As David explains, there are two ways of controlling our budget: raising revenue or reducing spending (or some combination of the two), just like an American household. Rebecca Walser thinks that Modern Monetary Theory (MMT) could be decimated by Covid-19. And there are a few key issues that have surfaced: the U.S. Government printing $8 trillion and the equity market going up over 40% (pre-Covid) with no economic fundamentals to support it, 10 million job openings, supply chain issues, as well ...
Jan 12, 2022•29 min•Season 1Ep. 167
Rebecca Walser thinks that the 401(k) is a failed experiment. In her opinion, the Revenue Act of 1978 was nothing more than a corporate tax dodge for highly compensated executives, and not a state retirement vehicle. While working as a benefits consultant, Rebecca was looking for a way to administer an alternative savings plan for a client as opposed to just a cash bonus savings plan. She came upon the 401(k) provision and noticed it was a “tax dodge” that could be leveraged. One of the main con...
Jan 05, 2022•30 min•Season 1Ep. 166
David has been tracking Joe Biden’s Build Back Better plan for the last 6 months – and the sticking points have been Joe Manchin and Kyrsten Sinema. Joe Manchin, in particular, has always been the one senator having issues with Biden’s signature bill. He has had issues with the size of the bill, and whether it was going to have an effect on inflation which is something that has already been ruled by many economists as no longer transitory. Jerome Powell, the Chair of the Federal Reserve, has ind...
Dec 29, 2021•13 min•Season 1Ep. 165
David’s latest book, the Infinity Code, is centered around the story of a shadowy cabal bent on transforming the US monetary policy and has recently been finished. The Fed is currently wrestling with raising interest rates in an effort to combat inflation, but they are facing an obstacle in the form of the national debt. If interest rates are raised, which is the way the Federal Reserve usually responds to inflation, the cost to service the national debt will rise dramatically and could force th...
Dec 22, 2021•13 min•Season 1Ep. 164
The Baby Boomer Dilemma came about because of Doug’s work with David in the past. After a podcast crowdfunding event last January, Doug received enough funding to get things off the ground. The Baby Boomer Dilemma is based around the simple choice families face between a defined benefits plan or a defined contribution plan. During World War 2, there were price wage controls in place, and it was illegal to lure recruits away from other companies with a higher compensation. This became the basis o...
Dec 15, 2021•37 min•Season 1Ep. 163
Inflation is here, the question is “Is it here to stay?” Consumer prices soared in October 2021 and are up 6.2% from a year earlier, the fastest increase in over three decades. We’ve grown accustomed to inflation of 2% a year, so the current level of inflation is considerably higher than economists have expected and is having some serious impacts on people’s daily lives. High inflation will likely be with us well into 2022 and beyond. The reasons prices are rising are complex. One of the variabl...
Dec 08, 2021•20 min•Season 1Ep. 162
As a financial advisor, David came up with the concept of the three buckets and a quick five-minute presentation to convey the idea to clients. This developed into an hour-long presentation which eventually became the seed of the Power of Zero book. It took David just three days to write the book because the core of the material was already in place. He just had to commit to putting it onto the page. The book was republished in 2018 with new content by Penguin Random House. David is currently wr...
Dec 01, 2021•30 min•Season 1Ep. 161
The situation with the Biden infrastructure plan continues to evolve. Senators Joe Manchin and Krysten Sinema have continued to be obstacles in the Democrats' way from getting the bill passed. The Democrat caucus has been in disarray and seems to be pulling in different directions. Biden was hoping the bill would pass by having everyone vote before the legislation was written prior to him landing in Rome. Right now, it looks like things are dead in the water including raising tax rates on the ri...
Nov 24, 2021•48 min•Season 1Ep. 160
Joe Biden has talked about how his tax plan is cost neutral, where the increases in taxes on the wealthiest Americans will offset the costs. Maya MacGuineas recently took a look at the numbers to find out if that’s true. The Build Back Better Act is set to cost $2.1 trillion as it’s currently written. It relies on a number of sunsets and expirations to keep the costs down. If the plan’s temporary policies were made permanent, the costs would increase by an additional $2.2 trillion. When the fede...
Nov 17, 2021•19 min•Season 1Ep. 159
There is a little-known part of the IRS tax code that allows you to access your 401(k) or 403(b) prior to 59 and a half without penalty. Traditionally, the penalty is 10%, but the Rule of 55 gives you access without paying a penalty, but it comes with certain requirements. If you leave your job in the calendar year you turn 55 or older for any reason and your employer has stipulated that you have the ability to tap into your plan, you can do so without penalty. Some plans may require you to with...
