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 August 2017 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.
August, 2017 – 7 Ideas and Views Newsletter by Van Mueller
This month's newsletter will discuss so called “entitlements”. These include; Social Security, Medicare, Medicaid, The Affordable Care Act (Obama Care) and a few others. We will talk about why they are so important to your success as agents and advisors. Having a wonderful knowledge of these programs will allow you to ask powerful questions that will inspire prospects and clients to set appointments with you.
Asking more detailed questions about these “entitlements” will allow you to have more success when you are participating in those appointments.
These programs are experiencing serious financial difficulties and face enormous challenges that will require major adjustments if these programs are to survive with some semblance of their current structure.
The reason I chose this month to do this is the Trustees for Social Security and Medicare just released their annual report. This report was usually provided in May. But as the news became worse and worse the report appeared later and later. The calculations are not difficult. I believe they chose to release this report when many Americans are on vacation and not paying attention as they normally might. That is why it is released in the summer every year now.
Why do I call Social Security, Medicare, Medicaid and the Affordable Care Act, etc., so called entitlements? Because no one is entitled to them. No One!
The constitution prevents the government from infringing on individuals' rights. The Constitution does not grant rights. The Declaration of Independence said individuals were endowed with certain unalienable rights which include: Life, Liberty and the pursuit of happiness. Rights are not given in the constitution. The Constitution is written to prevent infringement of individual rights by government. This is backed up by the 1937 Supreme Court Ruling on Helvering vs. Davis. Our Supreme Court ruled the Social Security isn't a contributory insurance program. Both the employers and employees Social Security taxes will be paid to the US Treasury like any other revenue and WILL NOT BE EARMARKED IN ANY WAY. It is completely legal for our representatives to use FICA taxes in any way they choose. Doesn't that make Social Security really a welfare benefit? Doesn't that make FICA taxes a payroll tax and not a pension contribution? The law, ruled upon by the Supreme Court backs this up.
Why should you be enthralled rather than in despair about these numbers and this information? As insurance and financial professionals you will be able to ask prospects and clients about this information. You will ask them if they should trust the government to keep their promise to provide these benefits or would it be somewhat smarter to assume they won't plan for that and consider it icing on the cake if they somehow find a way to keep their promises.
You will ask them if they should trust the government to keep their promise to provide these benefits or would it be somewhat smarter to assume they won't plan for that and consider it icing on the cake if they somehow find a way to keep their promises.
Here's a few more numbers I hope you will find inspirational for your careers.
The new Trustee's report showed that 171 million Americans paid into the Social Security program in 2016. There are currently 61 million people receiving benefits. That means there are less than three people paying for every one person who is receiving benefits. The US Bureau of Labor Statistics says the fastest growing demographic in our country by 2024 will be people over age 65. We will have between 80 million and 100 million recipients by 2030. By 2030 we will be very close to having two taxpayers paying for every one recipient of benefits. Obviously, this is not sustainable.
The recipients of Social Security and Medicare will not allow their benefits to be tampered with too much. They hold enormous power as a voting bloc. Doesn't that mean revenues will be reduced in many other areas of services provided by the government? What areas will those be?
The sales Idea section of the newsletter will have articles about Social Security, Medicare, Medicaid and the Affordable Care Act to help you build powerful conversations that inspire prospects and clients to take action.
I have one more question about Social Security. If peoples' life expectancies continue to rise, will the math for Social Security get better or worse? If we have another economic downturn, will Social Security become bankrupt sooner or later? Won't Americans be dealing with all of these issues in the 2020's and yes, maybe in even less than a decade?
If peoples' life expectancies continue to rise, will the math for Social Security get better or worse?
This is the greatest and most important time ever for insurance and financial professionals. Every American, young and old, rich and poor will need our advice. Don't assume they know that. Ask them the questions you learn in this newsletter.
Social Security is actually the easiest so called entitlement to fix. Ten years ago it would require only small adjustments to guarantee the program to the end of this century. Now, because they didn't take action, Social Security will be much more difficult to fix. It will still not be as difficult to fix as Medicare, Medicaid, and the Affordable Care Act. Those require enormous and unbelievable adjustments to maintain their fiscal viability.
Let's talk about Medicare. There are 57 million beneficiaries. Eighteen percent or almost one out of every five people in our country are on Medicare. By 2030 those will be at last 80 million people on Medicare or close to one out of every four Americans. Pretty soon the whole country will look like Florida. Please remember that 70 percent of the Baby Boomers retire between 2022 and 2029.
The unfunded liability for Social Security is around $15 trillion. The unfunded liability for Medicare is around $100 trillion. Medicare is predicted to go bankrupt in 2029. If we have an economic downturn that date could move up to less than a decade from now.
Medicare is predicted to go bankrupt in 2029. If we have an economic downturn that date could move up to less than a decade from now.
