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 June 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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June, 2019 – 7 Ideas and Views Newsletter by Van Mueller
Before we start this month’s newsletter, I would like to correct two errors that I made in the May newsletter. These errors were identified by two subscribers who took the time to nicely ask if I had shared the information I was trying to share correctly. One agent wrote to me and I incorrectly defended my mistake twice about penalties for Modified Endowment Policies (MEC) withdrawals for people 59½.
Before I identify the corrections, I want to be sure that I clarify several important considerations about this newsletter.
First, I do not write this newsletter every month for me or for you. I write it for us. I am trying to uncover and discuss issues that will inspire our prospects and clients to take ACTION. I am attempting to look at things like long term care and caregiving from every angle possible, so we can have amazing conversations with our prospects and clients about these issues.
I am trying to uncover and discuss issues that will inspire our prospects and clients to take ACTION.
There are so many issues to discuss about taxes and benefits and inflation and volatility and longevity. I am trying to help agents get to a place where they can have intelligent conversations with our prospects and clients without having to do enormous hours of research. As hard as I try not to make errors, I do. Also, some of the matters discussed are my opinions. My opinions are not always in agreement with other peoples’ opinions. Please don’t forget that.
Here’s the point; we are in this together. We are trying to show our prospects and clients how they can stay in control of their financial and retirement futures in spite of the many challenges they face attempting to achieve those goals. The information we share must be accurate and must be used to elicit our prospects’ and clients’ opinions about all the issues we discuss in this newsletter.
So, I want to thank the two people who stayed after me about these two corrections. Thank you for taking your time to enlighten me. Thanks for reading the newsletter.
Here’s the most important point. This is our newsletter. I am just the one who is writing it. When you have questions about the content or how to use the content, you must ask those questions. Those questions will help all of us, including me to do a better job for our prospects and clients.
I am not offended when you believe I have made an error. Professionals never get offended! I am grateful. The more we work together the more powerful we become. This is the punchline. If I haven’t made things clear enough or I have made a mistake or I haven’t discussed an issue that needs to be addressed, please let me know. Please request clarification at vanmueller.com or my personal email, vanemueller [at] gmail [dot] com. Please remember: This is our newsletter. To achieve and become all we can become, we must use all our collective knowledge and wisdom to help our prospects and clients achieve their goals, not ours!
To achieve and become all we can become, we must use all our collective knowledge and wisdom to help our prospects and clients achieve their goals, not ours!
I am grateful to all of you for your help and I look to your continued support in the future. Thank you again to those two agents.
Here is the first and easiest correction to explain. [Editor's note: Click here for our post containing last month's newsletter, referenced in the rest of this paragraph.] At the top of page 4 in the paragraph that begins, “What this shows” the second sentence is wrong. I tried to explain that the 10 percent penalty is on the $840 tax: It isn’t. The penalty is on the $7,000 taxable withdrawal; therefore, the penalty is $700, not the $84 I tried to declare. That made the total tax $1,540 not the $924 I initially declared.
Let me be clear, I don’t believe it harms the idea or the use of the money. It’s still a spectacular idea to use a Modified Endowment Contract. I just explained the rule to you incorrectly.
It’s still a spectacular idea to use a Modified Endowment Contract.
Let’s review: The penalty for a MEC withdrawal for someone under age 59½ is 10 percent of the taxable withdrawal. It is not 10 percent of the tax.
Now, let’s look at the other error I made in the May newsletter. Again, I am close to the spirit of the law, however the numbers I used were 2018 numbers and not the current 2019 numbers. You will also see that the explanation of this information is different in 2019 than it was in 2018, even though the outcome is the same. Doesn’t that sound like government?
The second error I made was at the bottom of page two in the paragraph that began, “You keep seeing me use the word temporary”. In the middle of the paragraph I did a terrible job of explaining the numbers that qualify for long term capital gains. If you would like to check my new explanation, please search “Requirements for Long Term Capital Gains Treatment in 2019” in Google. There is an enormous amount of information available and this is integral to a successful career as an insurance and financial professional.