Nov 10, 2021•15 min
The Joe Biden legislature is currently dead in the water. Congress people are looking for ways to pay for the package, but even if they could there may not be a package to pay for. Every Senator wields considerable power and a couple in particular have been vocal opponents of the proposed bill. Joe Manchin and Krysten Sinema have voiced concerns about the package and the price tag. Other members of the Democrat party have lambasted Joe Manchin on social media and on the floor, and he has not tak...
Nov 03, 2021•16 min
David gets variations of one question pretty frequently whenever he gives one of his presentations, whether that’s in front of financial advisors or members of the general public. At the end of the workshop, there are five takeaways. The first is that tax rates are likely to be dramatically higher in the future than they are today. Mathematically speaking, we are past the point of no return. The second is that the only way to truly insulate yourself from the impact of higher taxes is to get to t...
Oct 27, 2021•22 min•Season 1Ep. 156
It looks like Joe Biden’s landmark legislation is running into some challenges in Congress. Joe Manchin, one of the most powerful men in Congress right now, has pushed back on the $3.5 trillion bill and counter-offered with a more narrow $1.5 trillion plan. Progressive Democrats in the house are saying that it’s too small to make their priorities a reality. Both sides of the aisle are pulling in opposite directions and don’t seem to be able to come to a compromise. Joe Biden is making tax reform...
Oct 20, 2021•12 min•Season 1Ep. 155
The increase on taxes on the rich with the Human Infrastructure plan is rumored to cost the average American nothing, but that’s not quite the full story. The long-term implications of the cost of the plan say differently. Fiscal insanity has been a bi-partisan venture, and it has been for at least the last 20 years. Debt goes up under Republican administrations just as much as Democrats. Under Donald Trump’s administration, the debt rose by an average of $2 trillion per year. Historically, the ...
Oct 13, 2021•19 min•Season 1Ep. 154
Dr. Larry Kotlikoff is the foremost expert in the world on fiscal gap accounting and has done a great job transforming how we should be thinking about a nation’s debt. Dr. Kotlikoff recently stated during an interview that most retirement planning is wrong. According to Dr. Kotlikoff, the basic problem with financial planning is that the goal of our life is not to accumulate wealth so that people can charge us fees on our assets. It’s about having the best lifestyle we can, given our resources, ...
Oct 06, 2021•23 min•Season 1Ep. 153
Most of the changes of the two infrastructure bills working their way through Congress right now will mainly affect high-income earners, but the details may change as time goes on. There are seven major takeaways from the recent house tax bill. The first is that personal income tax rates are going up, but only for roughly 2% of households that make more than $400,000 per year. Joe Biden campaigned on not raising taxes on the middle class, and the current form of the bill seems to reflect that. T...
Sep 29, 2021•19 min•Season 1Ep. 152
Whether you like to talk about politics or not, the things that are happening in Congress right now will affect your retirement. All the unmitigated spending during the Covid pandemic is catching up with the US. Treasury Secretary Janet Yellin revealed further measures to avoid breaching the federal government’s borrowing limit and also announced they would be suspending reinvestments for a number of retirement funds. Debt negotiations have always been a game of chicken between the Democrats and...
Sep 22, 2021•16 min•Season 1Ep. 151
If Joe Biden can’t get his tax legislation through before midterm elections, it’s unlikely he will be able to pass it at all. The situation in Afghanistan has lost Biden approval points in polls across the nation and since the midterm elections usually involve the sitting administration losing either the Senate, the House, or both, there may be no opportunity for him to push it through later. The Senate, which is currently controlled by the Democrats, has proposed a $1 trillion infrastructure, w...
Sep 15, 2021•21 min•Season 1Ep. 150
In August 2016, the University of Michigan began a trend by offering their football coach a split-dollar life insurance arrangement as an alternative to deferred compensation. Other football coaches in different schools have similar arrangements. The overarching principles of these kinds of plans can apply to you as well without having to be rich or famous to take advantage of the benefits. This is a program where the employer agrees to loan dollars to an employee, generally over a period of 7 y...
Sep 08, 2021•19 min•Season 1Ep. 149
Is it possible for the tax proposals moving their way through Congress to be retroactive for 2021? Biden has proposed raising the business tax from 21% to 28%, and when you add in the State corporate income tax of 7% that will put the US near the top highest corporate tax rates in the world. For individuals, Biden has proposed increasing the top income tax bracket from 37% to 39.6% for married couples making over $400,000 He has also proposed a large change to the FICA taxes. For people making $...