This problem is amplified by life expectancy. When Medicare was enacted in 1965, the actuarial life expectancy of an American was 70 years old. For men reaching age 65, that life expectancy is now age 86 and for women reaching age 65 their life expectancy is age 88. The program was not designed for people to live that long. The success of Americans over age 65 having access to quality health care has created an economic disaster that no one in government seems to want to take on.
Last month's newsletter shared information that current retirees are facing between $400,000 to $600,000 in healthcare cost during their retirements. That will essentially consume all of most people's Social Security for healthcare costs. Ask them what they will use for food, clothing and shelter.
If healthcare costs inflate at the rate of 6 percent, which is a very low rate for healthcare, they will double by 2029 which is the last year the Baby Boomers turn age 65.
The amount of money necessary to deal with all these issues is astonishing. Shouldn't we ask our prospects and clients if they would prefer to take their retirement planning into their own hands?
Don't you see how valuable and important you are becoming in our country?
Don't you see how valuable and important you are becoming in our country?
Now, let's talk about Medicaid. There are currently 77 million beneficiaries of Medicaid in a country of 323.1 million people. That is 23.8 percent of every person in America is on Medicaid. That is one out of every four people in our country. Next time you are on a street corner with three other people it is likely that one of you is on Medicaid. This is simply unsustainable. I haven't gotten to the Affordable Care Act yet, but think about this. If you understand these statistics very few people in our country have any money. Only 10 percent have more than $100,000 in assets. When the government needs more money, more revenue in the future will they get that additional revenue from the 90 percent who don't have any money, that they are supporting, or the 10 percent who do have money? If you are one of those 10 percent, how do you feel about that? Are you okay with the government coming to take away from you and your family and your business or would you prefer to stay in control of your income tax liability? Then ask if your prospect or client thinks the government is stupid? They will laugh, maybe make a joke, but then ask again if they think the government is stupid. Aren't they aware that we have tools that allow you to pay your taxes now when they are historically low and transfer money to the future, INCOME TAX FREE, when taxes will obviously be much higher? How long do you think they will allow us to have products like that? Isn't it also true that only people who have those products before the government changes them will be the only ones allowed to keep them? Won't the government be acting on this soon? Shouldn't you beat them to the punch while you still can?
The mistake we all make as insurance and financial professionals is that we believe all of our prospects and clients are aware of this information. The reverse is true. None of them have heard about it, are thinking about it or have given ANY consideration to this information. That is why you become so important. If you ask prospects and clients about all of this you instantly help them become aware of something their own common sense says they should be giving consideration to.
You all have great power and very few of you are aware of the tremendous power that you possess. We inspire people to take action by helping them to use their own common sense to reason out what is the best course of action for them to have successful financial futures and successful retirements.
You all have great power and very few of you are aware of the tremendous power that you possess.
Should our prospects and clients build gigantic piles of untaxed money for the government of the future to ravage or should they build a gigantic pile of money for themselves and their families that will never be income taxed again?
Should they continue to have all their future benefits reduced or should they create easy ways to replace lost benefits?
Should they allow inflation to destroy the value and purchasing power of their money or should they build strategies that allow them to use inflation to their advantage?
Will they allow every time there is a market crash to destroy what they've grown or will they employ ways to first not be hurt by those events and then, yes, actually take advantage of them?
Finally isn't the biggest enemy and the number one goal of all retirees LONGEVITY? We all want to live a long, healthy and prosperous life, but doesn't that longevity create much pressure on all the previously discussed issues?
Ask your prospects and clients these questions. If you retire at age 65 and die at age 70 will we have any problem planning your retirement? However, if you retire at age 65 and live to age 95 and run out of money at age 72, what kind of retirement will you have? Isn't age 72 the new age 52? Don't 72 year olds still have wonderful and active lives? What will that be like if you don't have any money? Please be sure to ask these questions.
Finally, before we start with the sales ideas, let's talk about the Affordable Care Act which is known as Obama Care and has been in all the news lately. Because the Senate was unable to repeal Obama Care and that program was already was having difficulty, it will face even more challenges. It is almost certain that President Trump will take two actions which will surely cause the demise of Obama Care.
It is almost certain that President Trump will take two actions which will surely cause the demise of Obama Care.
It is highly likely he will direct the Internal Revenue Service to not enforce the rule requiring everyone to have health insurance. If people don't have to buy insurance, more and more will chose not to. That means sick people and the old people will become a larger portion of the insurance pool and that will almost surely drive rates up exorbitantly.
Our president will also stop paying extra money to the insurance companies under Obama Care because this portion of the bill was not passed in the house; Republicans claim doing that is illegal anyway. Courts have agreed with them. The Solicitor General who is appointed by President Trump will agree with both the President and the courts and nullify the provision. When those subsidies end, every insurance company in America will pull out of Obama Care leaving nobody to write insurance.
Americans will really have no good choices. Americans will see their premiums rise dramatically and there won't be any companies willing to write new insurance. THIS WILL BE AN ENORMOUS MESS!
