The Power Of Zero Show

By: David McKnight
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  • Summary

  • Tax rates 10 years from now are likely to be much higher than they are today. Is your retirement plan ready? Learn how to avoid the coming tax freight train and maximize your retirement dollars.
    The Power Of Zero
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Economics Personal Finance
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Episodes
  • Dave Ramsey: Fire Your Tax Advisor for Recommending a 401(k)!

    Dave Ramsey: Fire Your Tax Advisor for Recommending a 401(k)!
    Feb 5 2025

    This episode of the Power of Zero Show sees host David McKnight address Dave Ramsey’s advice – inviting a member of his audience to fire his tax advisor for recommending a 401(k).

    The problem with “financial gurus” like Dave Ramsey and the call-in shows they host is that they provide one-size-fits-all prescriptions that are delivered in very stark black and white terms.

    While David is an advocate for accumulating money in tax-free retirement vehicles, he also recognizes the importance of nuance with these types of recommendations.

    David explains that contributing to a Roth 401(k) is a good avenue to explore if you believe that your tax bracket in retirement is going to be higher than it is today.

    David believes that taxes will rise dramatically over the next 10 years.

    Following one-size-fits-all advice shared by financial gurus puts you at risk of running out of money faster because you may pay a tax along the way that you didn’t necessarily have to pay…

    David discusses when you should go for a traditional 401(k) and when it would be wiser to opt for a Roth 401(k) instead.

    According to a recent Penn Wharton study, if the U.S. doesn't right its fiscal ship of state by 2040, no combination of raising taxes or reducing spending will arrest the financial collapse of the country.

    David goes over a couple of strategies that could help your money last five to seven years longer.

    The fact that there are huge benefits to investing in tax-free accounts shouldn’t necessarily translate into you reflexively pouring all your retirement contributions into your Roth 401(k), says David.

    David shares his thoughts on when it may be a good idea to listen to Dave Ramsey and when it isn’t a clever move to follow his advice.

    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

    USA Today
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    7 mins
  • The Guru Gap: How America’s Financial Gurus Are Leading You Astray and How to Get Back on Track

    The Guru Gap: How America’s Financial Gurus Are Leading You Astray and How to Get Back on Track
    Jan 29 2025
    Today’s episode is a podcast guest interview David McKnight did for Josh Jalinski’s The Financial Quarterback Podcast. David gives Josh’s audience a quick bio that spans from his early days in the financial services space in 1997 all the way to his latest book The Guru Gap. The premise of The Guru Gap is the difference between the 1990s when people had very few options to vet out financial planning advice and today, where they have plenty of ways to vet out. Nowadays, whenever David makes a financial recommendation, 90% of his clients take to the internet to vet that recommendation. In The Guru Gap, David focuses on financial gurus Dave Ramsey, Suze Orman, Ken Fisher, Clark Howard, and Ramit Sethi – and their advice. Since financial gurus aim at taking important and complex financial principles and distilling them down into 10-second sound bites, they tend to give short shrift to a lot of details David’s clients would need to protect and grow their retirement savings. The #1 goal most Americans have is to have their money last as long as they do. Financial gurus have had an adversarial stance toward financial planners like David and Josh Jalinski. Some of David’s clients who seem to put more stock into what these gurus have to say tend to forget that their advice typically isn’t undergirded by math and actuarial science… Josh Jalinski shares a couple of stories that really tick him off when it comes to financial gurus and the consequences of their advice. David believes that America is better off with people like Dave Ramseys and the like in it than without them. “If you’re making $50,000 and spending $60,000 Dave Ramsey is precisely the person you should be talking to,” says David McKnight. David sees people like Dave Ramsey be “good for bad investors, and bad for good investors”. Wade Pfau thinks that following Ramsey’s advice of taking 8% withdrawal rates on your assets in retirement and putting 100% of your allocation in stocks, you’ll run out of money in advance of life expectancy 63% of the time. David touches upon the so-called Dave Ramsey circle of poverty: he gets you out of debt on the road to financial success, and then he promptly bankrupts you by taking an 8% withdrawal rate. Josh shares his thoughts on Dave Ramsey and explains that some people never save. Citing former Comptroller General David Walker and Penn Wharton David talks about what could be waiting for the U.S. in the near future. David gives out a couple of reasons why you should think about doing a Roth conversion. David and Josh talk about saving future taxes when someone passes away. A key question to ask yourself: Why not pay the tax today at 22% or 24%, so that your kids can inherit that money tax-free regardless of when they liquidate it? David reveals that, because of The Guru Gap, he has received a cease and desist from one of the financial gurus mentioned in the book. Josh and David dissect “the Ken Fisher approach” – including its key flaws and shortcomings. In Josh’s opinion, one of the negative traits of financial gurus is their lack of availability for debate. For David, the least expensive way to purge the longevity risk from your portfolio is an annuity. Josh and David bring up financial advisors dispensing advice on TikTok into the conversation. The overwhelming amount of tips shared by gurus leads to people making bad decisions or not making a decision at all. Of the five financial gurus mentioned in The Guru Gap, Suze Orman (the only CFP of that group) is the one David McKnight likes the most, also because her advice is most in line with the mainstream financial planning consensus. Ramit Sethi is the financial guru that seems to have the most adversarial approach toward financial planners. David used to be a fan of Clark Howard who now has a strong opinion about cash-value life insurance and fixed-income annuities. David lists steps people should be taking with their money from a tax and retirement perspective. According to David, if ever there were a time in the history of our country to be undertaking a Roth conversion, it’s over the course of the next nine years. Josh and David discuss a balanced financial plan that includes annuities to counter longevity risks, insurance to protect one’s family, money as a volatility buffer, equities to beat inflation, some Bitcoin, a little gold, and cash for emergencies. 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 Josh Jalinski, The Financial Quarterback Al Gore Dave Ramsey Suze Orman Ken Fisher Clark Howard Ramit Sethi How to Get Rich (Ramit’s Netflix special) I Will Teach You to Be Rich: No ...
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    1 hr and 4 mins
  • Suze Orman: Here’s Why Annuities Are So Bad! (Avoid Them at All Costs!)

