The Power Of Zero Show

David starts the conversation by describing how a financial guru, Derek Sall, allegedly lost $400k in an ill-advised Roth conversation. According to Sall, you're way more likely to have a lower income in retirement than you have today, so you'll likely be in a lower tax bracket in the future. But as we all know, tax rates must go up as early as 2026 to pay for unfunded government obligations.  Dav...

Jeremy Schneider is a financial guru who claims to have retired at the age of 36 with four million dollars. He recently shared an anecdote about a young millionaire who owned around $90,000 in cash value life insurance. The reaction of the host was quite interesting, as none of the other millionaires interviewed for the show brought up life insurance as a means of building or holding their wealth....

Regardless of your age, proximity to retirement, or financial profile, Dave Ramsey recommends the exact same investment allocation: divided equally among four types of funds; growth, growth and income, aggressive growth, and international. Dave's philosophy essentially boils down to investing in the stock market. The Money Guy show did a recent comparison between the Ramsey portfolio and the S&P 5...

The national debt is fast approaching $32 trillion dollars, nearly double from only a few short years ago. Neither parties are blame-free for the situation we find ourselves in as of 2023. That $32 trillion does not include the unfunded liabilities and obligations that we will be paying for over the next ten years. We got to this point without including the added costs of Social Security, MediCare...

There are a number of popular finance YouTube personalities like Graham Stephan talking about how you can be a millionaire by simply contributing $18 a day into a Roth IRA, but that doesn't tell the whole story. Not only is that advice too simple, it doesn't take into account the value of a million dollars thirty years in the future. Inflation will approximately reduce the spending power of that m...

Step one of the Power of Zero strategy is to realize that due to unfunded obligations for Social Security, Medicare, and Medicaid and interest on the exploding national debt, tax rates in the future are going to be dramatically higher than they are today. Step two is to understand that in a rising tax rate environment there is an ideal amount of money to have in your taxable and tax-deferred bucke...

Your LIRP functions as the ideal volatility buffer because it grows safely and productively in a tax-free way. According to a recent study by Ernst & Young, investors that contribute 30% of their retirement savings to a LIRP will have their savings last longer than people who put 100% of their savings into investments alone. This seems to fly in the face of every financial guru who has ever opined...

The biggest issue with Dave Ramsey's view on Roth Conversions, and most of his advice in general, is his one-size-fits-all approach which costs his listeners hundreds of thousands of dollars. Dave starts off on the right foot by recommending people pay the taxes up front for a Roth Conversion but then veers off the track pretty quick. Dave breaks down a hypothetical married couple filing in 2020 d...

We know for sure that we currently have three more years of historic tax rates. The good news is that it's fairly likely that those tax rates will be extended for another eight years, giving us a wider window of opportunity. Congress has essentially removed the limits on how much money you can convert to a Roth IRA. All you have to do is decide how much tax you want to pay. Most people assume that...

The Trump tax cuts went into effect at the end of 2017, but because they lacked a supermajority of approval in Congress those tax cuts had an expiration date. David has long maintained that the government won't let those tax cuts expire. There is a broad swath of Americans that are responsible for getting the current politicians re-elected and those people have short memories. If taxes go up, they...

For David, financial gurus seem to hold a deep hatred for permanent life insurance – be it whole life, universal life, index universal life, or variable life. A key question to ask: with so many financial gurus against life insurance, how can we conclude that it should be integrated into a balanced, comprehensive approach to tax-free retirement? David believes that such an approach stems from the...

The decision of whether to contribute to a Roth 401(k) or a Traditional 401(k) all comes down to whether you are likely to be in a higher tax bracket than you are now when you retire. The only determining factor in whether you should contribute to a Roth 401(k) is what you think your tax rate will be when you retire. David takes an example of two twin brothers and compares the difference between a...