Please use this information to ask, not tell prospects and clients what will happen and what they think they need to do to be okay.
Please use this information to ask, not tell prospects and clients what will happen and what they think they need to do to be okay.
I repeat, it is so spectacular to do what we do. There are no prospects or clients who understand the scope of what is about to happen. They will adore you. They will welcome you into their families if you have asked them to take action about something they have no inkling about, before it happens.
These issues are all door openers. They are all appointment getters. They are all sales makers. They work. They only work if you ask prospects and clients about them.
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We're passing on two of the newsletter's monthly sales ideas - every issue of the newsletter contains 7 ideas, plus one idea for the Canadian market. Subscribe to get them all.
Idea #4: When Should You Take Social Security?
What is the break even age for taking benefits? Should you take benefits early at age 62? Should you take benefits at full retirement age 66 or 67? Or, should you wait until age 70 to maximize your monthly income for life?
I am including four really well written articles and they have different answers. One says maybe early. One says maybe full retirement age. One says maybe you should wait until age 70. ALL OF THEM AGREE: there is no right answer. The answer is different for every prospect and client we talk with based upon a multitude of factors that include family longevity, current health, need for the income and many others.
I get loads of appointments asking everyone, please hear me, EVERYONE, what is the best age to take Social Security?
If they say 62, I ask, what if they live to 95? Didn't you lose out on hundreds of thousands in lost benefits? If they say 70, I ask, what if you die at age 62? Remember the average age of death of males is America is 57. Didn't you lose out on hundreds of thousands of benefits? Then ask, do you have a strategy to maximize rather than minimize your Social Security benefits? If I could ask you a series of questions that would allow you to clarify what would be best for you and your family could you find me 45 minutes in the next week or two? There is no cost or obligation for this service. Would Tuesday at seven be okay?
Examples of questions would be, are your parents still alive? How old are they? If they are not alive how old were they when they died? Are you in good health or can you live off other income if you deferred taking your Social Security later? I think you get the drift. This is the hottest thing in the industry for getting appointments. Don't study this information. Practice it!
One more thing: One of the articles does a mathematical calculation of taking Social Security at age 62, 66 and 70 and then living until age 76, 80 or 90. Here are the results.
| Age | 62 (Retirement) | Live to 70 | Live to 80 | Live to 90 |
|---|---|---|---|---|
| 2141 Mo | $465,000 | $623,000 | $1,095,000 | |
| 66 (Retirement) | ||||
| 3209 Mo | $477,000 | $689,000 | $1,326,000 | |
| 70 (Retirement) | ||||
| 4646 Mo | $422,000 | $700,000 | $1,532,000 |
THAT'S THE MATH! AMAZING!
Title: Retirement: Figuring your Social Security break-even age
www.chicagotribune.com (Chicago Tribune, June 7, 2017)
http://www.chicagotribune.com/business/sns-201705181536--tms--kplngmpctnkm-a20170607-20170607-story.html
Title: Don't Need Your Social Security? 1 Reason Why You Should Claim It Anyway
www.fool.com (The Motley Fool, June 12, 2017)
https://www.fool.com/retirement/2017/06/12/dont-need-your-social-security-1-reason-you-should.aspx
Title: What's Better: Claiming Social Security at 62 or 66?
www.fool.com (The Motley Fool, July 11, 2017)
https://www.fool.com/retirement/2017/02/11/whats-better-claiming-social-security-62-or-70.aspx
Title: How a college degree is like a Social Security check
www.marketwatch.com (Market Watch, July 28, 2017)
http://www.marketwatch.com/story/how-a-college-degree-is-like-a-social-security-check-2017-07-28
Idea #5: Women Must Understand How to Maximize Benefits
Why should women care about Social Security benefits? They are still discriminated against in our society. It is not as intentional as it once was, however these facts diminish their Social Security and pension benefits.
They are caregivers of our children and they are usually the caregivers of their parents: Both take them out of the workforce. So, even though they have a longer life expectancy for the most part, they receive lower Social Security and pension benefits.
This article is important because it identifies five things women should be considering and it also gives you common sense talking points when discussing retirement with women prospects and clients.
First, they should understand the lifetime value of their Social Security benefits. What is their breakeven point?
Second, what value will be provided by extra paid and counted work? Maybe a little extra work will provide a substantial amount of additional benefits.
Third, do they understand the value of spousal and survivor benefits?
Fourth, do they understand how much impact the husband's claiming decision will have on their benefits?
Finally, are they aware of the rising costs of Medicare and healthcare in retirement?
These issues created the foundation of a quality discussion with your female prospects and clients about why they should do everything they can to maximize Social Security benefits.
Title: 5 Things Women Need to Understand About Social Security
www.linkedin.com (Linked in, July 13, 2017)
ttps://www.linkedin.com/pulse/5-things-women-need-understand-social-security-mark-brown
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