David McKnight discusses one of the most destructive pieces of retirement advice he has ever heard: that you should never do a Roth conversion in retirement or within five years of retiring.

Dave Ramsey believes you should forego doing a Roth conversion if you’re within five years of retirement or are already retired – because of the so-called Five-Year Rule.

The problem with this approach, according to David, is that Ramsey is misinterpreting what that rule actually means, in addition to confusing multiple rules and applying them to the wrong people.

Ramsey’s advice, continues David, encourages retirees to make choices that could cost them a fortune and taxes over time.

The bigger issue, however, is the fact that Ramsey is focusing on the wrong thing – what he should really focus on is where tax rates are headed in the future.

The current historically low tax rates won’t last, as the U.S. national debt is on track to hit $63 trillion by 2035.

If that were to happen, the U.S. Congress won’t have the luxury of keeping tax rates low anymore.

According to former Comptroller General David Walker, tax rates will likely need to double just to keep the Government solvent.

A recent Penn Wharton study found that if the U.S. doesn't get its house in order by 2040, no combination of raising taxes or reducing spending will arrest the financial collapse of the nation.

David warns that if you’re still contributing to or sitting on a big tax-deferred nest egg like a 401(k) or IRA, you’re setting yourself up to pay massive taxes in the future.

Remember: 2035 is your Roth conversion deadline.

David goes through his suggested strategies to avoid paying higher tax rates and potential penalties in the future.

Something good to keep in mind is that if you’re in the 0% tax bracket and tax rates double, two times zero is still zero…

David sees Dave Ramsey as the go-to expert for get-out-of-debt advice, not retirement planning strategy.

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

Dave Ramsey

David Walker

Penn Wharton

David McKnight addresses something that can make or break your Roth conversion strategy: how you actually pay the tax.

David kicks things off by sharing that Federal and state estimated tax payments are usually made in four equal installments: April 15th, June 15th, September 15th, and January 15th of the following year. 

Did you know that doing a Roth conversion in December, like many people do, will lead to the IRS pretending that income was earned evenly throughout the year?

If you don’t account for that, you could get hit with an underpayment penalty (8% of the underpaid amount).

David goes over different ways you can handle the tax payment. 

The first way is to pay it using cash or a taxable brokerage account – this allows the full conversion amount to move from IRA to Roth IRA.

By doing that, you’re essentially using your least efficient dollars, from a tax efficiency perspective, to catapult 100% of the converted amount into the Roth IRA.

David touches upon the IRS Form 2210 Schedule AI, which informs the IRS of the fact that your income was uneven and it can wipe out the penalty for the first three quarters of a year.

The second way is to withhold the tax at the time of conversion. While this method helps prevent the risk of penalty (and you don’t have to file extra forms) it comes with a downside: less money ends up in the Roth IRA.

Thirdly, you could make a second IRA distribution and withhold 100% for taxes.

David shares a word of caution: when using this approach, you don’t want to bump up into a higher tax bracket, especially if it’s a jump from the 24 to the dreaded 32% bracket.

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

David McKnight explains why he has chosen to avoid bonds entirely and why you might want to rethink how you protect your portfolio as you approach retirement.

David kicks things off by illustrating the so-called sequence of returns risk.

According to conventional wisdom, bonds tend to be less volatile, so they help smooth out the rough years in the stock market. 

However, bonds aren’t the safety net they used to be. And over long periods of time, bonds tend to underperform stocks by a wide margin.

David warns against “stuffing your portfolio with bonds just to be safe.” 

The reason for that is that you’re not only capping your upside, you’re also taking on risks of your own: inflation risk, interest rate risk, and the risk of simply not having enough growth to fund a long-term retirement.

Instead of watering down his stock portfolio with bonds, David uses a volatility buffer.

He keeps 3-5 years' worth of living expenses in a separate, safe, and productive account – his go-to option is Indexed Universal Life Insurance (IUL).

An IUL gives you safety from market downturns because it’s linked to an index but has a floor that protects you from losses. 

In other words, an IUL has potential for reasonable growth without the full downside risk of stocks.

David discusses a scenario in which he’s retired and living off his investments when the market suddenly drops by 30%...

The approach David relies on enables him to have peace of mind – something that really helps because, as he puts it, “The more you can take emotion out of the equation, the better your investment returns.” 

David goes over what to consider and do to get started with a volatility buffer.

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

David McKnight addresses something Dave Ramsey has been saying for years: “You should NEVER own bonds in retirement!”

David points out that the tool that actually solves the problem Ramsey has been trying to avoid is the same one he spent years mocking on his call-in show: the Fixed-Indexed Annuity.

Ramsey’s argument is that stocks outperform bonds over time – hence, bonds should be avoided as they’re “slow, underperforming, and risky.”

David indicates what Ramsey is half right about, as well as something he’s missing the mark on…

David discusses how bonds can act as a sort of volatility buffer, despite what Ramsey preaches. 

