We look forward to the Van Mueller newsletter every month. It's chock-full of sound bites, sales tips, and eye-opening statistics. Here are our favorite parts of the December 2019 edition. We're sharing the full introduction, and 2 of the 7 monthly sales ideas. If you like what you read, we encourage you to click here and become a subscriber.
Reprinted with the author's permission.
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December 2019 – 7 Ideas and Views Newsletter by Van Mueller
In the November newsletter we began by providing some additional tools that can be used to inspire our prospects and customers to take action. These tools can be used to help our prospects and customers organize their thinking about issues like insurance protection, finance, taxes and retirement. One of the mistakes we make as insurance and financial professionals is assuming that our customers have really thought about all of these issues carefully and thoroughly. Literally, the opposite is true. The little bit that they even have an awareness of comes to them in “sound bites”. These have now been reduced to 15 second blurbs such as, “life insurance is a lousy investment”, or “Buy term and invest the difference” or “Nobody can time the market” or “Maximize tax deferral”.
It turns out that these are all deceptive misrepresentations. Does it make sense to take a tax deduction now, on a small amount of money, when taxes are historically low so that you can build a large amount of FULLY taxable money in the future when it is certain that the government will need an enormous amount of additional revenue for benefits they provide like Social Security, Medicare, Medicaid, interest on dramatically increasing debt, Homeland Security, defense, pensions, etc.? Wouldn't it be smarter to pay your taxes now when they will be as low as they will ever be and invest and save in financial vehicles that once you put the money into them, the government can NEVER get their hands on that money again? This is basic common sense. And yet Americans build strategies that are the opposite of their common sense. Why? Because they are inundated with an enormous amount of “sound bites” that can easily turn fiction into truth. Really think about this: Isn't it true that if you hear a lie a thousand times it can become truth? Then doesn't that information become part of your customers' belief system? And if you attack their beliefs will you realize much success? Of course not. By the way, if all of this tax deferral works so well, why do most Americans not have enough money for retirement or even a small degree of financial security? Building enormous amounts of money for our government to have complete future access to seems to be at cross purposes. Aren't we giving up control of that money?
How do we get prospects and customers to reconsider these terrible misrepresentations? Wouldn't it be by asking questions that help our customers use their “common sense” to reconsider what they've been told? Wouldn't a great question for all our customers be, “What if the information you are using is not appropriate for your situation? Wouldn't you want to use methodologies that would maximize every dollar you have? Wouldn't you want to increase your control of your money rather than decrease your control of your money?” Ask them this question: “Why do you think the government wants Americans to build a large amount of fully taxable money in the future? Isn't it because they will need enormous amounts of new revenue for future benefits? Aren't the people running for government office already talking about future revenue needs?” Do you want the government to be in control of how much they take, or do you want to be in control of how much the government takes? They sound like easy questions and they are, however no one is asking those questions, so our prospects and customers are led down a different path.
Why do you think the government wants Americans to build a large amount of fully taxable money in the future? Isn't it because they will need enormous amounts of new revenue for future benefits? Aren't the people running for government office already talking about future revenue needs?
That is why last month I provided more detail about websites such as www.usdebtclock.org and www.truthinaccounting.org. I wanted you to have an easily accessible resource to share not only with prospects and clients, but yourselves as well. If you don't understand and believe this, how can you ever expect prospects and clients to believe what you are sharing? People most often do not buy what you say; they buy how you say it.
This month I want to provide you with several more sources of information and how to use them. Here is one that I use on literally every appointment I have. I use it to inspire rich and middle class and less fortunate people. This proves the government will absolutely, positively need more revenue from everyone.
Wage Statistics For 2016
It is a little tricky to find the website, so I've included the direct link. Once you become familiar with the provided chart, this site will become a vital part of your sales presentations, so you'll want to add it to the list of favorites on your computer. https://www.ssa.gov/cgibin/netcomp.cgi?year=2016. At the very top of the chart it says “Social Security Online”. Next to that it states, “Automatic Increases”. The information also shows in the top left corner that it is provided by the office of the Chief Actuary for Social Security. Right below that it says, “Enter another year.” Even though the box shows 2016, you can enter any year from 1989 to 2018 and that annual information will be provided. I will be sharing information from the year 2018.
If you read the paragraph underneath the box that reads, “Net compensation components for 2018” you will ascertain some vital information. First, there were 167,669,326 workers. Why should you know that? America has 332 million people. That means that half of America is working, and half is not. In that same paragraph it says 50 percent of wage earners earn less than $33,000 per year in compensation. Will we be able to collect enormous amounts of revenue from these people? Don't you believe it would be highly unlikely? That same paragraph also shares that 67 percent of Americans make less than $50,000 per year in compensation. Is that a lot of money if you have to pay for insurances, housing, transportation, food, clothing, etc.? So, will we get any additional money from these people? Maybe. I will explain later. Now as you go down the chart on the left side you will see $70,000 to $74,999.99. 138 million Americans out of 169 million wage earners make less than $75,000 per year. If you are married with two children, are you rich if you make $75,000 or less per year? The chart shows that the percentage is 82.34 percent. If you even go to $100,000 per year of income the number is 150 million or almost 90 percent of all tax payers. Don't you think this information is very disturbing to that top 10 percent?
