Updated September 4, 2023, at 5:07 PM
Since his first book, The Power of Zero, was published in 2014, David McKnight and his team have been diligently guiding financial professionals and their clients towards the zero percent tax bracket.
A few years ago, David even produced a full-length documentary called, The Power of Zero: The Tax Train Is Coming. It showcased several interviews with economists, Congress members, and industry professionals. All with the intent to explore our nation’s looming debt crisis and to create awareness about the challenges of retirement in our great country.
So, David McKnight published another riveting industry book, Tax-Free Income for Life. This time, he explicitly lays out a proven process to mitigate two huge retirement risks clients face: tax rate risk and longevity risk. We’ll be summarizing that book here.
Keep reading to see why you should consider diving into Tax-Free Income for Life in its entirety.
Tax-Free Income for Life Book Summary
David’s book first discusses how the two biggest risks a retiree will face are tax rate risk and longevity risk. Indeed, one would assume that he’d address tax-rate risk since his paradigm of getting to the zero percent tax bracket has been showcased and implemented for the past decade or so.
However, David spends time discussing how living too long, or longevity, exacerbates several retirement planning challenges. He describes the impact of the sequence of returns and the risk of withdrawing too much from a portfolio. He also explains how long-term care can deplete one’s retirement plan, and how inflation has magnified the longer you live in retirement.
Often, the path to solving one or more of these issues comes with a price. David would argue that some financial professionals do a fantastic job mitigating risk by securing guaranteed lifetime income. However, they might overlook the potential of rising taxes or ignore provisional income in getting there.
Or the opposite could be true.
One might shift everything to the “tax-free” bucket, but they might not solve guaranteed lifetime income. To address both tax-rate risk and longevity risk, it’ll take extra effort. But it’s worth it.
Roth Conversions & Case Studies
David also discusses the Roth conversion process and how vital it is to work with product manufacturers (insurance carriers) who can accommodate a series of conversions over a period of years without administration problems. That is, there are only a handful of carriers who can do these “piecemeal internal Roth conversions.” And it’s vital to align with them to help your clients address these major risks.
Lastly, David demonstrates his work’s power by giving a real-life case example, going in-depth on how he’d navigate a plan. Ultimately, he helps a couple mitigate the two major risks upon which this book and David’s philosophy is based.
His Q&A section at the end is some of the most common-sense language I’ve seen in our industry—discussing pretty complex topics.
Related: Bridge the Retirement Income Gap
Final Verdict on David McKnight’s Tax-Free Income for Life
Tax-Free Income for Life is a must-read for any financial professional searching for a comprehensive planning process. It’s phenomenal in addressing the two things that keep pre-retirees and retirees awake at night: taxes and outliving their money.