When it comes to investing, I'll Teach You to Be Rich author Ramit Sethi sees whole life insurance, annuities, and Primerica as major red flags. David believes that, in the Netflix documentary How to Get Rich , Ramit Sethi makes sweeping insurance product condemnations with little or no evidence to support his case. If David had a chance to sit down with Ramit Sethi, there's a series of questions...

Dave Ramsey contends that the IUL is a ripoff primarily because of two reasons: high fees and surrender charges He also recommends that if you have an IUL to surrender it immediately, thereby incurring those surrender charges immediately. The reason companies have surrender charges is to cover the costs of getting the program off the ground. They start off high and reduce gradually over the first...

If you have the lion's share of your wealth in a tax-deferred bucket, you have actually played your cards perfectly. You probably allocated that money at a time when tax rates were likely higher, and right now tax rates are at historic lows. This is the perfect time to move things into the tax-free bucket. The question is 'How long will these historically low tax rates last?' Traditional thinking...

The internet is full of naysayers that are convinced the Indexed Universal Life Insurance Policy (IUL) is a ticking time bomb, but the question is "what does the evidence show?". Over the last fifteen years we've seen catastrophic market declines and near-zero interest rates for a protracted period of time. This has created the perfect conditions to measure the effectiveness of the IUL. The stock...

In a recent video a high school senior called in to Dave Ramsey's show where he offered some good advice but also played down the severity of the nation's debt crisis. Dave refers to two different books on how the national debt was going to ruin the country back in the 80's, which obviously did not come to pass. The trouble is not the level of debt a country has in general, it's how much debt ther...

A recently published study claims that taking income from permanent life insurance and annuities in retirement can create a better outcome for investors.  Ernst & Young compared five different strategies including investments only, investments and term life insurance, permanent life insurance and investments, deferred income annuities, and a combination of #3 and #4. In their comparison, Ernst & Y...

IUL and whole-life policies both have their place. Whole-life advocates prefer it because your cash value is guaranteed to increase each and every year as the IUL has growth that is tied to the upward movement of a stock market index. The downside to the IUL is that down years do happen, and in those years you get credited a zero but still have the expenses associated with the IUL. David goes thro...

Janet Yellen appeared in front of a Senate Finance Committee in March where explosive testimony erupted when a senator from Louisiana asked a line of questions regarding the impending insolvency of Social Security. The Social Security Trust Fund is due to go broke in nine years, at which point recipients will receive 24% fewer benefits when that happens. Of the $4.5 trillion in taxes proposed by P...

David breaks down the 5 biggest IUL mistakes people make and how to avoid them.  He starts the conversation by explaining the impact IULs can have on tax-free retirement when used correctly.  Mistake #1 - Getting an IUL through the wrong company. David highlights what to look out for before settling on an IUL provider. Mistake #2 - Getting the wrong IUL product. You could have the best carrier in...

David sits down with certified financial planner Mark Byelich to discuss how to avoid over-converting your Roth IRA. They start the conversation by describing how over-converting your Roth IRA could sink your retirement plan.  According to David, you should execute a Roth conversion if your tax bracket is going to be higher during retirement than it is right now. For stress-free retirement, David...

David sits down with certified financial planner Mark Byelich to discuss why the middle class could soon be paying 45% effective tax rates. When asked what investors should pay attention to in 2023, David says it's now do or die for those looking to take advantage of the Trump tax cuts that are set to expire in December 2025. According to David, the most important thing you can do to help your mon...

David sits down with financial advisor Daniel Rondberg to discuss how to dramatically lower the tax bill on your Roth conversion.  They start the conversation by describing why the Power of Zero message is crucial to tax-free retirement. According to David, stress-free retirement often comes down to only worrying about the things you can control.  David and Daniel talk about the Power of Zero movi...

David starts the conversation by describing why it makes sense to have indexed universal life insurance.  Did you know that any taxes you pay in your taxable brackets are, ironically enough, optional? David reveals that the ideal amount of money you should have in your taxable bracket is six months of living expenses. Once you've maxed out your IRA, David believes an IUL becomes a great avenue to...