Download The Power of Zero by David McKnight Pdf book free online. The US government has made unfunded pledges worth trillions of dollars for programs like Social Security and Medicare, and the only way to keep these promises is to raise taxes. To keep our country solvent, several experts have advised that tax rates should be doubled. Unfortunately, if you’re like most Americans, you’ve put most of your money into tax-deferred accounts like 401(k)s and IRAs. How much of your hard-earned money will you get to retain if tax rates rise?. GET FREE AUDIOBOOK
McKnight gives a clear, step-by-step roadmap for getting to the 0% tax bracket by the time you retire in The Power of Zero, thereby eliminating tax rate risk from your retirement picture. Now, in this extended edition, McKnight has added a new chapter on the 2017 Tax Cuts and Jobs Act, which shows readers how to negotiate the new tax legislation in its first year of implementation and how to take use of it now to extend the life of their retirement assets.
The day of reckoning is drawing near. Are you willing to go to any length to feel the power of zero?
Table of Contents
Summary of The Power of Zero by David McKnight Pdf
Why would you not pick up this book with such a captivating title? Because I had failed to read it the first time around and it was on short-term loan, I had to take it out of the library twice. Isn’t it annoying when that happens? It was fortunate for me that it was still available on a second library visit.
The Power of Zero tackles taxes, an important topic that I’ve been researching because it’s not my area of expertise. On the internet, there are many questions, replies, and projections about the future of taxation. Of course, given so many variables, it’s difficult to foresee and guess what the rate will be, but it’s important to be aware of the impact of taxes on your prospective take-home pay today and in the future. Based on historical data, we currently have the lowest tax rates to date.
“How Have the Top and Bottom Income Tax Brackets Changed Over Time?” from the National Taxpayer’s Union Foundation is the finest breakdown I could locate. Not only is income for the highest tax band larger, but the tax rate is also lower when compared to the previous years. So, rather than paying taxes tomorrow, it appears that you should do so today.
Author David McKnight goes over a few scenarios in his book The Power of Zero, including why and how to minimize taxes in retirement. He begins by discussing the importance of deductions and how they are the most powerful tool during our working years, but many of us will no longer qualify for these deductions once we retire, so while our incomes may be lower because we aren’t working, we may be taxed more because we don’t have qualified deductions. He also discusses how to avoid having your Social Security benefits taxed by making sure your other retirement accounts aren’t considered as provisional income when you remove them. He also proposes LIRP, or Life Insurance Retirement Plan, which I had never heard of before and will try to explain and detail below.
Why Deductions in Retirement Won’t Help You Save Money
In general, we can take advantage of more deductions throughout our working years, but once we retire, all of these deductions will be phased out, resulting in greater taxes. McKnight brought up an interesting point that, to be honest, I’d never considered. We had mortgage interest for the first time last year. We never gave enough to warrant itemizing, and our employers had retirement plans, so these deductions had little impact on us.
Mortgage interest – By far the most popular itemized deduction for individuals who itemize, but hopefully you’ll have paid off your house by the time you retire and won’t be able to take advantage of this deduction. It’s also worth noting that, according to the recent tax overhaul, the standard deduction will be $12,000 for single taxpayers and $24,000 for married couples filing jointly for tax years 2018 through 2025. That’s about double what it was in 2017. Unless you live in a really expensive house in a very expensive neighborhood, which we do not, the standard deduction is plenty. This also suggests that the deadline for the tax shift in 2025 is approaching.
Children – Children are a tax credit, which is significantly more useful than a deduction because a credit reduces your tax payment dollar for dollar. It’s unlikely that your children will live with you in retirement, and even if they do, they’ll be too old to be considered dependents. This tax credit is one of the most straightforward and gratifying tax benefits available, and it has more than doubled in the previous two years, benefiting families even more. The child tax credit for this year (2019) is $2000 per child.
Contributions to a retirement plan – By the time you retire, you should no longer be contributing and instead be withdrawing.
Charity – While charitable contributions are a significant source of deductions during working years, because income is lower or the prospect of income declines in retirement, more people choose to donate their time rather than their money, resulting in a lack of charitable contributions for a deduction.
About the Author
In 1997, David McKnight earned an honors degree from Brigham Young University. David has assisted hundreds of Americans in reaching the zero percent tax rate over the last 20 years. He’s been on Bloomberg Radio, Investors Business Daily, and major outlets including the New York Times and Reuters several times. The Power of Zero, his best-selling book, has sold over 250,000 copies. He educates hundreds of financial advisors across the country who specialize in The Power of Zero retirement approach as the President of David McKnight & Company. He and his wife Felice live in Grafton, Wisconsin, with their seven children.