Episodes

  • In What Order Should I Spend Down My Assets in Retirement?
    Apr 2 2025

    David McKnight addresses the most efficient order in which to spend your assets in retirement.

    Online programs and algorithms that forecast and run calculations related to your retirement assets suggest starting with your tax-deferred assets like 401(k)s or IRAs.

    Such tools recommend spending down your tax-deferred assets now, when tax rates are low, and your tax-free assets later – when tax rates are likely to be higher than they are today.

    Reminder: regardless of the distribution strategy you choose, it should aim to maximize the likelihood that your money lasts as long as you do.

    David’s recommended strategy involves spending small slivers of each of your assets all in the same year.

    In other words, instead of mowing through one asset class all at once and then moving on to the next, you spend a little from each asset over time.

    There’s a scenario in which you could receive your Social Security 100% tax-free – this could extend the life of all your other resources by five to seven years.

    David explains why you shouldn’t aim to spend down all your tax-deferred assets in the early years.

    David touches upon using a Roth conversion as a strategy.

    Roth IRAs, Roth 401(k)s, and tax-free Social Security (when you can keep your provisional income low enough) are other sources of tax-free income you may accumulate along the way.

    David discusses why it may be better to take a more nuanced approach, rather than simply spending down your tax-deferred assets first and your tax-free assets later.

    Mentioned in this episode:

    David’s national bestselling book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

    DavidMcKnight.com

    DavidMcKnightBooks.com

    PowerOfZero.com (free video series)

    @mcknightandco on Twitter

    @davidcmcknight on Instagram

    David McKnight on YouTube

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

    Show more Show less
    7 mins
  • Suze Orman Says Have 3 to 5 Years of Living Expenses in CASH During Retirement (Good Idea?)
    Mar 26 2025

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

    DavidMcKnight.com

    DavidMcKnightBooks.com

    PowerOfZero.com (free video series)

    @mcknightandco on Twitter

    @davidcmcknight on Instagram

    David McKnight on YouTube

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

    Suze Orman’s Podcast

    Show more Show less
    11 mins
  • 5 Huge Benefits of the Roth IRA!
    Mar 19 2025

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

    DavidMcKnight.com

    DavidMcKnightBooks.com

    PowerOfZero.com (free video series)

    @mcknightandco on Twitter

    @davidcmcknight on Instagram

    David McKnight on YouTube

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

    Penn Wharton

    Show more Show less
    7 mins
  • Two Huge Problems with Whole Life Insurance
    Mar 12 2025

    This episode of The Power of Zero Show is part of David McKnight’s podcast interview with Caleb Guilliams and Tom Wall, PhD.

    David touches upon a recent Ernst & Young study where whole life insurance was used as a buffer-type strategy.

    When it comes to the “risk continuum”, David sees IUL as slightly on the right side of whole life insurance.

    IUL is something worth doing only if you think that risk premium can get you a slightly higher rate of return over time.

    David recognizes that IUL has risks but that, in exchange for those risks, you can get somewhat of a higher rate of return.

    Whole life policies aren’t something David sees as designed to build money up and then take money out permanently.

    One of the reasons why David likes the IUL is because you can find a carrier that gives you a guaranteed 0% loan.

    Some may argue that Wade Pfau, who wrote the foreword for David’s latest book, The Guru Gap, prefers whole life instead of IUL.

    David’s stated objective is to build up your net worth as effectively as you can.

    His suggestion for the accumulation period is to save as well as you can and to mostly invest in stocks.

    David explains his preference for IUL over whole life policies.

    Mentioned in this episode:

    David’s national bestselling book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

    DavidMcKnight.com

    DavidMcKnightBooks.com

    PowerOfZero.com (free video series)

    @mcknightandco on Twitter

    @davidcmcknight on Instagram

    David McKnight on YouTube

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

    Ernst & Young

    Dave Ramsey

    Wade Pfau

    Show more Show less
    15 mins
  • Academics LOVE Annuities – Why Do Investors HATE Them?
    Mar 5 2025

    Today’s episode of The Power of Zero Show features part of David McKnight’s conversation with Caleb Guilliams and Tom Wall, PhD.

    David kicks things off by addressing the liquidity issue.

    Handing a chunk of your retirement savings over to an insurance company in exchange for a stream of income that’s guaranteed to last as long as you do sounds great in principle, but people often have consternation about it…

    The thought of losing liquidity on a significant portion of their net worth is what prevents some Americans from opting for SPEAs and DIAAs.

    David explains why a fixed index annuity can be a valuable resource to leverage.

    David discusses what the annuity industry tends to do.

    In his book, Tax-Free Income for Life, David illustrates the so-called “piecemeal” internal Roth conversion.

    An internal Roth conversion allows you to convert your annuity into a Roth IRA – with an amount of your choosing and over a timeframe your financial plan calls for.

    Tom Wall discusses the two phases of an annuity, the accumulation and distribution phases, as well as the repercussions of the perceived loss of liquidity.

    Mentioned in this episode:

    David’s national bestselling book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

    DavidMcKnight.com

    DavidMcKnightBooks.com

    PowerOfZero.com (free video series)

    @mcknightandco on Twitter

    @davidcmcknight on Instagram

    David McKnight on YouTube

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

    Show more Show less
    5 mins
  • How IUL Fits in a Balanced Approach to Tax-Free Retirement
    Feb 26 2025

    This episode of The Power of Zero Show is part of David McKnight’s conversation with Caleb Guilliams and Tom Wall, PhD.

    David touches upon the “dangerous partnership” between the American people and the IRS.

    David is an advocate for a balanced, comprehensive, approach to tax-free retirement – he explains why that’s the case.

    One of the things David likes about IULs is the fact that they can perform specific applications that no other stream of income, such as Roth IRAs and Roth 401(k)s, can do.

    David goes over the unique trait of each of the streams of tax-free income he sees as key components of “the Holy Grail of financial planning”.

    A Roth IRA, for example, gives you immediate liquidity, while a Roth 401(k) gives you a match.

    A Roth Conversion allows you to convert an unlimited amount of assets to tax-free.

    Taking money out of your IRA up to your standard deduction allows you to get a deduction on the front end, grow your money tax-deferred, and take your money out tax-free.

    An IUL, on the other hand, enables you to get a death benefit in advance, for the purpose of paying for long-term care.

    A balanced, comprehensive, approach to tax-free retirement capitalizes on all the nooks and crannies in the IRS tax code.

    David is in agreement with a recent Ernst & Young study inviting people to have 30% of their retirement savings go towards cash-value life insurance.



    Mentioned in this episode:

    David’s national bestselling book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

    DavidMcKnight.com

    DavidMcKnightBooks.com

    PowerOfZero.com (free video series)

    @mcknightandco on Twitter

    @davidcmcknight on Instagram

    David McKnight on YouTube

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

    TikTok

    Ernst & Young

    Show more Show less
    15 mins
  • Your Authoritative Guide to Tax-Free Retirement Planning in 2025
    Feb 19 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: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track DavidMcKnight.com DavidMcKnightBooks.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube Get David's Tax-free Tool Kit at taxfreetoolkit.com Donald Trump David Walker Mitt Romney
    Show more Show less
    11 mins
  • Expecting a Pension? Strongly Consider a Roth Conversion
    Feb 12 2025

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

    DavidMcKnight.com

    DavidMcKnightBooks.com

    PowerOfZero.com (free video series)

    @mcknightandco on Twitter

    @davidcmcknight on Instagram

    David McKnight on YouTube

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

    Jeff Bezos

    Show more Show less
    7 mins