Sep 01, 2021•12 min•Season 1Ep. 148
Legislative hijinks are happening in Congress right now and they are going to have an impact on the timing of a potential tax increase coming down the road. The Senate has struggled for a while now to come to an agreement on a $1 trillion infrastructure package, but with some bipartisan cooperation they’ve pushed it through. Democrats in Congress have turned their attention to a $3.5 trillion budget that is going to be a much bigger challenge. Any tax increase that gets pushed through will be pa...
Aug 25, 2021•15 min•Season 1Ep. 147
A new report says that retirees who convert their savings into guaranteed lifetime annuities effectively double the amount they are willing to spend each year on themselves and their families. This indicates that retirees holding more of their wealth in guaranteed income are more willing to spend on luxury items and experiences because of a higher comfort level with additional spending. The report looked at retired households with more than $100,000 in savings and spending more than $25,000 each...
Aug 18, 2021•17 min•Season 1Ep. 146
A Democratic representative out of California has introduced a bill to change the way that Social Security cost of living adjustments are calculated. It proposes to link the Social Security increase each year to the Consumer Price Index for the Elderly, instead of the CPI for Workers. The difference between the two indexes over the course of a 30-year period is roughly 0.2% each year, which doesn’t sound like much, but when you compound that over the 30 years, it adds up quickly. The cost of liv...
Aug 11, 2021•13 min•Season 1Ep. 145
Joe Biden campaigned on the platform of raising taxes on the top 1% of earners in America, yet six months into his administration, there haven’t been any increases thus far. The main pillars of his proposal are to increase the corporate tax rate from 21% to 28% and to increase taxes on married couples earning more than $400,000 per year ($200,000 for individuals) from 37% to 39.6%. For those making $1 million or more, your long term capital gains tax rates would increase from 20% to 39.6%, effec...
Aug 04, 2021•15 min•Season 1Ep. 144
The 3% Rule says that if you want to have $100,000 per year in retirement, you would need $3.3 million saved up, which is not very attainable for most Americans. If you can offload longevity risk to a company that can handle it better than you can, you have to save far less. If you take a portion of your liquid investment portfolio and purchase an annuity, you can potentially achieve the same income flow at roughly half the cost. An annuity from an insurance company also mitigates withdrawal rat...
Jul 28, 2021•35 min•Season 1Ep. 143
David’s first appearance on the podcast was one of the most downloaded episodes. Back in 2014, David wrote the Power of Zero book and since then the national debt has grown considerably. We are now at $28 trillion in debt and the primary problem is that much debt is only affordable as long as interest rates stay historically low. At some point in the near future, the US will no longer be able to borrow money at the current rate and this will result in the cost of servicing the national debt will...
Jul 21, 2021•28 min•Season 1Ep. 142
Roth IRA’s have been trending on Twitter recently because it was discovered that Peter Thiel accumulated over $5 billion in his Roth IRA. Peter Thiel was one of the original founders of Paypal in 1999 when the Roth IRA was still in its infancy. At that time, his salary qualified him to contribute to his Roth IRA and he placed 1.7 million shares of Paypal into his account. The shares started off at the value of one-tenth of one penny ($1700), and after Paypal went public, those same shares rose t...
Jul 14, 2021•18 min•Season 1Ep. 141
Americans have over $30 trillion sitting in 401(k)’s and IRAs, and people are waking up to the fact that those accounts are in the crosshairs of the US government to solve their debt problems. In a recent interview with Maya MacGuineas, she said the fiscal condition of the US and what’s going to happen over the next 10 years is terrifying. The Biden administration will likely try to kick the can down the road and that’s only going to make the fix more draconian. The political class is hyper focu...
Jul 07, 2021•26 min•Season 1Ep. 140
President Joe Biden has recently proposed a $6 trillion budget designed to make the US more competitive. Spending is already on an unsustainable trajectory so we need to examine the impact this budget proposal will have on the fiscal outlook of the country. A lot of people believe a $6 trillion budget is too much, too soon and will exacerbate the debt problem in the long run. The budget proposal introduces budget deficits over the next several years, financed mainly by additional debt. This will...
Jun 30, 2021•20 min•Season 1Ep. 139
Politicians are in a state of mind where they are not interested in fixing the problem, which means that the fix on the backend is going to have to be more aggressive and draconian. The damage the debt does is, in many ways, invisible to the average person. We have had decades to fix the debt problems but politicians have failed to do so. If we made these changes to something like Social Security years ago, we could have fixed it without affecting anyone depending on the system, but that is not ...
Jun 23, 2021•20 min•Season 1Ep. 138
