The Power Of Zero Show

Hosted by David McKnight

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415

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Oct 2026

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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.

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October 28, 2026Episode 4179 min

You're Withdrawing From Your Retirement Accounts in the Wrong Order

Most retirees are told to spend one account at a time, but a smarter retirement planning strategy treats every account as part of a single income system. David McKnight shows how to use the quiet early years of retirement to your advantage, and why the order you draw your income may matter less than you think. Show Notes One of the most common pre-retirement questions is which account to spend first: brokerage, IRA, or Roth IRA. Conventional advice says spend taxable money first, then tax-deferred, and Roth last – David agrees with the first part, but not for the usual reason. If you retire at 62, your paycheck disappears, Social Security hasn't started, and RMDs are years away. That's what David calls the "Retirement Income Valley". David recommends to fund your lifestyle from your brokerage account so that you can use your lower brackets to convert your IRA to Roth. You're using your brokerage account to buy tax bracket capacity, typically a five-to-eight-year window before Social Security and RMDs fill those brackets for you. David's advice differs from other experts in that he doesn't want you to convert every last dollar, since drawing your IRA to zero isn't the goal. Even though your working-year deductions vanish in retirement, the IRS still gives you a standard deduction ($32,200 if you retire today). The goal is to keep your IRA/401(k) balance low enough that RMDs stay at or below $32,200. By doing that, you'll be able to benefit from the "holy grail" of financial planning: a tax-free IRA distribution. David shares an analogy: you should think of retirement income as a control panel of faucets: traditional IRA, Roth IRA, Social Security, and a volatility shield. Your job each year is to decide how much to draw from each faucet to fund your lifestyle… all while staying as close or in the 0% tax bracket as possible. The so-called volatility shield, in particular, matters when markets have a bad year. Financial planning guru Suze Orman advocates for keeping five years of living expenses outside the stock market, so that a potential downturn doesn't force you to sell at the wrong time. This is an idea David loves, he explains why you should avoid the sequence of returns risk and opt for living off your volatility shield during down years instead. This approach, he points out, can raise your sustainable withdrawal rate from 4% to as high as 8%, with a 95% success rate. However, David and Orman differ on where to hold that money. His pick is a properly structured, funded Indexed Universal Life insurance (IUL). The reason for David's choice is that, by following this approach, cash value isn't exposed to market losses, has averaged 5-7% net of fees, and can come out 100% tax-free. The overall idea can be boiled down to this: take normal distributions when markets are up, switch to the volatility shield after a downturn – then resume once your portfolio recovers. The finished strategy: live off your brokerage account during the so-called Retirement Income Valley while converting IRA dollars to Roth at comfortable tax rates. You can subsequently coordinate withdrawals across traditional IRA and Roth accounts, and manage RMDs alongside Social Security taxation rather than separately. The result of what David suggests are multiple tax-free income streams that keep you in or near the 0% bracket… and off the IRS' radar. Remember: the best withdrawal strategy isn't an order, it's coordination: deciding each year which faucets to open, throttle, or shut off. Given the national debt's trajectory, David advocates for maximum control over your taxable income before the government needs more of it. 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 Suze Orman

October 21, 2026Episode 41611 min

The Retirement Problem No One Can Solve? Not So Fast.

