There are a lot of stigmas around retirement planning and David’s new book addresses two of the most difficult problems facing retirees right now, longevity risk and tax rate risk, and how to deal with them at the same time.
Tax rate risk has always been a big problem for retirees, but it’s not their biggest concern. Most people worry more about running out of money before they run out of life. David has observed that financial advisors are stuck believing they can solve one risk or the other.
99.5% of advisors fall into this trap where they mitigate longevity risk within the tax-deferred bucket, and that unleashes a chain of unintended consequences that can bankrupt a stock market portfolio ten to twelve years faster than you thought possible.
Daniel recommends to every financial professional he meets that they read the Power of Zero collection of books. You’re not relevant to the retirement space if you don’t have some part of your company’s philosophy centered in the Power of Zero message.
David isn’t making big claims about a specific timeframe. His message is universal and experts have been saying we’ll need to deal with all this debt at some point in the future. It’s not a political issue, we all need to prepare for this.
An object at rest stays at rest. People are averted to paying taxes to the IRS sooner than they need to, even if they believe that tax rates will be higher in the future. More people are coming over to the Power of Zero way of thinking.
There is an incredible divide between the people who think that tax rates will never go up and those who think that the Power of Zero paradigm is the gospel of retirement planning. The biggest skeptics don’t believe that tax rates will rise in the future and the very thought threatens their way of living.
David McKnight’s top three advisors to pay attention to include Ed Slott, Tom Hegna, and Van Miller. Each of them has something extremely valuable to add to the conversation.
Many experts decry annuities unnecessarily and consumers need to be careful about overgeneralizing. Financial gurus on television and the internet have to paint with a very broad brush so that it applies to a large swath of people. Unfortunately, the people that need more customized strategies get sucked in by the one-size-fits-all idea.
Would David ever consider hosting a moderated financial planning debate with the traditional gurus on one side and the Power of Zero paradigm on the one side?
Just like in politics, there is an establishment in finance. David’s first book was the #2 bestselling business book in the world, but despite that, it didn’t make it onto any bestseller lists. David and Daniel are up against the invisible hand of the establishment to get the word out.
What can we expect from the Joe Biden administration? Much of the answer depends on the Georgia runoffs and whether the Democrats gain control of the Senate. If that’s the case, Joe Biden will push through a number of changes that will affect millions of Americans no matter what tax bracket they are in. If you’re making more than $400,000 each year you better duck and cover.
What should you do if you haven’t done anything yet? Start with educating yourself on where you think the fiscal condition of the country will be in the next decade or so. There are a number of experts predicting a perfect financial storm in 2030. If you believe tax rates will be lower in the future, keep putting money into your 401(k)s and IRAs, but if you think tax rates will be higher in the future then start moving money into your tax-free bucket. Be preemptive about your future retirement.