The irony is that the best alternative to bonds is something that Ramsey has derided for years (the Fixed-Indexed Annuity).

David goes through the key differences between a Fixed-Indexed Annuity and a bond.

In years when your stock portfolio is down, you can draw from your annuity – this gives your stock time to recover before you start taking further distributions.

That act alone can increase your sustainable withdrawal rate on the stock portion of your portfolio from 4% to as high as 8% with a 95% success rate. 

David’s disagreement with Dave Ramsey isn’t so much with the suggestion of getting rid of bonds, something David actually agrees with, but it’s missing the most important part: what you replace bonds with matters.

Remember: there’s no better bond alternative in the retirement space than the Fixed-Indexed Annuity.

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

Dave Ramsey

David McKnight walks you through what he believes to be the retirement strategy of the future: the Power of Zero approach.

Congress recently passed the One Big Beautiful Bill Act, which makes the Trump tax cuts permanent.

The brackets were set to expire in 2026, but now we’re told they’re here to stay…

By 2035, the U.S. will need massive infusions of cash just to cover the interest on the debt of $37 trillion, not to mention Social Security, Medicare, Medicaid, and defense.

When the Government needs money and no one else will loan it the money, it does the one thing it’s always done in the past: raise taxes.

Remember: even though tax rates are low today, they won’t stay that way forever. Congress can change the rules anytime it needs more revenue.

David illustrates the main goal of the Power of Zero approach and how it works: it’s all about creating multiple streams of tax-free income, none of which show up on the IRS’ radar, but all of which contribute to you being in the 0% tax bracket.

Beware: this idea that we’ve locked in low tax rates forever is an illusion. Just because Congress called these tax cuts permanent doesn’t mean they won’t reverse them the minute they need more revenue.

According to Dr. Larry Kotlikoff of Boston University, the unfunded obligations for Social Security, Medicare, Medicaid, interest on the national debt, and the general cost of running the Federal Government over the next 75 years, are over $200 trillion.

Right now, you have a chance to strategically reposition your retirement savings to be tax-free. Shift that money 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.

David believes that you have a chance to strategically reposition your retirement savings tax-free.

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

Laurence Kotlikoff

While on the golf course with his son, David McKnight got asked a question, by a couple of men in their early 70s, every pre-retiree and retiree wonders at some point: “What’s the biggest mistake people make when preparing for retirement?”

Many people spend their entire career saving money in tax-deferred accounts like 401(k)s and IRAs.

As that balance grows larger every year, it’s easy to get the illusion that all that money belongs to you, while a larger portion actually belongs to the IRS. 

How much of that sum you ultimately get to keep depends on what tax rates happen to be in the year you take that money out.

David believes that the #1 mistake you can make in retirement is failing to plan for taxes.

Remember: if you arrive in retirement with the vast majority of your wealth sitting in tax-affirmed accounts, you’ve put yourself in a position where the government gets to decide what percentage of your money you actually get to keep.

Keep deferring, as you know you’ll be in a lower tax bracket in retirement, has been traditional wisdom for quite some time, but the math doesn’t work out anymore.

David touches upon the repercussions of the increasing tax rates caused by the nation’s skyrocketing and unfunded obligations.

His recommended step is to start shifting money from tax-affirmed to tax-free accounts.

David discusses the approach you should take and reminds you that retirement isn’t just about how much money you’ve saved… it’s about how much of that money you actually get to spend.

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

For many people, an approach that incorporates whole life insurance has become part of their broader retirement strategy. Is that a good way to go? That’s what David McKnight addresses in this episode.

While Whole Life has some legitimate applications, especially for people who are risk-averse and are looking for guaranteed steady accumulation, there’s an option that does the job more effectively: Indexed Universal Life (IUL).

David touches upon why you may want to opt for IUL instead of Whole Life, including the fact that, with IUL, you can access your cash value in retirement without having to pay loan interest. 

That gives you more flexibility and more efficiency when using IUL as a source of income.

David compares Whole Life and Indexed Universal Life.

If your goal is to shield your retirement portfolio from market downturns, then Whole Life is like taking the scenic route: You’ll get there. but it will cost you more time, fuel, and money.

IUL, by contrast, is like taking the express lane: Same destination, just faster, cheaper, and more efficient.

“If efficiency matters to you, and you’re trying to increase the likelihood that your money will last as long as you do, then Indexed Universal Life is the superior alternative”, says David.

David goes over what happens when you borrow money from your Whole Life policy vs. from your IUL. 

It’s good to know that some IUL policies have wash loans or zero-cost loans that make accessing your money more predictable and sustainable.

David believes that, when it comes to retirement income and the volatility buffer concept, the IUL is more efficient and effective, as it gives you higher growth potential and more favorable loan features.

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

In this episode of The Power of Zero Show, host David McKnight discusses why it may make sense to replace the bonds in your retirement portfolio with a Fixed Index Annuity, and how doing so could lead to a much better outcome for your retirement.