Financial planning expert Rob Berger says the biggest challenge in retirement planning is one that no one can solve, since nobody knows how long retirement will last. David McKnight shares his disagreement, and explains why a financial product designed for exactly this problem – annuities – may be the answer. Show Notes In this episode, David McKnight responds to Rob Berger's video The Retirement Problem No One Can Solve. Rob compares retirement to entering a race without knowing how long it is, how fast you can safely run, or when someone will tell you that you've reached the finish line. David thinks Rob did an excellent job of identifying the problem, but he strongly disagrees with the premise that no one can solve it. The fundamental challenge for every retiree is that you don't know whether your savings will need to support you for five, twenty-five years, or longer than that. David shares a different analogy, inspired by retirement economist Michael Finke: a birthday party with one large cake and no idea how many children will show up. The cake is the pool of money you've accumulated, the children are the years you'll live after retiring, and the slices are your annual retirement income. If you cut the cake into thirty tiny pieces just in case, and only five children show up, everyone gets an unnecessarily small piece and most of the cake goes uneaten – that's traditional retirement planning. You ration your savings as though you might live to 95, 100, or beyond, and if you die earlier than expected, you leave behind a very large portfolio because you were afraid to spend your money. According to David, Rob is wrong in saying that no one can solve this problem, as annuities were literally invented to solve it. Imagine a bakery promising to keep delivering more cake if you run out. You've transferred your longevity risk to the bakery, which is what an insurance company does. An insurance company doesn't need to know how long you personally will live, it only needs to estimate, with reasonable actuarial accuracy, how long a large group of people will live. An annuity doesn't tell you how many children are coming to the party, it guarantees that you won't run out of birthday cake. This isn't a new or controversial concept, economists have been studying it for at least six decades, including in Menahem Yaari's 1965 paper. Annuities can support more retirement income than a portfolio alone because of risk pooling and mortality credits. If you rely exclusively on a stock and bond portfolio, you have to self-insure against the possibility of living to a hundred. Ernst & Young compared investment-only retirement strategies with strategies that integrated permanent life insurance and deferred income annuities, using 1,000 Monte Carlo scenarios. They found that strategies combining investments with deferred income annuities produced more retirement income than investment-only approaches. One integrated strategy produced 5% more retirement income and 19% more projected legacy than the investment-only strategy. Critics often assume an annuity must reduce what you leave to your heirs, but if guaranteed income prevents you from selling investments at the wrong time, you can end up passing more to your children and grandchildren. Sounds interesting? Start by identifying your essential retirement expenses (housing, food, etc.), then subtract reliable income like Social Security and pensions. If a gap remains, use an annuity to fill it with guaranteed lifetime income, and the remainder of your assets can stay invested for growth, discretionary spending, emergencies, and legacy. The 4% Rule tries to solve the same problem without transferring longevity risk. In other words, you may live 10 years and could have enjoyed larger pieces, or you may live 35 or 40 years and the framework becomes increasingly uncertain. That's why retirees with portfolio-only strategies often underspend: they experience their portfolio as one finite cake instead of spendable income, while an annuity gives them permission to spend because another check is coming. Ken Fisher has argued that whatever an annuity can do, a conventional portfolio can do better. David disagrees, asking: "Really? Then why are we calling longevity an unsolvable problem?". A portfolio can provide growth, liquidity, dividends, and legacy, but it can't guarantee that your income will continue for the rest of your life, regardless of market performance and how long you live. You don't solve longevity risk by predicting how long the birthday party will last… you solve it by guaranteeing that the cake never runs out. 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 Rob Berger The Retirement Problem No One Can Solve video by Rob Berger Michael Finke Ken Fisher Ernst & Young Uncertain Lifetime, Life Insurance, and the Theory of the Consumer by Menahem Yaari Menahem Yaari

October 14, 2026Episode 4158 min

This TikTok Finfluencer Says His 76-Year-Old Dad Can Spend 7.5% and Still Grow His Portfolio. Let's Check the Math.

