The Power Of Zero Show

Latest Episodes:

Can Social Security, Medicare and Medicaid Be Saved? Jul 10, 2024

Show notes

Today's episode is part 2 of David's interview with Dave Hall.

David shares his thoughts about moving the retirement age to what it currently is.

Dr. Larry Kotlikoff has suggested raising taxes to 4% – 2% on the employee and 2% on the employer – as a way to solve the issues around Social Security.

David sees the combination of pushing back the retirement date and increasing revenue as a valuable avenue to tackle the Social Security issue.

Dave and David talk about the current and future state of Medicare.

Medicare is the largest of the three programs that constitute the $239 trillion underfunding.

David touches upon David Walker's answer to the question "Do you foresee a future in which they could raise income taxes to pay for that underfunding?"

States like California and Washington are concerned about the future viability of their Medicare programs because of all the long-term care needs the country has.

There's a 70% chance that, among spouses, one will end up needing long-term care. David unpacks the potential repercussions of that.

Mentioned in this episode:

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Dave Hall

Dr. Laurence Kotlikoff

Suze Orman

David M. Walker

How the Current U.S. Debt-to-GDP Trajectory Could Kill Your Retirement Plan Jul 03, 2024

Show notes

Today's episode is part 1 of David's interview with Dave Hall.

David shares what he considers the fundamentals of his financial movement: "numbers don't lie."

David cites a recent Penn Wharton study that illustrates two things that should be done by 2043 – and what will happen if these conditions aren't met.

Dave and David discuss the debt-to-GDP ratio, and why debt isn't the problem.

According to experts, when the debt-to-GDP gets past 75% it's when there's an eroding influence on your economic output over time.

Dave and David go over when they started to track the $21 trillion dollar debt situation and related aspects.

There's a demographic "time bomb" and it will have an impact on Social Security, Medicaid, and Medicare.

David talks about the big inverted pyramid, its relation to benefits, and the increasing tax rate forecast.

Medicare is five times more expensive than Social Security, making it a harder thing to fix.

Mentioned in this episode:

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Dave Hall

Comeback America and America in 2040: Still a Superpower? by David Walker

Penn Wharton

Bill Gates

David Walker's interview with David McKnight

David Walker's Interview on 60 Minutes

How Soon Will AI Replace Financial Advisors? Jun 26, 2024

Show notes

Today's video is part four of David's interview with the co-founder of Power of Zero, Larry DeLegge. They discuss whether AI will replace financial advisors and if Congress will take away the tax advantages of cash value life insurance.

According to David, financial planning is more of an art than a science. This is why he is not all that convinced that AI has the capabilities to successfully handle people's unique and complex financial situations.

2043 will be a big year for our country. Once we hit a 200% debt to GDP, no combination of increasing taxes or reducing spending will arrest the fiscal collapse of our nation.

David breaks down the options and solutions we still have to put our country back on a sustainable fiscal path.

David shares his thoughts on whether Congress will change the rules on cash value life insurance.

The book, Power of Zero, works best for people who have already accumulated money and are looking for ways to wring the most efficiency out of their savings while shielding themselves from the impact of higher taxes.

David reveals that his next book will target the younger generation--the people in their 20s, 30s, and 40s.

David agrees with Harrison Young's famous saying that the people who contribute 30 percent of their retirement savings to cash value life insurance take much more income in retirement than people who do investments alone.

David shares why he believes financial advisors need to redeem life insurance and tax-free planning principles by teaching the principles to the younger generation.

If you're going to write a book, find some good stories and make those stories the centerpiece of what you're trying to drive home. That's how you write a good book.

David's advice for people looking to write a book on finances: don't ever start a book with your own personal story. Start your book with a story that will grab your reader's attention and then keep them for the rest of the book.

Mentioned in this episode:

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Tom Hegna's Who Wants to Be a Millionaire? By Tom Hegna

Beware of This Tax Bracket When Doing a Roth Conversion Jun 19, 2024

Show notes

Today's video is part two of David's interview with Larry DeLegge, the co-founder of Power of Zero. They discuss the tax bracket you should avoid when doing a Roth conversion.

