do their taxes. The problem with this is that these types of services are not paid or motivated to advise you on taxes you might pay on retirement distributions 20 or 30 years down the road. CPAs themselves are not very motivated to save your taxes on your 401k IRA distributions, as their main goal is often to help you save on taxes today. David shares three key things a good financial advisor can help you with: 1) to increase the rate of return on your investments. 2) to help you save on taxes at a time when you can least afford to pay them, like retirement. 3) to completely purge longevity risk from your retirement picture. For David, a qualified financial advisor, through sophisticated retirement planning software, can help you anticipate what your tax burden might be years down the road and set up a plan that helps you maximize your after-tax cash flow in retirement. David discusses the Longevity Risk, a situation in which investors go at it alone, seeking to neutralize longevity risk by attempting to follow the 4% Rule. The 4% Rule states that if you never take out more than 4% of your retirement savings in a given year, you have a reasonably high chance that your nest egg will last through life expectancy. The 4% Rule has recently been downgraded to the 3% Rule because some experts believed that the 4% Rule was built around overly optimistic and outdated variables. For David, things aren't as easy as they may appear because of what he calls the "Illusion of Liquidity." Having money sitting around – as per the 3% Rule – can often lead to it being seen as an emergency fund or even a slush fund. Mentioned in this episode: Suze Orman The White Coat Investor Clark Howard Vanguard Are Financial Advisors Worth It? - The Motley Fool (table included) TurboTax H&R Block David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube

Today's episode focuses on the impact of Joe Biden's student loan forgiveness program on the fiscal trajectory of the U.S.. David shares that Biden's plan has only one stipulation: your annual income must be less than $125,000 as a single person (or $250,000 for a married couple). The program only concerns federal student loans. and you can have up to $20,000 in student loans forgiven if you received a Pell Grant. Otherwise the limit is $10,000. David questions whether Biden could do what he has planned, something that seems to be suggested by David Walker – former Comptroller General of the Federal Government – as well. David quotes Dr. Larry Kotlikoff who touches upon the fact that up to three million Americans over 60 are still paying off their student loans. For the non-partisan Penn Wharton, President Biden's plan includes three major components. They estimated that the debt cancellation alone will cost up to $519 billion, while the loan forbearance will cost another $16 billion, and the new income-driven repayment IDR program would cost another $70 billion. According to Maya McGinnis, President of the bipartisan Committee for a Responsible Federal Budget, Biden's plan will do nothing to actually make education more affordable – meaning that it will likely drive up tuition costs, all while raising prices on a variety of other goods and services for ordinary Americans. Even the Washington Post concedes that the Biden plan will cause tuition to increase more rapidly, primarily due to its income driven repayment IDR provisions. David illustrates how the approach of Biden's plan will encourage students to take out more debt and colleges to charge more in tuition, and how this will impact you as you're trying to get to the 0% tax bracket. Mentioned in this episode: Will the Inflation Reduction Act Raise Your Taxes? This Could Increase Inflation David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube

Ken Fisher dislikes annuities. He is not shy about it and became controversially famous with his 'I Hate Annuities' campaign. But is his hatred justified? First, Fisher's claims that annuities have 'nosebleed' fees is just wrong. Most of them don't have any fees. The only exception is variable annuities, but the investor gets a guaranteed lifetime stream of income in exchange. Do annuities keep the promise they make to investors? Ken doesn't believe they do. But as David explains, annuities ensure a retiree never runs out of money, which is the one thing retirees fear more than death. When it comes to withdrawing money during retirement, the 3% Rule is one of the most effective strategies you can use today. According to David, Fisher's claims that annuities always mean more taxes is completely false. You can essentially solve all your tax problems by implementing what David calls the Piecemeal Internal Roth Conversion. Fisher argues that annuities do not have a liquidity option. Yes, annuities do have surrender fees, but as David explains, most people don't need liquidity because their investments already guarantee they won't outlive their money. Another of Fisher's issues with annuities is the abnormally huge size of annuity contracts. David counters that claim by saying he's seen dozens of contracts, and they are not as complicated as Fisher paints them to be. Can annuities provide any real value to the average investor? Fisher thinks they can't. David, however, highlights that annuities offer value in ways no other investment vehicle can - your living expenses are taken care of regardless of the market environment, forever. Fisher also maintains that financial advisors are the only people who gain anything from annuities. That's a little disingenuous coming from a person who built a $7 billion business from financial advising. If anything, Ken Fisher is consistent - consistently wrong on all his criticisms of annuities. David further adds that his advice is dangerously misleading and primarily aimed at getting you to transfer your assets over to Fisher Investments. Mentioned in this episode: Financial Fast Lane on YouTube David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube

Lane Martinsen from Financial Fast Lane interviews David McKnight on why you should use LIRP and the benefits of getting to the zero percent tax bracket. David explains the motivation behind his book The Power of Zero. David reveals why he is convinced that future tax rates will be significantly higher and why it makes sense to be in the zero percent tax bracket in retirement. If you are in or approaching retirement, David recommends taking advantage of the historically low tax rates before the current tax code expires in 2026. According to David, the most effective retirement planning technique combines all available tax-free strategies. Does the 0% tax bracket really exist? David explains how Americans can get into the zero percent tax bracket without trying to game the IRS. David goes through the strategies that can shield you against the risk of a higher tax bracket - and the main components of a comprehensive approach to tax-free retirement. David breaks down what Life Insurance Retirement Plan (LIRP) is and why it's so effective when it comes to tax-free retirement. David reveals the holy grail of retirement planning and what it entails. Numerous studies have shown that the number one concern for retirees is not the risk of paying higher taxes, but the fear of outliving their money. David talks about his second book, Tax-Free Income For Life, and how it can potentially help retirees mitigate longevity and tax rate risk through sane financial planning. David's advice to retirees and people nearing retirement: Rising taxes are inevitable. Don't let a year go by without taking advantage of the historically low tax rates. Mentioned in this episode: Financial Fast Lane YouTube Channel David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube

Did Joe Biden just solve the national debt crisis? Here's why you shouldn't be celebrating just yet. David explains why most people believe passing the Inflation Reduction Act might be the first step to taming inflation and curbing the national debt crisis. According to Maya MacGuineas, the President of the Committee for a Responsible Federal Budget, this legislation represents an essential first step toward fixing the debt crisis by enacting several policies related to energy, climate, health care, and the tax code. David points out that Maya is brilliant at what she does, but she might be wrong on this one because the data actually paints a totally different picture. The numbers according to statista.com reveal the national debt is projected to be over 30.6 trillion by the end of 2022 and 43.3 trillion by the end of 2031. David explains that since the Inflation Reduction Act will only save $313 billion over the next 9 years, it does nothing to reduce the current debt. It only slows the growth of the debt by a measly 2.5%. As far as fixing the national debt crisis is concerned, David is convinced that the only way to drive change is to increase revenue and reduce spending. The Inflation Reduction Act will introduce numerous impactful activities that might reduce government spending and solve inflation, but David feels it's not a serious attempt to fix the national debt. As David explains, with the national debt crisis growing into an intractable problem, being in the zero percent tax bracket is now more important than ever. Mentioned in this episode: David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube

David breaks down the Inflation Reduction Act of 2022 and how the bill will potentially curb inflation by reducing the deficit, investing in domestic energy production, and promoting clean energy solutions. As far as Biden's Build Back Better Initiative is concerned, imposing more taxes on individuals and couples who make $400k and $450k per year, respectively, is one of the major factors that contributed to the bill not going through. David analyzes whether the inflation Reduction Act will increase taxes for all Americans. David reveals the glaring errors in the proposed inflation act and whether changes to the bill will mean an end to Trump's tax cuts. David explains how Biden's Build Back Better plan would have created an inflationary environment. David demonstrates how the new tax laws are comparable to kings from the past imposing taxes on individuals based on crop yield in a matter that's unfavorable to the farmer. David breaks down the key components of the Inflation Reduction Act of 2022 and how, if passed, might cure the inflation symptoms we're seeing right now. The Inflation Reduction Act will introduce numerous government spending activities. Where will all this money come from? David believes these projects will be funded by more taxes. As David explains, the passage of the bill will, directly and indirectly, affect all Americans, especially since higher taxes for businesses translates to higher costs for the concerned products or services. Mentioned in this episode: David's books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code DavidMcKnight.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube