David breaks down the Inflation Reduction Act of 2022 and how the bill will potentially curb inflation by reducing the deficit, investing in domestic energy production, and promoting clean energy solutions. As far as Biden's Build Back Better Initiative is concerned, imposing more taxes on individuals and couples who make $400k and $450k per year, respectively, is one of the major factors that contributed to the bill not going through. David analyzes whether the inflation Reduction Act will incr...
Aug 10, 2022•9 min•Season 1Ep. 197
David is asked about the pros and cons of the Indexed Universal Life – or LIRP – and what to look for when researching it. As far as LIRPs are concerned, David suggests looking for contracts that are both tax- and cost-free. David discusses some mistakes that some experts such as Dave Ramsey make when talking about ‘buy term, invest the difference’. David explains that running out of money before running out of life is one the biggest risks retirees are facing today – and goes over two ways to p...
Aug 03, 2022•16 min•Season 1Ep. 196
David shares that he got into the industry during the “calm before the storm.” It was 1997 and, during the State of the Union, President Bill Clinton announced that the national deficit was simply zero. Today, less than 25 years later, the national debt is $30 trillion. By 2010, however, David Walker – former Comptroller General of the Federal Government and a personal hero of David’s – appeared on 60 Minutes saying that tax rates would have to double in order to keep the country solvent. 2010 a...
Jul 27, 2022•16 min•Season 1Ep. 195
There's this belief among financial experts that life insurance is the financial silver bullet. However, as David explains, that's not 100% accurate. Yes, life insurance can mitigate every retirement risk and solve all forms of retirement problems, but it's never a safe bet when implemented all on its own. A Life Insurance Retirement Plan (LIRP) should not be the only cog in your retirement machine because retirement is all about squeezing as much juice as possible from all available tax-free ac...
Jul 20, 2022•10 min•Season 1Ep. 194
David shares that the 2022 Trustees Report raises a sharp warning cry about the catastrophic short- and long-term trajectories of the Social Security program. The surplus that had built up over the years as Baby Boomers plowed money into the Social Security program is beginning to draw down as the same Baby Boomers are moving out of the workforce at the tune of 10,000 per day. David talks about the fact that, at the current pace, the trust fund will run out in 2035, and the incoming revenue base...
Jul 13, 2022•10 min•Season 1Ep. 193
One of David’s jobs as the host of the Power of Zero Show is to constantly remind listeners of the horrifying fiscal outlook the U.S. is facing. This episode looks at components that are contributing to this “fiscal apocalypse”. David Walker, former Comptroller General of the Federal Government, sees the Debt-to-GDP ratio as something worth focusing on. Currently, it’s about 108% – about the same percentage as in the immediate wake of World War II. However, it’s projected that it could increase ...
Jul 06, 2022•9 min•Season 1Ep. 192
Life insurance retirement plans or LIRPs are long-term propositions. They only really work if you think of them like a marriage, meaning they work best if it's until death do you part. Don't start an LIRP unless you're planning on dying while it's enforced, even if that means you have to keep it for 40 or 50 years. Your LIRP needs to be a 0% loan. One of the things that makes the LIRP so appealing is that you can take the money out tax free, and you do that by way of a loan.. An LIRP may be tax ...
Jun 29, 2022•15 min•Season 1Ep. 191
Today’s episode addresses the question ‘Do we continue to let inflation run roughshod over our purchasing power, or do we raise interest rates and risk plunging our country into a recession?’ David states that Federal Reserve Chair Jerome Powell is fast approaching a grim crossroad in which he may have to raise interest rates in order to rein in out-of-control inflation. David explains how Venezuela recently had inflation approaching 40%, and its government decided to raise interest rates to 42%...
Jun 22, 2022•9 min•Season 1Ep. 190
This episode focuses on the unsettling math behind Dave Ramsey’s recommendation to buy term and invest the difference. David shares the definition of the ‘Buy Term and Invest the Difference’ approach, and talks about Ramsey’s claim that permanent life insurance is a rip-off. For David, Dave Ramsey makes a big mistake for the fact that his analysis doesn’t include two major expenses: the cost of term life insurance and the expense ratio inside Roth accounts. David feels that Dave Ramsey omits key...
Jun 15, 2022•9 min•Season 1Ep. 189
David shares a stat from the US Labor Department: as of May 11th, inflation over the last 12 months through April of 2022 has been 8.3%. David explains that the general belief is that inflation doesn’t necessarily translate to more taxes because the IRS has been historically good at indexing tax brackets to keep up with inflation. However, he says, there are a few thresholds in the IRS tax code that aren’t indexed to keep up with inflation – and could result in you paying higher taxes. Social Se...
Jun 08, 2022•13 min•Season 1Ep. 188
“ I don’t want to pay the taxes on my Roth Conversion” is the single greatest objection David sees every week. David believes that whoever makes that argument is basically saying that they don’t want to pre-emptively pay a tax before the IRS absolutely requires it of them and that they think their tax rate down the road will be lower than it is today. He sees the latter point as the greater concern. For David, if you’re in the 22% or 24% tax brackets – meaning that your taxable income is between...
Jun 01, 2022•12 min•Season 1Ep. 187
Today’s podcast explains why it might be a massive mistake to invest in municipal bonds. The reason why this is such an important topic is our unusual fixation with municipal bonds when trying to set up a tax-free retirement. Interest from municipal bonds counts as provisional income. That means that it counts against the thresholds that cause Social Security taxation. So, while you may be looking for a stable, predictable, tax-free income stream, you could unwittingly lose a portion of your Soc...
May 25, 2022•11 min•Season 1Ep. 186
For David, the problem is that the U.S. has promised its people way more than it can afford to pay. The debt clock says $30 trillion, which is a mind-boggling figure. According to other experts, however, the real number is actually higher than that. It is close to the $125 trillion mark. Citing Dr. Larry Kotlikoff from Boston University, David reveals that, according to a fiscal gap accounting, the projection over the next 75 years isn’t $30 trillion, nor $125 trillion… it sees true national deb...
May 18, 2022•19 min•Season 1Ep. 185
In this episode, David wants to share the truth about Dave Ramsey, look at the two pillars of his financial worldview, and deconstruct those beliefs. David believes that if Dave Ramsey’s audience followed his advice on paying off high-interest credit card debt, the U.S. would be a much healthier place from a financial perspective. In David’s assessment, Ramsey’s audience is made of lower to middle-income America, people who are making $50,000 per year but who are spending $60,000. With his appro...
May 11, 2022•11 min•Season 1Ep. 184
David explains how Obamacare surtax, which was introduced back in 2013 when Obamacare passed, works and who it affects. The 3.8% of Obamacare surtax only applies to the investment income that reaches above and beyond specific thresholds: $200,000 for an individual person and $250,000 for a married couple filing jointly. David addresses the question of how this could affect you if you’re planning on doing a Roth conversion at some point in the next 10 years. According to David, not many people pa...
May 04, 2022•8 min•Season 1Ep. 183
This episode revolves around when you should draw social security in a rising tax environment. David believes that if you have taken stock of the fiscal landscape of the U.S., it seems fairly obvious that tax rates will have to rise dramatically in the next 10 years to keep the country solvent. This should have a bearing on when you elect to receive your social security. As David explains, each year you delay taking social security past age 62, your benefit will increase. The amount of the incre...
Apr 27, 2022•12 min•Season 1Ep. 182
This episode focuses on a question David recently got from a couple – they made $650,000 per year and wanted to know whether they should consider doing a Roth conversion. Some details about the California-based couple who asked David their question: they’re both age 50, with $1.5M in their old IRAs and 401k. They had a lifestyle need of approximately $100,000 after tax, and had about $1M in liquid savings in their taxable bucket. And, lastly, they were contributing $100,000 per year to that buck...
Apr 20, 2022•13 min•Season 1Ep. 181
In May 2021, David recorded a podcast that focused on the Secure Act 2.0, the follow-up to the Secure Act that completely killed the stretch IRA and the stretch Roth IRA. Today’s episode looks at the big surprise that has surfaced in the latest updated iteration of the Secure Act 2.0 that’s currently gaining steam in Congress. In last year’s podcast episode, David outlined six major changes to retirement planning that this law is proposing. According to David, the one thing that the previous ver...
Apr 13, 2022•11 min•Season 1Ep. 180
In this episode, David focuses on the true fiscal day of reckoning for the U.S., and how it should inform important retirement decisions when it comes to the Power of Zero paradigm. For David, asking yourself ‘Over what time frame should I be shifting my tax-deferred retirement assets to tax-free?’ is one of the most important variables to consider when executing your Power of Zero strategy. David’s view is to consider shifting money slowly enough so that you don’t rise into a tax bracket that g...
Apr 06, 2022•14 min•Season 1Ep. 179
The idea behind today’s episode comes from a conversation David had with someone at a recent event he spoke at. He praised the LIRP as the “perfect Swiss Army knife-type of investment,” and couldn’t understand why more people didn’t make it their only investment tool. David isn’t a fan of conversations that position the LIRP as a “Holy Grail” of financial planning. David shares examples of questions and conversations of the arguments that may be made by someone who’s a big believer in the LIRP i...
Mar 30, 2022•14 min•Season 1Ep. 178
Today’s episode focuses on the difference between your effective and marginal tax rate and which one is relevant in different financial planning contexts. For David, the American tax system works exactly like a graduated cylinder: your money flows in and it goes all the way down to the bottom. Some of it gets taxed at 10%, some at 12, 24, 32, 35 or 37% – even Bill Gates briefly has some of his earned tax income tax at 10% before it goes all the way to 37%. David explains that the marginal tax ra...
Mar 23, 2022•14 min•Season 1Ep. 177
David explains how, normally, we think of the sequence of return risk as the risk associated with the order in which you experience investment returns in your stock market portfolio in retirement. There are a couple of different ways you can safeguard yourself against sequence of return risk. The first one is to allocate money to an annuity that provides for your income during those early years of retirement so that you aren’t forced to take money out of the stock market. The second option is to...
Mar 16, 2022•14 min•Season 1Ep. 176
There are dozens of contexts in which life insurance gets used, but 95% of the time, and from a Power of Zero planning standpoint, it gets used in two different ways. David explains how having a certain amount in your taxable bucket may sound great because it’s liquid and you can access it, but by taking the inefficiencies in the taxable bucket, you amortize them out over the balance of your lifetime – and this may end up costing you hundreds and thousands of dollars. There are different ways yo...
Mar 09, 2022•14 min•Season 1Ep. 175
David discusses how Mitt Romney is at the forefront of trying to save Social Security, Medicare, Medicaid, solve the national debt problem, all while simultaneously trying to save the country. In a recent interview with former Power of Zero Show guest Maya MacGuineas, Mitt Romney discusses something that should resonate with you if you care about national debt and the future of the country. David believes that if Romney were to get through the Trust Act he has proposed, he could very well save t...
Mar 02, 2022•19 min•Season 1Ep. 174
Mark Byelich doesn’t know when taxes are ever going to be lower than they are right now. David sees Medicare, not Social Security, as the main issue because Medicare is five times more expensive and it’s what’s really going to be driving debt over time. David thinks that Social Security can easily be fixed by moving the age of retirement or by adding means testing like it happens in other countries. In his opinion, the challenge is how to renegotiate Medicare. It’s what is increasing by 6% each ...
Feb 23, 2022•26 min•Season 1Ep. 173
Normally, it takes a year to add $1 trillion to the national debt. With Covid-19, we have added $6 trillion to the debt. Something that usually happens in 6 years took place in 3 months. David believes that instead of cutting the various programs, the government is going to raise more taxes. Mark discusses main turning points of his career: being part of Ed Slott’s mastermind group since 2011, seeing one of David’s presentations, and getting a copy of The Power of Zero at a conference in San Die...
Feb 16, 2022•25 min•Season 1Ep. 172
In a previous episode of the Power of Zero Show, David discussed the importance of having a guaranteed 0% loan provision in your LIRP. Beware: even if an insurance company has a guaranteed 0% loan provision, there's still another way that they can get you. There are two ways in which they can configure these loans: they can either charge you interest in advance or they can charge you interest in arrears. In the case of interest charged in advance, the insurance company charges you the interest r...
Feb 09, 2022•14 min•Season 1Ep. 171
Today’s episode focuses on outlining the basic differences between long-term capital gains and ordinary income taxes, and showing how they interact with each other from a taxation perspective. The idea for the topic actually came from a question one of David’s POZ advisors had received ahead of a recent webinar David hosted. Long-term capital gains typically get added to your Adjusted Gross Income (AGI), which is important, because your AGI determines whether you can contribute to Roth IRAs, or ...
Feb 02, 2022•12 min•Season 1Ep. 170
David’s upcoming book, The Infinity Code, is a novel that talks about important financial concepts and themes, and that will keep you on the edge of your seat through the entirety of the read. The book will be available on Amazon and other stores soon. In David’s opinion, starting a LIRP is a bit like getting married, so it’s important to be meticulous in your research. When it comes to LIRPs, the IRS allows you to take a loan – the way these loans work is that instead of taking a loan from your...
Jan 26, 2022•24 min•Season 1Ep. 169
Episode 165 of the Power of Zero show covered how Joe Manchin gave a firm ‘No’ to Joe Biden's signature legislation, the Build Back Better plan, in its current form. This topic is of crucial interest in regards to Power of Zero planning, because had he gotten that legislation through, it would have required the changing of the U.S. tax code to pull it off – this would have extended the Trump tax cuts for middle America by another 8 years. Democrats managed to get Manchin back to the negotiating ...
Jan 19, 2022•12 min•Season 1Ep. 168