They start the conversation by describing why it's a no-brainer to pay your taxes today at 22 or 24% marginal rates.

Instead of rushing to complete Roth conversions by 2026 and potentially bumping into higher tax brackets, David suggests stretching the conversions over several years.

After 2026, the tax brackets are expected to increase, with the 22% bracket becoming 25% and the 24% bracket becoming 28%.

However, these brackets are still lower than the higher brackets (32%, 35%, 37%) that one might be forced into if they rush the Roth conversion.

David reveals why he advises people to do Roth conversions but only follow a restrained approach to Roth conversions.

David talks about the ideal balance for saving money in taxable, tax-deferred, and tax-free buckets.

What will happen to standard deductions come 2026?

David is not worried about the standard deduction. He explains that standard deductions will be around for the foreseeable future, and there are no indications of the government getting rid of them.

For David, it's more prudent to plan for higher taxes than to speculate on the complete elimination of the standard deduction.

All financial advisors agree that tax rates will be significantly higher in the future, which supports the strategy of paying taxes now at lower rates.

Should people use cash to pay tax on Roth conversions now, or should they contribute it to a Roth 401(k) now? David's advice is for people to go with the Roth 401K.

Mentioned in this episode:

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

The Ticking Time Bomb in Your Cash Value Life Insurance Jun 12, 2024

Show notes

Today's episode is part 1 of David's interview with Power of Zero co-founder Larry DeLegge.

The two talk about value life insurance policies, children, and whether life insurance can serve as a viable volatility shield in retirement.

David shares his thoughts regarding the "IUL vs. whole life insurance policy" debate.

For David, starting a life insurance policy is like getting married – he explains why.

When it comes to life insurance policies, there are two key things David looks at.

The first one is safe and productive growth, the second thing is a guaranteed 0% loan.

David touches upon the 4% rule and the so-called volatility buffer.

"The problem with the 4% rule is that it's a pretty expensive way to go about saving for retirement," says David.

A recent Ernst & Young study looked at whether there is any reliable way to get an 8% distribution rate.

David cites a study that said that bonds are much more correlated to the stock market than we previously thought and are much more volatile than previously thought..

David discusses precautions to take with the LIRP for your children to avoid unpleasant surprises.

Mentioned in this episode:

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

The Most Dangerous Retirement Advice from Suze Orman, Dave Ramsey and Ken Fisher Jun 05, 2024

Show notes

This episode is part 3 of David's interview with Power of Zero co-founder Larry DeLegge.

The two discuss the most dangerous retirement advice from Suzie Orman, Dave Ramsey, and Ken Fisher.

Financial gurus in the business of dispensing one-size-fits-all financial planning advice is David's biggest pet peeve.

Why do they do it? To appeal to a broader range of Americans.

David explains what his so-called Dave Ramsey's circle of poverty is all about.

Two out of three people who reach financial independence following Ramsey's advice will run out of money before they run out of life…two-thirds of the time!

David believes that Dave Ramsey is good for bad investors, but bad for good investors – and cites a couple of examples to illustrate that.

David talks about why he believes Ken Fisher is averse to bringing up Roth conversions to his clients and prospects.

There's a key difference between Ken Fisher and the likes of Dave Ramsey – David tells it all.

David opens up about something he's really excited about regarding his new book.

Mentioned in this episode:

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Dr. Wade Pfau

Tom Hegna

Graham Stephan

Power of Zero YouTube Video Dave Ramsey Eviscerates Co-Host George Kamel for Preaching the 4% Rule

Clark Howard

The Fatal Flaw in Suze Orman and Dave Ramsey's Retirement Planning Advice May 29, 2024

Show notes

Today's video is part six of David's interview with financial advisor Chris Martens where they discuss the fatal flaw in Dave Ramsey and Suze Orman's retirement planning advice.

They discuss David's new book, "The Guru Gap," and how America's financial gurus are leading people astray.

