In this episode, host David McKnight tackles a question about the tax bracket at which you should stop contributing to the Roth IRA and start contributing to the traditional IRA.

The inspiration for this episode was a recent episode of The Money Guy Show.

David believes that advice such as that shared on The Money Guy Show doesn’t consider most of the people asking questions like the one addressed in the episode.

Those are people whose combined marginal tax rates fall between 25% and 30%.

Generally, David likes the idea of having a rule of thumb tax bracket that helps you determine whether or not you should go Roth or traditional.

However, he warns against providing advice that ends up confusing a huge swath of investors.

In fact, David sees the particular rule of thumb like the one shared on The Money Guy Show as something that isn’t going to be all that helpful to many Americans.

David breaks down the power of zero rule of thumb when it comes to deciding between Roth or traditional.

Your state tax in retirement is likely to be very similar to what your state tax is now.

David’s rule of thumb: if you’re in the 24% federal tax bracket or lower, then go Roth all day.

That’s because your current 24% bracket is still lower than the future version of the 22%, which is 25%...

Remember: if you’re in the 24% or lower in the federal marginal tax bracket, go Roth. If you’re in the 32% bracket or higher, then go tax deferred.

Generally, David DOESN’T recommend filling up your entire tax-free bucket and ignoring tax deferred altogether if you decide to go Roth.

Simply allocating your match to the tax deferred portion of your 401(k) is a great way to accumulate the required amount in your tax deferred bucket.

David tends to like the Money Guy Show, but he feels that, in this instance, they should simply ignore state taxes in the Roth vs. traditional calculus and draw a red line at the 24% tax bracket.

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

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

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

Brian Preston

Bo Hanson

The Money Guy Show

David McKnight looks at a recent study on retirees that seems to tell a different story compared to what many people in the U.S. tend to believe.

Americans often view guaranteed lifetime income annuities skeptically – they’re perceived as a drag on the growth of their stock market portfolio.

According to the study by retirement researchers David Blanchett and Michael Finke, retirees with guaranteed lifetime income spend about twice as much as their counterparts who rely on stocks and bonds alone for income in retirement.

Those who rely purely on investments alone in retirement end up spending less because they fear running out of money in advance of life expectancy.

David explains that “retirees with annuities spend more, not because they are wealthier, but because they have a form of wealth – a guaranteed income – that encourages them to spend.”

Comparing two couples, a risk-averse couple with a risk-tolerant couple, Blanchett and Finke’s study found a 1.1% difference in them taking an annual withdrawal rate from their portfolio.

David couldn’t have been any clearer: “If you want to spend more in retirement, taking an investment-only approach is usually the worst way of going about it.”

Mentioned in this episode:

David’s upcoming book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

David Blanchett

Michael Finke

The episode explores whether the proposed Department of Government Efficiency (DOGE) will move the needle when it comes to the U.S. debt crisis.

Some people see DOGE as the bold move America needs to solve its looming debt crisis.

Elon Musk believes that DOGE can rip out at least $2 trillion out of the $6.5 trillion Biden-Harris budget – however, David McKnight disagrees.

David gives a breakdown of the federal budget, including the so-called non-discretionary spending.

Former U.S. Comptroller General David Walker shares his thoughts on what he sees as the potential impact of DOGE on the federal deficit.

David explains that, unless actions are taken right away, Social Security, Medicare, and Medicaid will eventually bankrupt America.

Moreover, the more time passes with the Federal Government failing to dramatically scale back such programs, the more onerous and draconian the fix will be on the back end.

Does David see DOGE as being able to move the needle on solving the national debt crisis? “Probably not,” he says.

Mentioned in this episode:

David’s upcoming book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

DOGE

Donald Trump

Elon Musk

Vivek Ramaswamy

David M. Walker

Committee for a Responsible Federal Budget

The episode kicks off with David McKnight sharing his view of the guru’s approach: “to go about half an inch deep and ten miles wide.”

David discusses a sort of clash that financial planning gurus are creating by trying to attract — or even 'steal' — clients from financial planners who already have them.

The goal of financial planners should be to provide a bridge between the advice clients get from financial gurus and their ultimate objective of ensuring that their money lasts as long as they do.

