{"version":1,"type":"rich","provider_name":"Libsyn","provider_url":"https:\/\/www.libsyn.com","height":90,"width":600,"title":"The Three Biggest Retirement Planning Mistakes I See All the Time","description":"David McKnight discusses the three biggest retirement planning mistakes that show up over and over again. Avoiding them will dramatically increase the likelihood that your retirement savings will last as long as you do.  Mistake #1 pertains to over-accumulating in tax-deferred accounts like 401(k)s and IRAs \u2013 a mistake that surprises many people as they feel they\u2019re doing everything right. The problem here is that you\u2019re taking a deduction at historically low tax rates only to postpone the payment of those taxes to a point in the future where tax rates are likely to be much higher than they are today. The moment you hit age 73 or 75, Required Minimum Distributions (RMDs) kick in. In other words, the IRS is forcing you to take money out, whether you need it or not. Those RMDs get combined with all your other sources of income: The taxable portion of your social security, your pension(s), and your investment income. David notes that, before long, you can find yourself in a higher tax bracket in retirement than you were during your working years. Remember, RMDs count as provisional income, which can cause up to 85% of your social security to become taxable \u2013 plus, it can trigger IRMAA surcharges on your Medicare premiums too. Building a retirement plan that is almost entirely tax-deferred looks good on paper but leaves you entirely exposed to the impact of higher taxes in the future. The second mistake is waiting too long to execute Roth conversions. David touches upon the so-called \u201cretirement income valley,\u201d the ideal window within which to fully execute your Roth conversion. Many people ignore it. They\u2019re hesitant, reluctant to pay a tax to the IRS before it\u2019s absolutely required of them. Failing to take advantage of the \u201cretirement income valley\u201d puts you at risk of having your social security become taxable, while also paying higher Medicare premiums for the rest of your life. When it comes to Roth conversions, David recommends having a \u201crip the band-aid off\u201d approach.  It may hurt a little during the conversion period but once that money is in the Roth bucket, it\u2019s tax-free for the rest of your life. The third big mistake David sees over and over again is underestimating future tax rates and overestimating your control over them. Most retirement plans today are built on the dangerous assumption that tax rates in the future will look a lot like they do today. However, David stresses that looking at the fiscal trajectory of our country paints a different picture. The national debt will grow by $2 trillion per year over the next 10 years, and $3 trillion per year after that. With the rising interest costs and $200 trillion in unfunded obligations for Social Security, Medicare and Medicaid, there will be a financial day of reckoning where tax rates will be forced higher. David predicts that to be around 2035 \u2013 which gives you around 10 years to plan and execute on your plan. People spend their entire lives focusing on building as big a retirement nest egg as possible, but they give almost no thought to the type of accounts within which that nest egg is being built. The lack of consideration for the tax implications upon distributions is a huge oversight, says David.  At the end of the day, the only thing that really matters in retirement is how much money you get to spend after taxes. David concludes by highlighting that the best way to regain control over your after-tax income retirement is to pay taxes on it preemptively at historically low tax rates and on your terms (rather than on the IRS\u2019 terms).     Mentioned in this episode: David\u2019s new book, available now for pre-order: The Secret Order of Millionaires David\u2019s national bestselling book: The Guru Gap: How America\u2019s Financial Gurus Are Leading You Astray, and How to Get Back on Track Tax-Free Income for Life: A Step-by-Step Plan for a Secure Retirement by David McKnight 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 ","author_name":"The Power Of Zero Show","author_url":"http:\/\/davidmcknight.com\/","html":"