David believes that Dave Ramsey and Suze Orman have done an incredible service helping many Americans get out of debt and even become rich--but they're not all that good at helping you stay rich or secure your retirement.

According to David, the problem with most financial gurus is that they're trying to appeal to as broad an audience as possible. To do that they dispense one-size-fits-all financial advice.

Unfortunately, because of this really broad un-nuanced approach, most financial gurus cannot stay behind products like permanent life insurance that require nuance.

David reveals that his main goal is to uncover sustainable retirement strategies and help people wring the most efficiency out of their retirement plan.

David and Chris agree that people should not take financial advice from advisors on TikTok.

David further explains why TikTok is not his favorite place to get financial advice.

Mentioned in this episode:

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Here's What Happens When You Put 30% of Your Retirement Savings into Cash Value Life Insurance May 22, 2024

Show notes

Today's episode is from David's conversation with CFP Adam Olson.

They discuss why mega-CPA firm Ernst & Young is saying that if you want to maximize your income in retirement, you should put 30% of your retirement savings into a cash value life insurance.

David reveals what percentage of your savings you should put into a life insurance retirement plan.

David shares the benefits of accumulating three years worth of living expenses in your cash value life insurance–this is to pay for your living expenses in the year following a downturn in your stock market portfolio.

According to David, the benefit of doing so is it gives your stock market portfolio a chance to recover before taking further distributions.

If you're 50 years or younger, put 30% of your retirement savings towards cash value life insurance. This move alone will double your sustainable withdrawal rate in retirement.

So, if you're saving 25% of your income for retirement, David recommends putting around 8% into a cash value accumulation product.

Mentioned in this episode:

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

What Dave Ramsey DOESN'T Want You to Know About Indexed Universal Life May 15, 2024

Show notes

Show host Arturo Johnson shares his experience with coming across David's content – and how it has changed his perspective.

David mentions a study that illustrates the benefits of putting 70% – and not 100% – of your retirement savings into a Roth 401k and the balance into cash value life insurance.

Dave Ramsey is famous for stirring up a hornet's nest among CFPs all across the U.S. David unpacks a shortcoming with one of Ramsey's principles.

David goes over what can happen when you utilize life insurance as a volatility shield/buffer.

The only way to get an 8% distribution rate in retirement is by utilizing a financial tool that Dave Ramsey says is a hot pile of garbage: cash value life insurance.

The reason why David likes IUL is because history shows that you can get five to seven percent net of fees over time in your IUL.

David talks about something he dislikes in Ramsey's views on IUL and that many "gurus" such as Suze Orman, Clark Howard, and Ramit Sethi say it's a scam.

"The IUL is not a stock market replacement, it's a bond alternative," says David.

Mentioned in this episode:

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

First Glimpse at Your Tax Bracket in 2026 (And What It Will Cost You) May 08, 2024

Show notes

David talks about what tax brackets will look like starting from January 1st 2026.

One of the things that will change in 2026 are the actual tax rates – with an increased percentage of tax attached to a given range of income.

In 2026, tax rates will return to what they were in 2017.

David points out that some people online mistakenly believe that, in 2026, things will simply revert back to the same tax rates of 2017, with the same income ranges attached to those rates.

An important thing to note is the federal government will index the 2017 tax brackets for inflation, treating your 2026 tax bracket as if the tax cut had never happened.

David shares a fairly accurate way of determining what your tax brackets are likely to be and what it will end up costing you.

Those in the 24% tax bracket or lower will see a slight uptick in their taxes in 2026 – not because of tax bracket compression but due to their tax rate increasing.

David sees doing a Roth conversion as a huge planning opportunity to protect yourself.

The idea is to take advantage of the Trump tax cuts while they're still around so that, by the time they expire, you'll have safely transferred a portion of your retirement savings to Roth IRAs.

David believes that, even though tax rates will go up in 2026, they'll increase even further in 2030 and 2031 to pay for interest on the national debt in Social Security, Medicare, and Medicaid.

Mentioned in this episode:

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com