138 million Americans out of 169 million wage earners make less than $75,000 per year. If you are married with two children, are you rich if you make $75,000 or less per year?
Think about this; that is 19 million Americans who will have to provide dramatically increased revenue for 332 million Americans. WOW! Ask them if they are they going to let the government decide how much of their money they are going to take, or would they like to maintain control of how much the Internal Revenue Service and the government takes?
Readers from Canada; your numbers are very similar, and you have a lot higher percentage of Canadians turning 65 and living longer than ever.
Here's where the politicians' arguments really come apart. Look at how many people make one million or more per year. There are 156,120 Americans who make one million or more per year. That is .0009 percent of all wage earners and .00047 percent of all Americans. If we taxed these people at 100 percent of their earnings, we won't even make a dent in what we have to pay as a country every year. It adds up to around $380 billion. We spend around $4.8 trillion at the federal level and $3.4 trillion at the state level.
Doesn't this raise a number of questions? Aren't we going to tax people with incomes over $100,000 at much higher levels in the future? Doesn't it also mean that we will have to increase taxes on upper-middle class, middle class and even the poor? Doesn't everyone at every level need to do some serious tax planning?
Aren't we going to tax people with incomes over $100,000 at much higher levels in the future? Doesn't it also mean that we will have to increase taxes on upper-middle class, middle class and even the poor? Doesn't everyone at every level need to do some serious tax planning?
Just a quick aside: They won't raise taxes on the poor. That would not play well in the media. However, they will increase Social Security and Medicare taxes in the future. They will sell that as necessary to maintaining the ability to provide benefits. No one will be immune.
In 2016 it was only 133,000 Americans who made more than one million in compensation. You can examine every year since 1989. You can see what happened during the crashes in 2000 to 2002 and 2007 to 2009.
This chart raises a few more concerns that really must be discussed. If the United States is a $21 trillion-dollar economy and $8.3 trillion comes from compensation, doesn't that mean the rest of our $21 trillion comes from investments? If the government needs more revenue what do you think they will do to tax rates on investments? Remember, they need the money.
Finally, we have had an almost 11-year economic expansion from 2009 to the present. When the economy finally pays the price and we have an economic catastrophe, what do you believe will happen to the numbers in this chart? Won't they go down? Won't that put more pressure on the government to raise taxes on anyone with compensation over $100,000?
I share this chart with every prospect and customer: Young and old, rich and poor. I want them to understand the important role they play and how unevenly distributed the responsibility for revenue is divided in our country. 50 percent of Americans or 88 million people pay 97 percent of all the taxes in our country. Please remember, that is during good times. I would ask every wage earner in America to watch out and you have the information from the government itself to prove it. This is a wonderful tool.
I would ask every wage earner in America to watch out and you have the information from the government itself to prove it. This is a wonderful tool.
The next site I want you to pay attention to is www.ssa.gov. That is the Social Security website. Why would that be beneficial to you as an insurance and financial professional? There are 74 million Baby Boomers who turn 65 over the next nine years. By 2029, every Baby Boomer in Americas will be 65 or older. There are 66 million Generation Xers born between 1965 and 1980 and every one of them will be over age 65 by 2045. That means over the next 25 years you will have 140 million Americans who will have to give consideration to Social Security but will know literally nothing about the program. How do we know that? A recent student shared that 97 percent of Americans take Social Security to their detriment rather than their benefit. 97 percent! Wouldn't helping our customers make better choices when it comes to this important benefit make you a vital resource for these 140 million Americans?
Social Security provides a 43-page booklet entitled Fast Facts & Figures About Social Security, 2019. This booklet provides a treasure trove of amazing information for both us as advisors and our customers as recipients. Pages 41 through 43 provide information that I use to inspire people to take action. The information comes from the source. That is why it is so powerful. When you go to www.ssa.gov, if you click on the menu, you will find a plethora of subjects that you can delve into. I would recommend that everyone who wishes to have success in our industry become knowledgeable about Social Security.
I would recommend that everyone who wishes to have success in our industry become knowledgeable about Social Security.
