David McKnight addresses something Dave Ramsey has been saying for years: “You should NEVER own bonds in retirement!”

David points out that the tool that actually solves the problem Ramsey has been trying to avoid is the same one he spent years mocking on his call-in show: the Fixed-Indexed Annuity.

Ramsey’s argument is that stocks outperform bonds over time – hence, bonds should be avoided as they’re “slow, underperforming, and risky.”

David indicates what Ramsey is half right about, as well as something he’s missing the mark on…

David discusses how bonds can act as a sort of volatility buffer, despite what Ramsey preaches.

The irony is that the best alternative to bonds is something that Ramsey has derided for years (the Fixed-Indexed Annuity).

David goes through the key differences between a Fixed-Indexed Annuity and a bond.

In years when your stock portfolio is down, you can draw from your annuity – this gives your stock time to recover before you start taking further distributions.

That act alone can increase your sustainable withdrawal rate on the stock portion of your portfolio from 4% to as high as 8% with a 95% success rate.

David’s disagreement with Dave Ramsey isn’t so much with the suggestion of getting rid of bonds, something David actually agrees with, but it’s missing the most important part: what you replace bonds with matters.

Remember: there’s no better bond alternative in the retirement space than the Fixed-Indexed Annuity.

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

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

Dave Ramsey

David McKnight walks you through what he believes to be the retirement strategy of the future: the Power of Zero approach.

Congress recently passed the One Big Beautiful Bill Act, which makes the Trump tax cuts permanent.

The brackets were set to expire in 2026, but now we’re told they’re here to stay…

By 2035, the U.S. will need massive infusions of cash just to cover the interest on the debt of $37 trillion, not to mention Social Security, Medicare, Medicaid, and defense.

When the Government needs money and no one else will loan it the money, it does the one thing it’s always done in the past: raise taxes.

Remember: even though tax rates are low today, they won’t stay that way forever. Congress can change the rules anytime it needs more revenue.

David illustrates the main goal of the Power of Zero approach and how it works: it’s all about creating multiple streams of tax-free income, none of which show up on the IRS’ radar, but all of which contribute to you being in the 0% tax bracket.

Beware: this idea that we’ve locked in low tax rates forever is an illusion. Just because Congress called these tax cuts permanent doesn’t mean they won’t reverse them the minute they need more revenue.

According to Dr. Larry Kotlikoff of Boston University, the unfunded obligations for Social Security, Medicare, Medicaid, interest on the national debt, and the general cost of running the Federal Government over the next 75 years, are over $200 trillion.

Right now, you have a chance to strategically reposition your retirement savings to be tax-free. Shift that 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 believes that you have a chance to strategically reposition your retirement savings tax-free.

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

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

Laurence Kotlikoff

While on the golf course with his son, David McKnight got asked a question, by a couple of men in their early 70s, every pre-retiree and retiree wonders at some point: “What’s the biggest mistake people make when preparing for retirement?”

Many people spend their entire career saving money in tax-deferred accounts like 401(k)s and IRAs.

As that balance grows larger every year, it’s easy to get the illusion that all that money belongs to you, while a larger portion actually belongs to the IRS.

How much of that sum you ultimately get to keep depends on what tax rates happen to be in the year you take that money out.

David believes that the #1 mistake you can make in retirement is failing to plan for taxes.

Remember: if you arrive in retirement with the vast majority of your wealth sitting in tax-affirmed accounts, you’ve put yourself in a position where the government gets to decide what percentage of your money you actually get to keep.

Keep deferring, as you know you’ll be in a lower tax bracket in retirement, has been traditional wisdom for quite some time, but the math doesn’t work out anymore.

David touches upon the repercussions of the increasing tax rates caused by the nation’s skyrocketing and unfunded obligations.

His recommended step is to start shifting money from tax-affirmed to tax-free accounts.

David discusses the approach you should take and reminds you that retirement isn’t just about how much money you’ve saved… it’s about how much of that money you actually get to spend.

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

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