The Power of Zero, Revised and Updated: How to Get to the 0% Tax Bracket and Transform Your Retirement by
David McKnight
My rating:
2 of 5 stars
This is one of those books that was created to try to sell you something. In this case, it’s trying to convince the reader that they have an issue with their savings plan, and that there is a way to pay zero taxes that only a few rich people currently know about. The solution involves using a variation on life insurance. You’ve been warned.
I actually thought the first part of the book, which lays out the forecast of much higher income tax rates in the US and the impact on different retirement savings vehicles, was interesting, if lacking in detail. The author conveniently ignores things like capital gains tax and dividend taxes that are currently at a lower rate than income taxes, and I suspect that will be the case even if his forecast of tax increases occur. And he ignores other tax planning schemes that those rich life insurance owners also avail themselves of, like trusts and corporations. I would agree that tax rates can, and likely will rise from where they are now. And some thought should go into investors tax planning due to that eventuality.
So the problem statement is a good story. But what of the offered solution? The author focuses on the scheme of buying specific life insurance policies that have “additional features” (and when you read additional features, you correctly think additional costs) that allow for additional investment, borrowing your invested money without repayment, and use as a long term care annuity. It’s described a lot like Saturday Night Live skit: it’s a floor wax and a dessert topping. As you read, you want to evaluate this product. But alas, the author really provides no details, instead begging off because there are hundreds of different policies with different costs and different benefits. You can’t even validate the claim that you can live off the proceeds of your savings without paying taxes, because there’s not enough detail, even in the chapter length “case study”. Your only recourse is to visit your local insurance broker. Not surprisingly, the author mentions that the book became a hot seller when insurance agents bought them to give to their prospects. Go figure.
When I read a book that is written as advertising material, I tread lightly. I look to see if there is any value beyond getting informed on some new product. Here, the value I received with in the initial problem description forecasting increasing taxes. I already understand this issue, but it was interesting to read someone else’s take on it. My second takeaway was the reminder that this kind of life insurance product exists. If the need arises while I’m managing my investments, I’ll know my insurance guy will have something to sell me. He always does.
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