Viral TikTok "finfluencer" Tyler Gardner claims his 76-year-old father can stay 100% in stocks. David McKnight breaks down exactly where that approach falls apart. Additionally, he reveals the retirement planning strategy that actually makes a 100% stocks allocation safe, so a market downturn doesn't force you to sell at the worst possible time. Show Notes In this episode, David McKnight fact-checks a viral TikTok video from "finfluencer" Tyler Gardner explaining why his 76-year-old father is still invested 100% in stocks. David stresses that he doesn't have a problem with being invested 100% in stocks under the right circumstances, and that a retiree can absolutely have 100% of his portfolio in stocks. However, Tyler's explanation for why this works is where David says we have some problems, and he breaks down his rationale. Tyler claims that by investing in dividend stocks, he can get about 3.5% return from dividends alone, then sell 4% of his stocks and live off 7.5% per year – all while still having his portfolio grow at 4%. David points out a mistake Tyler made in his calculations: if you take out 3.5% in dividends and sell another 4% of the portfolio, you've removed 7.5% of an 8% total return, leaving roughly 0.5%, not 4%. Tyler predicts his portfolio to be worth three times the initial investment in just 15 years… but David notes that you don't get to spend most of the return and simultaneously compound as though you didn't spend any of it. One thing Tyler forgets to mention in his approach is sequence of returns risks, something that's heavily impacted by the order in which you experience returns whenever you're withdrawing money from your portfolio in retirement. Tyler concludes that even if the market had its worst 20 years in history and returned only 4% a year on average, he'd wind up in the same scenario as if he'd invested 100% in bonds. However, "Average returns aren't a predictor of whether or not your strategy will survive", says David. Two retirees with the exact same return over 20 years, without taking withdrawals, would have identical ending values…unless what considers withdrawals too. If a retiree is forced to sell shares while their portfolio is down, permanently removing shares from the portfolio and preventing them from participating in the eventual recovery, they would find themselves in a very different situation. Despite pointing out various flaws in Tyler's video, David agrees with the moral of the story: before you listen to anyone about your appropriate allocation strategy, crunch the numbers yourself and figure out what's right for you and your risk tolerance. David doesn't think there's anything inherently crazy about a 76-year-old being 100% invested in stocks – what he wants to know is how much of his dad's lifestyle depends on that portfolio. If Tyler's father receives enough Social Security, pension income, or guaranteed lifetime income through annuities to completely cover his basic living expenses, that changes things entirely. If the stock market falls 40%, and your basic living expenses are already covered, you don't have to sell stocks to pay for them. You can give your portfolio a chance to recover before you take further distributions. David is a big believer in creating an income floor in retirement: cover your basic living expenses with reliable lifetime income, create a separate volatility shield for discretionary spending, and then invest the rest of your money in a pedal-to-the-metal, high-octane stock portfolio. David's strategy addresses sequence of returns risk through guaranteed lifetime income, a volatility buffer, and a 100% stock allocation. 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 Tyler Gardner TikTok

October 7, 2026Episode 4148 min

Five Years from Retirement? Do This.

The five years before retirement are what David McKnight calls the Retirement Danger Zone, a window where a stock market crash could trigger Sequence of Returns Risk and even derail a well-designed plan. In this episode, he breaks down the retirement planning strategies that build an income floor, create a Volatility Shield, and protect your tax rate before it's too late. Show Notes In this episode, David McKnight talks all things "Retirement Danger Zone", the 5-year time window that precedes your retirement. When you're 20 years from retirement and the stock market crashes, it stings but you still have time to recover. If you're only a few years from retirement, on the other hand, a stock market crash may force you to take distributions from a portfolio that just lost 30 or even 40%. That move may send your portfolio into a death spiral from which it never recovers, also known as Sequence of Returns Risk. Even a well-designed retirement plan can be devastated by that risk. If you're five years from retirement, the first step is to establish an income floor: figure out how much income you'll need each year to cover your essential living expenses. Your essential living expenses may be completely covered but you're still going to have discretionary expenses – which fall into two categories. Those can be so-called shock expenses (e.g. a new roof, an unexpected medical expense, etc.) or aspirational expenses (e.g. vacations, hobbies, etc.). Normally, you would pay for those expenses by taking money from your stock portfolio… but what if the market is down when one of those expenses arises? "This is why, by the time you retire, you should have 3-5 years of discretionary expenses accumulated in a properly structured, properly funded Indexed Universal Life Insurance Policy", stresses David. David explains how a so-called Volatility Shield can help you when the stock market takes a tumble. The strategy shared by David can increase the sustainable withdrawal rate on your stock portfolio from 4% to as high as 8% with a 95% confidence rate. And there's one more critical step to consider during your final five years before retirement: protecting yourself against higher taxes. 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

September 30, 2026Episode 4138 min

I Have $1 Million in Taxable Accounts and $1 Million in IRAs. How Can I Prepare for Higher Taxes?