First, the standard deduction for a married couple under age 65 in 2019 is $24,400. The standard deduction for a married couple over age 65 in 2019 is $27,000. These are very important numbers. Please remember them as we go through this explanation and in all your discussions with prospects and clients. These numbers represent how much taxable income you can earn before you have to pay any income taxes if you don’t itemize. If you do itemize deductions that is the number of taxable income you can earn before you begin to pay any income tax on your federal income tax return.
These are very important numbers. Please remember them as we go through this explanation and in all your discussions with prospects and clients.
In 2018 any income above those numbers is considered to be your taxable income; so, in 2018 if you filed as a married couple and your TAXABLE income was $77,200 or less you paid 0 percent long term capital gains tax. If your TAXABLE income was between $77,201 and $479,000 you paid 15 percent long term capital gains tax. If you made $479,001 or more of TAXABLE income your long-term capital gains tax was 20 percent.
Two important things: First, taxable income is calculated over and above your standard deduction and /or itemizations. Second, long term gains are investments that you have been invested in for longer than 12 months or as we declare 12 months and a day, and they are qualified for long term care capital gains tax treatment. Savings accounts, CD’s, annuities, life insurance gains WOULD NOT qualify for long term capital gains treatment by definition, however they have many other benefits that outweigh the loss of this preferred income tax treatment.
Savings accounts, CD’s, annuities, life insurance gains WOULD NOT qualify for long term capital gains treatment by definition, however they have many other benefits that outweigh the loss of this preferred income tax treatment.
Where can you find this information? Go to www.irs.gov and go to the 2018 1040 instructions. Scroll to page 40 of the instructions and you will find the Qualified Dividends and Capital Gains Tax Worksheet. It will clearly explain these numbers and also how to do the calculations.
In 2019, the numbers are increased in this manner: If your TAXABLE income is $0 to $78,750 you will pay 0 percent long term capital gains tax. If your TAXABLE income is between $78,751 and $488,850 you will pay 15 percent long term capital gains tax. If your TAXABLE income is above $488,850 you will pay 20 percent long term capital gains tax.
Please remember TAXABLE income is above the standard deduction or itemizations. Also, I am NOT including whether someone is responsible for the 3.8 percent net investment income tax because, so few are responsible for this income tax liability.
Finally, this is vital information. That is why I am devoting so much time to make sure I explain it correctly. Think about this: If you are in front of a married couple who live on $50,000 per year of income and they have $50,000 of long term capital gains in their mutual fund, wouldn’t it be advisable to share at the end of a long bull market that they could sell that mutual fund and preserve their $50,000 of long term capital gains and more than likely pay 0 percent in taxes on that $50,000 of gain because they qualify for long term capital gains treatment? Wouldn’t someone with $200,000 of income and $100,000 of long-term capital gains be grateful to realize they could collect those gains even though they are in a high ordinary income tax bracket and they would only pay 15 or 20 percent long term capital gains tax depending on whether they were married or single? Helping people to harvest their gains from this long bull market with little or no income tax liability will make you a hero and provide money for solving many other challenges our prospects and customers face.
Helping people to harvest their gains from this long bull market with little or no income tax liability will make you a hero and provide money for solving many other challenges our prospects and customers face.
My thanks again, to the agents who took their precious time to ask me to verify the correctness of this information. I am hopeful all of you will do the same. After all, don’t we want OUR newsletter to provide the best and most accurate information it can provide.
Now I want to talk about some issues I am becoming increasingly nervous about. Because Americans have such short attention spans, and by the way, that is not a put down, they are missing the message that even the most positive people about our economy are now conveying. Americans are not stupid: They Are Busy! They are overwhelmed with information that has no substance.
They now have to make a determination whether what they are reading, or hearing is even real, or is it fake. Whose vested interests are providing the information? Don’t we even have vested interests to some degree? Isn’t telling selling? Isn’t asking advocating? In this world we now live in, isn’t asking questions that are important and powerful the only way we can truly help our prospects and customers achieve their financial and retirement goals? Can we really protect them if we don’t understand what they want to be protected from? Wouldn’t this all be much, much simpler if all we did was ask questions that would inspire our prospects and clients to share their opinion with us? Wouldn’t they understand better what we are trying to do for them if it was their idea? Why is that such a hard concept to grasp when it is true that we even feel that way about ourselves Isn’t it just common sense?