David categorizes Dave Ramsey’s advice as “good for bad investors but bad for good investors.”

David explains the so-called “Dave Ramsey’s circle of poverty.”

According to Wade Pfau, who wrote the foreword for David’s new book The Guru Gap, adopting Ramsey’s approach will lead people to run out of money in advance of actuarial life expectancy 63% of the time.”

David shares that nobody he has ever talked to actually agrees with Dave Ramsey’s retirement advice.

Running out of money before running out of life is the #1 fear most Americans have.

David sees instilling hope as the main reason why Dave Ramsey’s approach tends to exacerbate the #1 fear Americans have — instead of removing that fear.

Mentioned in this episode:

David’s upcoming book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Dave Ramsey

Wade Pfau

This episode is based on David McKnight’s recent interview for Stephen Gallo’s podcast.

David explains how the advice shared by gurus tends to work – and the role financial advisors play.

David touches upon his concept of “Dave Ramsey’s circle of poverty.”

According to Wade Pfau, adopting the approach shared by Dave Ramsey will lead to you running out of money in advance of actuarial life expectancy 63% of the time.

To avoid falling in league with financial gurus, financial advisors should stay away from dispensing one-size-fits-all financial planning.

David analyzes Dave Ramsey’s approach – including why, instead of addressing America’s #1 fear when it comes to money, he exacerbates it.

David shares a couple of anecdotes about his new book The Guru Gap.

In researching financial gurus for The Guru Gap, David realized that they are even more wrong on key topics than what he had previously believed.

David discusses how you can discern good advice from bad advice when consuming content such as podcasts and YouTube channels.

Cash value life insurance is something that’s sort of universally panned by financial gurus, but it’s easy to make a mathematical justification for it.

Mentioned in this episode:

David’s upcoming book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Stephen Gallo

Dave Ramsey

Suze Orman

Wade Pfau

Ken Fisher

Tom Hegna

Ernst & Young

This episode is part of David McKnight’s guest interview with Kyle Solon.

David talks about the importance of math when it comes to decisions related to using cash value, life insurance, and annuities.

A recent Ernst & Young study showed a surprising stat about who had the highest income in retirement and passed the most money on to the next generation.

David illustrates the concept of the volatility shield, also known as volatility buffer.

The #1 concern of Americans all across the country is running out of money before they run out of life.

David shares a key question people should ask themselves when listening to gurus such as Dave Ramsey: “Is there a mathematical justification to what I’m being told?”.

David is a strong believer of leaning on the strategies that historically give you a much higher mathematical likelihood of increasing the life expectancy of your money.

Dave Ramsey is someone who David really likes for some things, while he isn't a big fan of him for other matters.

He sees Ramsey as good for getting people out of debt but not good at helping people have their money last through life expectancy.

David gives a breakdown of a couple of sections of his new book – The Guru Gap – and what people should do to educate themselves about the financial industry.

Mentioned in this episode:

David’s new book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Dave Ramsey

Ernst & Young

Ken Fisher

Suze Orman

David McKnight describes the Trump tax cuts situation before Trump’s victory at the 2024 presidential elections.

There’s likely going to be changes under a new Trump administration – something that David sees as great news.

When it comes to Roth conversion strategy, David is a believer in two things.

The first is to convert your money slowly to avoid rising into a tax bracket that gives you heartburn.

The second is to convert your money quickly enough to get all the heavy lifting done before tax rates go up for good.

While the posting of the end of the Trump tax cuts to 2032 would be good for American citizens, there’s a big downside for the country as a whole.

Several experts have predicted a need for a tax rate increase to prevent the U.S. from going broke as a country.

Eight more years with historically low tax rates would be especially critical for pre-retirees and retirees looking to shield their retirement savings from a predicted spike in tax rates in the future.

David shares something he believes can dramatically increase the likelihood of retirees having their money last as long as they will.

Mentioned in this episode:

David’s upcoming book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Donald Trump

Committee for a Responsible Federal Budget

David M. Walker

Larry Kotlikoff

Ray Dalio

Stanley Druckenmiller