David talks about the Power of Zero “philosophy,” as well as a recent Penn Wharton study saying that, if all we do is continue on this same course, by 2043 there will be no arrest in the financial collapse of our country.

95% of Americans have the lion’s share of their retirement savings sitting in what we call tax-deferred vehicles like 401(k)s and IRAs.

A big problem most Americans face: every year the IRS gets a vote on what percentage of your profits they get to keep.

David shares the Power of Zero origin story and he explains what someone should do to get as close as possible to someone else.

David addresses the question “Where should we be investing our retirement dollars?

$29,200 is the limit under which you’ll get to experience the water.

“A lot of people don’t realize that their social security number can be taxed,” 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

Penn Wharton

The Insurance Buzz

Today’s video is from David’s conversation with financial advisor Bruce Hosler.

They discuss why financial advisors like Ken Fisher don't want you to do Roth conversions.

David reveals why there is a lot of incoming resistance from financial "Gurus" about moving to tax-free and using the tools necessary to get to the 0% tax bracket.

David talks about his new book, Guru, and all of the interference he’s facing in trying to get the Power of Zero message out to the American people.

Most of these gurus believe that tax rates in the future are likely to be higher than they are today. But when you go to their websites, there are no practical strategies on exactly how you should arrange your assets to best shield yourself from the impact of higher taxes.

David highlights why Dave Ramsey is against any form of permanent life insurance. He even has a famous quote, “Permanent life insurance is 100 % crap, 100 % of the time.”

If you can fund your lifestyle out of your cash value life insurance in the year following a down year in the stock market, it gives your stock market portfolio a chance to recover before you take further distributions.

David explains how this act alone can increase the sustainable withdrawal rate on your stock portfolio from 4 % to 8%.

David and Bruce agree that people need to find ways to create multiple streams of tax-free income from multiple sources.

David reveals that conflict of interest is what prevents fee-based advisors from promoting the power of zero message.

David and Bruce talk about the unfunded obligation for Social Security, Medicare, and Medicaid--and the amount of money the government needs to have to pay for Medicare over the next 75 years.

Financial advisors are not educated enough about the reality of future higher tax rates. If they were, David believes they would be more familiar with the ways to mitigate against rising taxes down the road.

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

How much of your social security is getting taxed, at what rate, and is there anything you can do about it?

Unfortunately, the IRS doesn't make it easy for people to understand how much of their social security is taxable and at what rate.

David explains that the best way to understand social security taxation is to first know about provisional income--this is the income the IRS tracks to determine how much of your social security will be taxable.

As you continue to increase your IRA distributions and, therefore, your total provisional income, the percentage of your social security that becomes taxable quickly begins to rise.

The IRS says that if your provisional income is between $32,000 and $44,000, up to 50% of your social security can become taxable.

Fortunately, there are some scenarios where you wouldn't pay any taxes, thanks to standard deductions.

The most obvious thing to do if you don’t want social security taxation is to do a Roth conversion.

According to David, any income taken from a Roth IRA does not count as provisional income and, therefore, does not count against the thresholds that cause social security taxation.

However, the only time it makes sense to do a Roth conversion is if you believe that your tax rate in the future is likely to be higher than it is today.

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

This episode addresses whether the mainstream financial planning community is justified in avoiding Indexed Universal Life.

Lately, social media has been filled with videos praising the virtues of a financial tool known as Indexed Universal Life (IUL).

David explains why the IUL has been taking such a beating from traditional financial planners.

David discusses three different viewpoints against the IUL – including that of scammy salesmen on TikTok who often describe the IUL as “a stock market replacement on steroids.”

Financial gurus tend to be jack of all trades but masters of none with IUL critiques that are either plain wrong or far too simplistic, says David.

As a result of these groups’ cumulative efforts, IUL is widely viewed as a caricature of a financial product.

David goes over how to objectively evaluate IUL on its merits and shares three of its positive utilizations as a dynamic financial tool.

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

Suze Orman

Dave Ramsey

George Kamel

Ernst & Young

David discusses how much of your IRA you should convert, in what amounts and over what time frame.

If you’re not convinced by the possible dramatic increase in tax rates in 2031 to bump you into the 32% bracket, you’re not alone…

A whole battery of experts predict that tax rates will have to rise dramatically to help service the national debt and with the $200 trillion in shortfalls in Social Security, Medicare, and Medicaid.

In Comeback America, former Comptroller General David Walker predicted that effective tax rates for all taxpayers need to double by 2030.

David touches upon what would happen if the government doesn’t increase its taxes by 2043.

David mentions what your Roth conversion roadmap should look like in the next 10 years – and beyond – if you have the lion’s share of your retirement savings in tax deferred accounts like IRAs and 401(k) plans.

There’s one thing that you shouldn’t do before the “tax deadline.” You should not bump into the 32% tax bracket or higher.

David goes over what he refers to as a “wait-and-see approach.”

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

Comeback America: Turning the Country Around and Restoring Fiscal Responsibility by David Walker

Penn Wharton

David addresses Clark Howard’s viewpoint that seems to want to invite people to never consider a fixed index annuity.

Despite interacting with thousands of financial advisors who offer fixed index annuities every year, David has never heard one of them describe them the same way as Clark Howard.

Since financial gurus have to get their points across in short three-minute segments, they don’t have the luxury of nuance, says David.

David explains how fixed index annuities actually work, and why you can’t lose money in a fixed index annuity in its simplest form.

David touches upon the role of surrender charges and how Howard is wrong about them.

In traditional stock market investing, you’re not supposed to withdraw more than 4% per year.

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

Clark Howard

Doug Andrew called the IUL a dream investment, but is it the silver bullet retirement account he claims it to be?

David goes through Doug Andrew’s controversial remarks about IULs, and explains why he politely disagrees with his one-size-fits-all approach to index universal life.

David explains why the 4% rule is a very expensive way to pay for retirement.

He reveals why it's much more economical to guarantee your living expenses with a lifetime income annuity.

If you only utilize the IUL, you will dramatically underperform the stock market over time. Furthermore, you won't be taking advantage of all the unique benefits each of the tax-free alternatives the IRS tax code affords you.

The IUL should only be used as a complement to all these other streams of tax-free income, not a replacement for them.

David goes through the characteristics that make the IUL a unique investment avenue.

Would you rather adopt a retirement approach where you put every last dime of your retirement savings into an indexed universal life insurance policy? Or would you prefer your IUL to be just one component of a balanced, comprehensive approach to tax-free retirement?

For David, the IUL is not the only way to grow your money productively over the course of a lifetime. When you have an experienced financial advisor shepherding you through the process, you can get extremely productive returns from the stock market.

If you're younger than age 50, David recommends earmarking 30% of your retirement savings towards an IUL.

Why 30% and not 100%? Because 30% is a much more balanced, math-corroborated approach to using the indexed universal life policy.

The IUL is not a dream in a dream. It's merely a financial tool. When utilized in concert with all of the other available alternatives in the IRS tax code, it can help you create a balanced, comprehensive approach to tax-free retirement planning.

David reveals why Wall Street wants you to believe that the stock market is the only solution to stress-free retirement planning.

Most financial experts agree that tax rates in the future are likely to be higher than they are today. But that doesn't mean that you must reflexively default to putting all your retirement savings into an IUL.

If you want to make money in the stock market, you're supposed to buy low and sell high. Unfortunately, most do-it-yourself investors do the exact opposite.

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

This episode explores the two different five-year rules for Roth IRAs instituted by the IRS to prevent people from abusing them.

The first five-year rule applies to earnings on Roth contributions and determines whether those distributions can be taken tax-free.

The second rule concerns Roth conversions and lets you know whether conversion principles can be accessed penalty-free.

David explains that, for the purposes of the five-year rule, the clock starts the first time any money is contributed to a Roth IRA by either contribution or conversion.

Once the five-year rule has been met, it’s been satisfied for good.

Remember: any recent contribution to a Roth IRA can count as qualified tax-free distributions, even if they’ve been in the account for less than five years.

David shares that Roth 401k plans have their own five-year rule, which is counted separately from a traditional Roth IRA.

In case you’re unable to make a Roth contribution due to income limitations, you can make a non-deductible contribution to an IRA and then do a Roth conversion.

Don’t forget that there aren’t income limits for IRA contributions.

Dave discusses the fact that “the ordering rules for Roth IRA stipulate that withdrawals of after-tax contributions are made first, then conversions, and finally, earnings.”

The Roth conversion five-year rule lets you know if you can access your converted principal penalty-free.

The Roth contribution five-year period, on the other hand, lets you know if you can access your Roth earnings tax-free.

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