If you've built up $1M in your IRA and $1M in taxable investments, David McKnight has a warning: every year that money stays put, the IRS gets to vote on your tax rate. He breaks down a retirement planning strategy for gradually converting your IRA to Roth – fast enough to beat rising rates, slow enough to avoid painful brackets. In this episode, David McKnight looks at what you should do if you have accumulated $1M in taxable investments, and $1M in traditional IRAs and are concerned about the possibility of higher taxes in retirement. He stresses that having money in IRAs is like going into a business partnership with the IRS – every year they get to vote on what percentage of your profits they get to keep… The solution to the IRA problem is relatively straightforward: start doing Roth conversions. True, by doing so, you'll pay taxes on the conversion today, but you'll be doing so at near historically low tax rates. Remember: the key is to convert 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 predicts that, given the trajectory of the American national debt, the window of time to execute that strategy is about ten years. Beware: just because you believe taxes are going to increase, it doesn't mean that you should reflexively convert all your money to tax-free. You want to leave enough money in your traditional IRA to take advantage of your standard deduction in retirement. If you're married and retiring today, your standard deduction is $32,000. Single? Then, it's half that amount. David shares a couple of strategies that can help you skinny down the $1M in your taxable bucket. The first and most efficient way to shrink this bucket is to use it to pay the taxes on your Roth conversions. The second strategy, which applies if you're still working, is to fully fund your Roth 401(k) or Roth 403(b). One challenge with this approach is that those contributions must come out of your paychecks, which may lead you to have less money available to cover your monthly lifestyle. The next strategy comes into play once you retire and it's about living out of your taxable account during the first few years of retirement (which may be the lowest income years of your adult life). Furthermore, you may want to consider repositioning a portion of your taxable account into a properly structured cash value life insurance policy – such as an indexed universal life policy or IUL. David warns that IULs are not for everyone, as they require a sufficient funding period, careful design, and ongoing policy management. However, when structured correctly, IULs can serve as a volatility shield in retirement. The idea is, in the year following a down year in your stock market portfolio, to pay for your living expenses out of your IUL. Doing so gives your portfolio a chance to recover before you take further distributions. That act alone can increase the sustainable withdrawal rate of your stock portfolio from 4% to as high as 8% with a 95% confidence rate. 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

September 23, 2026Episode 4129 min

Best Reason to Delay Social Security To Age 70

When is a good time to start your Social Security? David McKnight reveals why smart retirement planning means waiting until age 70 for reasons that have nothing to do with a bigger check… and everything to do with the years in between being your best window for Roth conversions. In this episode, David McKnight addresses one of the most common questions he gets from people approaching retirement: "When should I start taking Social Security?" David believes that there's a compelling reason for having 70 as your default Social Security claiming age – and that isn't so that you get a bigger Social Security check… One of the key reasons to wait until 70 is something that rarely comes up in the traditional Social Security discussion: it has to do with taxes. David stresses that the years between retirement and age 70 can be some of the most valuable years of your entire financial life. Why? Because they may represent your best opportunity to execute Roth conversions. David touches upon the so-called Retirement Income Valley and the benefits it brings about. With a wrong approach, you may lock yourself into a permanently smaller Social Security check, and may have caused much of that check to become taxable because you simultaneously do Roth conversions. David suggests a different approach: retiring, delaying Social Security, and spending the next several years aggressively repositioning your tax-deductible dollars to tax-free. Once all that heavy lifting is done, you can then turn on Social Security. By following that strategy you accomplish two things: you lock in a substantially larger Social Security benefit and potentially reduce the other income that could cause that larger benefit to become taxable. Remember: delaying Social Security doesn't automatically make your Social Security tax-free. David talks about the IRMAA objection some may make as they hear his recommended strategy, and also touches upon his so-called "rip the band-aid off" approach to Roth conversions. David stresses that his interest isn't in whether a Roth conversion causes you to pay an extra few thousand dollars in Medicare premiums in one particular year. What he's interested in is whether the strategy reduces the total amount you pay in taxes and Medicare premiums over the balance of your retirement. "Social Security shouldn't be thought of as an investment, it's more like longevity insurance", says David. According to the 2026 Social Security Trustees Report, the Retirement Survivors Trust Fund is projected to exhaust its reserves in 2032 if Congress does nothing. However, that doesn't mean it's going to disappear, ongoing payroll tax revenue would still be sufficient. If higher taxes ultimately become part of the solution, then that only reinforces the importance of getting to tax-free before that happens. Your goal shouldn't simply be to maximize Social Security, it should be to maximize all of your after-tax streams of income. 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 2026 Social Security Trustees Report

September 16, 2026Episode 41110 min

Should You Stop Roth Conversions at the 22% Tax Bracket?