Another really beneficial website is https://taxfoundation.org. This is an amazing web site for clarifying all the inaccurate noise in media about taxes. This site provides information about all the candidates' tax plans. They help clarify the reasons for, and impact of, the tariffs, which are another word for a tax. They explain income taxes, excise taxes, gift taxes, estate taxes and property taxes. They share which states have the least taxes and the most taxes. What if you are in a state with low taxes? Are you safe? Of course you aren't. Governments will need more and more revenue. They will figure out a way to get people in your state to bail out the people in high tax states. We sell tax advantaged products. They are either tax deferred or they can be made to become tax free. If you do not have a reasonable understanding of tax law, you will never be as good as you could have been if you don't understand concepts like triple compounding, interest on principle, interest on interest and interest on the taxes you would have paid if the money was being taxed on an accrual basis. You must understand the difference between a marginal tax rate and an effective tax rate. Marginal tax rate is the highest tax you pay on the last dollar of income you earn. Effective tax rate is the amount you pay on every dollar of income. That percentage is always lower. If people in a 30 percent marginal tax bracket knew they could eliminate their income tax liability on fully taxable money for an effective tax rate of 19.6 percent and save 10 percent on income taxes, do you think they would do it? They won't if you don't know to ask. Isn't the secret to success in our business wrapped around these three words… “Find the Money”? If you can take qualified, fully taxable money and reduce or eliminate the income taxes on the withdrawal of that money do you think people would be interested?
Isn't the secret to success in our business wrapped around these three words… “Find the Money”? If you can take qualified, fully taxable money and reduce or eliminate the income taxes on the withdrawal of that money do you think people would be interested?
Here is a list of several more websites you should examine at your leisure. I know you will find them all useful.
U.S. Government Accountability Office: www.gao.gov
Congressional Budget Office: www.cbo.gov
Office of Management and Budget: www.whitehouse.gov/omb
Peter G. Peterson Foundation: www.pgpf.org
Center for Retirement Research at Boston College: https://crr.bc.edu
Employee Benefit Research Institute: www.ebri.org
U.S. Census Bureau: https://www.census.org
If you use these sites you will have wonderful third-party information from a variety of sources that will help you to inspire prospects and customers to take action. You now have the basic tools you will need.
Before I get started, I want to make something very clear. In the November and December newsletters I am sharing a tremendous amount of bad news or difficult challenges. This is what I want to make clear: AMERICANS DO NOT BUY BAD NEWS: AMERICANS BUY ACCESS TO OPPORTUNITIES. Only use these websites to make your prospects and clients aware that they face challenges. Once the customer becomes aware then immediately focus on the fact that they can be protected from harm and yes, even put in a position to take advantage of what's happening. That is how you inspire people to action.
This is what I want to make clear: Americans do not buy bad news: Americans buy access to opportunities.
Finally, in next month's newsletter I will update the new information using the changed standard deductions and new tax brackets necessary to transfer money from qualified to nonqualified or even tax free investments
Let's get started with this month's sales ideas.
Idea #2: More Social Security Information
Since I included the website www.ssa.gov in the beginning of this month's newsletter, I thought it would be appropriate to include these three articles. We must continue to build our understanding of Social Security so we may help guide our prospects and customers to the best choices for their Social Security benefits.
One of the articles helps explain 10 of Social Security's most confusing rules, such as the “hold harmless” rules. The other two articles are concerned with Social Security's cost of living adjustment.
It has been low and continues to be and will remain low. In fact, according to these articles the Social Security cost of living adjustment has averaged 1.4 percent for the last 10 years. That is certainly less than inflation. Social Security's purchasing power has decreased by 33 percent since 2000; even with cost of living increases. You must be able to explain this information to prospects and customers and inspire them to prepare for serious inflation and the loss of the purchasing power of their Social Security.
Title: Social Security's Ten Most Confusing Rules
www.fa-mag.com/ (Financial Advisor, November 19, 2019)
Title: Where Does Social Security's 2020 COLA Rank, Historically?
www.fool.com (The Motley Fool, November 1, 2019)
Title: 3 Reasons Social Security's COLA Has Been So Pitiful Over the Past Decade
www.fool.com (The Motley Fool, November 8, 2019)
Idea #5: Over and Under Age 65 Healthcare Is a Problem for Most Americans
Healthcare planning is increasing as a concern for overall financial planning for Americans over and under age 65. Many Americans are even avoiding getting treatment because uncertainty over their out of pocket healthcare costs. No matter how much money we make our customers, it will not be enough if they do not have access to quality health care. We are seeing more and more people with high deductibles or numerous co-pays avoiding the care they need to catch illness early or relieve pain issues or control blood pressure. This dramatically reduces quality of life for our customers. Even if we make them quality returns on their money or build better than average income streams for them in retirement, it will all be for naught if they must worry about health care costs for the rest of their lives.
Use these articles to open a discussion about these costs. If you don't sell health insurance, build a relationship with an agent who does. You will become very valuable in the planning process.
Title: Rising employee premiums and deductibles in the US are "leaving millions of families exposed"
https://finance.yahoo.com (Yahoo Finance, November 24, 2019)
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