    Suze Orman: Here’s Why Annuities Are So Bad! (Avoid Them at All Costs!)
    Jan 22 2025

    David McKnight takes a closer look at Suze Orman’s take on annuities – and at why she recommends her audience avoid them at all costs.

    Suze Orman labels the 5.4% compounded annual rate of growth one of her audience members (Janet) has had over the last six years as “horrific in today’s market.”

    David believes that the main issue with Suze Orman’s approach is that it engages in a classic case of apples to oranges comparison.

    According to David, index annuities are a bond alternative and were never meant to be a stock market replacement.

    David makes the case for index annuities performing far better than bonds – with a lot less risk.

    The average return on corporate bonds is between 4% and 5%, the one for treasury return is 3-4%, while the average return on municipal bonds is 2.12%.

    In David’s opinion, Janet should only feel bad about her 5.4% return over the 6 year time frame if the advisor who sold it to her sold it as a stock market alternative.

    Suze Orman’s audience member Janet purchased a so-called non-qualified indexed annuity, which tends to get a “last in, first out” treatment for tax purposes.

    David isn’t big on non-qualified annuities for the fact that a person purchasing them will have to pay tax on the growth before they’re able to access the principal tax-free.

    Another flaw in Orman’s assessment: she doesn’t tell you that you can hold an annuity in an IRA and pay ordinary income, or you can hold an annuity in your Roth IRA and pay no taxes at all…

    Something financial gurus like Suze Orman have in common: they DON’T have the luxury of nuance.

    Dollars earmarked to retirement accounts generally have a 10% penalty when you access them pre-59 and a half.

    David points out how Suze has wittingly demonized all forms of annuities – even the IRA and the Roth variety.

    While Suze is right saying that most annuities have surrender charges, she misses the entire point of why people usually get annuities: to get a guaranteed stream of income they can never outlive.

    401(k) has a surrender charge that’s far more punitive than any annuity David has ever seen.

    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

    Standard & Poor’s 500 Index

    USA Today
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    9 mins

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Profile Image for Matt

Clear communication amd knowledge

David speaks clearly and is very helpful and entertaining. Small facts and helpful hints on retirement planning.

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Excellent!

Thank you so much for making this podcast available to listen to on Audible.

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