Should you stop your Roth conversions at the 22% tax rate, or push into the 24% bracket? David McKnight responds to a viewer's detailed case for stopping early, revealing why optimizing this year's tax bill can be the wrong retirement planning move over a 30-year horizon. You'll discover his "rip the band-aid off" approach and why saving money on taxes today isn't a victory if it costs you more tomorrow. In a recent video, David McKnight explained why he believes the 24% tax bracket is the sweet spot in the current tax code for Roth conversions. In this episode, he addresses a viewer's comment that laid out a pretty detailed case for why he believes it makes sense to stop at the 22% bracket. The main difference between these approaches, David stresses, is that his viewer is optimizing the tax bill in the year of conversion – while David tries to optimize your tax bill over the balance of your lifetime. David illustrates why those two approaches can lead you in two entire different directions. Depending on the size of your IRA, the amount you're spending every year, your expected rate of return, and how many years you have before RMDs begin, you may simply not have enough space in the 22% bracket to get any meaningful amount of conversion done. Most of David's clients don't have $100,000 per year of taxable investment income coming out of a brokerage account. The lion's share of their retirement savings tends to be sitting in IRAs and 401(k)s, and they're generally taking distributions from those accounts to support their lifestyle. David discusses his so-called "rip the band-aid off" approach to Roth conversions. The biggest problem with his viewer's argument is the focus on calculating what it costs to convert the money today, without asking what it's going to cost if we don't convert it. The choice may be between paying a somewhat painful tax rate today or allowing that money to compound inside the IRA for another 10-15 years. That may lead you to deal with larger RMDs, potentially higher tax rates, more taxation of social security, potentially more IRMAA, and the eventual death of one of the spouses. David wonders whether, with the approach suggested by his viewer, you're actually solving the problem or just postponing it. "Because saving money on taxes today isn't much of a victory if doing so ultimately causes you to pay even more over a 30-year retirement", he concludes. 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

September 9, 2026Episode 41010 min

Why Not Put Your Entire Retirement into 5.25% Treasuries? (Have You Won the Game?)

Is putting your entire retirement planning strategy into 30-year treasuries really the safe bet it seems? David McKnight reveals why this approach could expose you to two hidden risks, and explains how the stock market and annuities might hold the real key to protecting your income. In this episode, David McKnight looks at whether putting your entire retirement portfolio into 30-year treasuries is the way to go. While it may seem like a pretty compelling argument, there's a major problem with this strategy – and it comes down to two things: taxes and inflation. The U.S. just crossed $40 trillion in national debt. It will continue to grow $2 trillion per year over the next 10 years, and $3 trillion per year after that… with no end in sight. David points out that buying a 30-year bond with this status quo isn't just making an interest rate decision, it's making a 30-year tax bet. The problem with inflation is that, with a conventional Treasury bond, your retirement income doesn't get automatically indexed to keep up with inflation. Try to think of the impact of a 3% inflation on your income over the next 30 years. "The issue with declaring victory at retirement and putting everything into a 5.25% 30-year treasury is that you exchange one type of risk, market volatility, for two other catastrophic risks: rising taxes and inflation", says David. The solution to this problem is to give different portions of your retirement assets different jobs. The strategy starts with inflation-adjusted, tax-free, guaranteed lifetime income and continues with the so-called Volatility Shield. David recommends paying for discretionary expenses out of your Indexed Universal Life Policy (IUL) during a flat or down market. That will give your stock portfolio a chance to recover before you start taking more withdrawals. That act alone can nearly double the sustainable withdrawal rate on your stock portfolio over a 30-year retirement. When it comes to investing, David prefers allocating about 70% in a total U.S. stock market index and 30% in a total international stock market. Remember: over a 30-year retirement, it isn't much about how much interest you earn, it's how much you can spend after taxes and inflation are figured into the equation. 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 John Bogle

September 2, 2026Episode 4099 min

Dave Ramsey's 8% Retirement Rule: What Could Possibly Go Wrong?