For decades, financial advisors have followed the conventional wisdom of the 60-40, 60% stocks, 40% bonds.

As you approach retirement, that ratio shifts even further in favor of bonds…

…however, the problem is that today’s bond market isn’t built like it used to be, and bond yields are still below their historical averages.

David touches upon the Fixed Indexed Annuity or FIA.

Remember: when you replace the bonds in your portfolio with Fixed Index Annuities, you’re not just getting similar safety. You’re actually improving your outcomes across the board.

David stresses that, in retirement, it’s not all about rates of return. It’s about how consistent that return is.

Something good to keep in mind: bonds can and do lose value. If interest rates spike, bond prices fall. If inflation spikes, bond purchasing power falls.

Are you 5-10 years away from retirement or already retired? If so, it’s time to reevaluate the role of bonds in your portfolio.

The reason for that is that bonds aren’t offering the returns they once did, carry more risk than most people, and they may no longer be the best way to reduce volatility or protect your portfolio.

David puts it bluntly: “If you aren’t using Fixed Index Annuities as a bond alternative, you could be missing out on one of the most powerful safe money strategies available today.”

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

Dave Ramsey

Suze Orman

Ken Fisher

S&P 500

David sits down with John Manganaro to unpack the advice of financial gurus like Dave Ramsey and Suze Orman. While their guidance has helped countless Americans get out of debt, David explains why their cookie-cutter approach to retirement income planning can fall short.

Why “hope over math” is a dangerous foundation for retirement planning—David explains why advice built on optimistic return assumptions leaves disciplined savers exposed to massive disappointment later.

Learn how Dave Ramsey’s 8% withdrawal and 12% return claims mislead investors and why following them could drain your retirement accounts too quickly.

David explains why saving $1,000 a month isn’t realistic for most families and how financial gurus use overly rosy scenarios to make the math appear more approachable.

David shares how gurus water down complex retirement math into sound bites that might inspire beginners, but fail those with real assets at stake.

Why one-size-fits-all advice collapses under scrutiny. For example, what works for paying down credit card debt doesn’t translate to sustainable retirement income.

David highlights the power of guaranteed lifetime income annuities and why they’re often a more efficient way to purge longevity risk than relying only on the stock market.

Learn how combining annuities with traditional investments can actually increase income while improving the odds that your portfolio lasts through life expectancy.

David shares how cash value life insurance can be used as a volatility shield—giving your stock portfolio time to recover after downturns instead of locking in losses.

Why guaranteed income changes retiree behavior. Research shows people with guaranteed income tend to spend more, worry less, and even live longer.

Why longevity risk is often underestimated by retirees—David reveals the benefits of planning for a 30–35 year retirement.

David explains how tax-free planning integrates with Social Security and why keeping provisional income below thresholds can keep benefits 100% tax-free.

Why the investing “holy grail” is leaving just enough in an IRA so RMDs are offset by the standard deduction—allowing tax-deferred money to come out tax-free.

How to build six different streams of tax-free income so none show up on the IRS radar, putting you effectively in the 0% tax bracket.

David highlights the fiscal reality ahead—with debt-to-GDP ratios soaring, he warns that tax rates are likely to be dramatically higher within the next decade.

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

David explains why A.I. could make Universal Basic Income (UBI) a reality sooner than you think. As machines take over more jobs—especially white-collar ones—we may need a new safety net just to keep society stable.

Why UBI is no longer a fringe idea but a serious policy being considered in Washington. It promises monthly cash payments to every adult, regardless of their job or income.

David highlights the staggering cost of UBI if implemented today. At $12,000 per adult annually, the total price tag would hit $3.1 trillion a year—equal to all Social Security and Medicare spending combined.

How to wrap your head around what that means for taxes. To fund UBI, the government would need to raise taxes by at least seven percentage points across the board.

David shares what that looks like in real life. If you’re in the 22% tax bracket now, that could jump to 29%—even before you factor in state taxes or future hikes.

With rising national debt and shrinking tax bases due to A.I., David believes higher taxes may become the new normal.

David explains how this affects your retirement plan. If you're deferring taxes in a traditional IRA or 401(k), you may be setting yourself up for a bigger tax hit down the road.

How to avoid that painful surprise later. Today's low tax rates could be the best deal you'll ever get—so delaying taxes could mean missing the window.

David shares the smart move more Americans should be making right now. Start shifting money into tax-free accounts like Roth IRAs while the current tax laws still work in your favor.

David covers a powerful example to bring this to life. Imagine you’re 55 with $1 million in a traditional IRA and expect to pay 22% in taxes. If taxes go up by 20 points in the next decade, you could lose hundreds of thousands more to the IRS than you need to.

Why waiting for retirement to convert to Roth might be a big mistake. The longer you wait, the larger your account grows—and the more you’ll owe when rates are higher.

How to protect yourself from what David calls a “perfect storm” of higher taxes and shrinking benefits. You can’t control what Congress does—but you can control where and how your money grows.

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