How to Best Position the LIRP in Your POZ Strategy

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 year, on average. This, without taking into consideration that there are 10,000 baby boomers who are exiting the workforce.

Mark confirms a question that was asked; the amount you can put in a Roth IRA annually, in 2022, is going to be limited.

David believes that the direction capital gains are heading toward depends on who’s in office. If you have Democrats at the Presidency, they’re most certainly trying to raise them. Republicans tend to think that high capital gains affect the growth of the economy.

If one leaves politics aside and looks at the math of it all, capital gains are going to have to rise precipitously – along with individual tax rates – or the U.S. is going to go broke as a country.

David is a fan of extending the Roth IRA conversion period beyond 2026. In replying to a question that was asked, he discusses how he would prefer paying the 22-24% bracket up until 2026 rather than preventively paying the 32% bracket.

He thinks that there is going to be a “perfect storm” in 2030; demographic, debt, and unfunded obligations – so you want to get things in order before then.

There are a couple of things that have hit a nerve with David; bouncing into the 32% tax bracket and people wincing over IRMA. 

There’s a trade-off, though; one can pay an increased IRMA in the short term to spare IRAs and Social Security from higher taxation over the long-term.

If a person can get to 0% tax bracket in retirement by shifting most of their assets to tax-free, they would put themselves in a position where they wouldn’t have to pay IRMA anymore, they wouldn’t have to pay Social Security taxes anymore, and they would shield themselves from the impact of high tax rates down the road. 

David provides an overview of his books Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life, and his upcoming one, the 75,000 word-long, The Infinity Code.

David shares what is the greatest risk according to retirees; running out of money before you run out of life.