Dave Ramsey says retirees can safely withdraw 8% a year from the stock market, but does his retirement planning math actually hold up? David McKnight breaks down why Ramsey's approach overlooks a critical risk, and why annuities may be the missing piece to sustainably boosting your retirement income beyond the traditional 4% Rule. In this episode, David McKnight examines Dave Ramsey's 8% withdrawal rate claim and why retirement planning may need annuities, and not just the stock market. For Ramsey, you can take 8% per year out of your stock market portfolio in retirement, despite what other financial planning advisors may say. Ramsey believes that advisors suggesting their clients follow the so-called 4% Rule are misadvising their clients. Wade Pfau, one of the most respected retirement researchers in the U.S. looked at what would happen if a retiree invested 100% of their money in stocks and took an 8% annual withdrawal each year, adjusted for inflation. The attempt to make that money last for 30 years failed in an astounding 63% of the cases. David thinks that Ramsey's calculations are flawed because he didn't take into consideration the sequence of returns risk. He shares an example that illustrates how Ramsey's 12% growth rate actually ends up falling apart (and costing retirees their hard-earned money). Once you're taking distributions, the order in which you experience sequence of returns can make the difference between your money lasting for the rest of your life or running out sooner. While David agrees with Ramsey in that retirees shouldn't settle for a 4% withdrawal rate in retirement, he believes that there are more reliable ways to improve upon the 4% Rule. The irony is that the most reliable ways to improve upon the 4% Rule is to use financial instruments Ramsey has spent decades telling his audience to avoid. Those tools are guaranteed lifetime income annuities and permanent cash value life insurance. David discusses the volatility shield, an account outside your stock portfolio that holds 3-5 years of discretionary expenses. The idea is to live out of that account in the year following a down year in the stock market. That way, your stock portfolio has a chance to recover before you take further distributions. This act alone can increase the sustainable withdrawal rate on your stock portfolio from 4% to as high as 8% with a 95% confidence rate. David's preferred vehicle for accomplishing that is properly structured, property funded indexed universal life insurance (IUL). An Ernst & Young study focused on what happens when you combine investments with permanent life insurance with guaranteed lifetime income annuities. What they found is that when you adopt an integrated approach that incorporates both cash value life insurance and annuities, you draw more retirement income with better outcomes than if you relied on investments alone. While David agrees with Ramsey's point that a 100% stock allocation in retirement makes sense, there's something he disagrees with – he explains what it is and their views differ. "Perhaps, Dave Ramsey isn't wrong about wanting retirees to enjoy an 8% level of income, he's just using the wrong tools to get there", David argues. 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 The Power of Zero: How to Get to the 0% Tax Bracket and Transform Your Retirement by David McKnight DavidMcKnight.com DavidMcKnightBooks.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube Dave Ramsey Wade Pfau Ernst & Young

August 26, 20268 min

The Three Biggest Reasons Americans Hate Annuities

Most Americans hate annuities and would tell you to avoid them… But what if the version you've been warned about isn't the only option for retirement planning? David McKnight breaks down a strategy that's quietly helping retirees sleep better at night and safeguard themselves against the 3 biggest annuities-related problems. In this episode, David McKnight looks at three perfectly legitimate reasons why Americans have been reluctant to embrace annuities, as well as a solution. The first problem is liquidity. David points out that one of the biggest fears in retirement is running out of money before you run out of life. He shares an example that shows you how, in the process of purging longevity risk from your retirement, you create an entirely different problem. The second reason why people dislike annuities has to do with what happens if you die early – what happens to what an insurance company promised to pay you for life? The third problem has everything to do with inflation. Sure, your income may be guaranteed for life but, with inflation, the lifestyle that income supports certainly isn't. David wonders whether there's a way to get guaranteed income you can never outlive without having to accept the three traditional drawbacks. "Over the years, life insurance companies recognized the shortfalls of the traditional guaranteed lifetime income annuity, so they designed a solution known as the Fixed Index Annuity", says David. With many Fixed Index Annuities (FIAs) you can access up to 10% of your contract value annually during the surrender period without paying a surrender charge. When you consider that most Americans with stock portfolios are relying on the 4% rule in retirement, 10% withdrawals are an absolute smorgasbord of liquidity. David explains how FIAs help with the second reason why Americans hate annuities, and what happens even if you end up living for a long time. He then illustrates how FIAs can come into play to help you deal with inflation – and why the so-called piecemeal internal Roth conversion feature is something you may want to explore. Remember: not all annuities are created equal. If you're interested in the benefits of guaranteed lifetime income without all the pitfalls that go along with traditional single premium immediate annuities, fixed index annuities may be a viable alternative. 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 The Power of Zero: How to Get to the 0% Tax Bracket and Transform Your Retirement by David McKnight DavidMcKnight.com DavidMcKnightBooks.com PowerOfZero.com (free video series) @mcknightandco on Twitter @davidcmcknight on Instagram David McKnight on YouTube

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