Don’t we love to buy things? Don’t we hate being sold things? Why do we keep trying to sell products? Why don’t we ask questions that help prospects and customers clarify in their own minds how they’d like to control their financial and retirement futures? Wouldn’t that even be more fun, more profound and more success oriented? Let’s ask great and powerful questions. Remember, our prospects and clients are not stupid; they are overwhelmed by useless information. Become magnificently valuable because you will use your great questions to turn data and information into knowledge and wisdom for everyone you come in contact with. That is truly your role if you really understand what you do.
Become magnificently valuable because you will use your great questions to turn data and information into knowledge and wisdom for everyone you come in contact with. That is truly your role if you really understand what you do.
As you all know, I believe a terrible economic disaster that will be global in nature is almost upon us. The part I continue to be wrong about is when this will happen. This disaster will happen, and now I am feeling much more certain that it will be sooner rather than later. I have a client who is also a friend. Every time I visit with her she tells me that “The Piper Must Be Paid!”
Many mutual fund companies are now sending their customers and their representatives, information about how to deal with a bear market and a recession. I believe they are actually smart to do that. If Americans go through another severe downturn and are not properly warned and they lose 30 or 50 or even 70 percent of their money AGAIN, they will never return to the stock market. Concern for our economy and the global economy is now being offered by almost everyone INCLUDING stock market bulls.
Why don’t I get in trouble with clients if I have been wrong for years about when this will happen? Here’s why: I don’t tell them, I ask them what they believe will happen and build strategies built on their beliefs and not my own. However, I continue to ask with more intensity what they want to happen when this finally happens. Do they want to get out before the market crashes or do they want to wait until it happens to make a move? I share with them some of the information I am about to share with you in the form of a question. I ask, are they aware that this is happening or where will they get the money for this or what if you live longer than you expect, how will you deal with it so it comes out to your advantage rather than hurting you?
Please go back and review the March and April newsletters. There are so many challenges to be faced by governments and corporations and individuals and mathematically they seem almost impossible to overcome. Please remember this. There is no end of the world. The richest people who have ever lived, were alive during America’s Great Depression. We will be able to turn everything that is a challenge into an opportunity if we build strategies and plan ahead. We still do control our own destiny. We must inspire our prospects and clients to feel the same way.
We will be able to turn everything that is a challenge into an opportunity if we build strategies and plan ahead. We still do control our own destiny. We must inspire our prospects and clients to feel the same way.
Let me be clear; the stock market, bond market, commodities market, real estate, gold and silver will crash. This is an everything bubble. Global Central Banks printed $16.5 trillion since 2009. There has been 662 global interest rate cuts. Many of those interest rate cuts reduced the result to negative interest rates.
Corporate debt increases almost mirror the growth of the S&P 500 over the last 10 years. This is an artificial stock market increase. It will not take much for it to cave in upon itself like a house of cards.
Please listen to what some other very reliable analysts are sharing with Americans. Ray Dalio who was recently interviewed on 60 Minutes believes there is a 70 percent chance for a recession before the 2020 elections. Ben Bernanke, former Federal Reserve Chair believes in 2020 Wile E. Coyote is going off a cliff, Alex Greenspan, also a former Federal Reserve Chair believes there will be both a stock market and bond market crash. Jim Rogers a very famous investor believes the next bear market will be the worst in his lifetime. Jeffrey Gundlach of DoubleLine Funds believes there are many issues. The European banking system, corporate and student debt, municipal retiree and healthcare finances all or individually could cause our markets to crash. Martin Weiss from Weiss Research sees serious issues with European banks who are bailed out by their governments on a regular basis and then return the favor by buying massive amounts of government debt. He feels a much more serious challenge will be the “silver tsunami.”
By 2030 one out of every seven people on planet Earth will be over age 65. Where do we get the money for health care, pensions, etc. for over one billion grandmas and grandpas? According to Stansberry Digest, U.S. corporate debt stands at nearly $10 trillion which is 60 percent higher than at the end of the financial crisis. It all must be refinanced. What if it isn’t? What happens?
By 2030 one out of every seven people on planet Earth will be over age 65. Where do we get the money for health care, pensions, etc. for over one billion grandmas and grandpas?
Professor Laurence Kotlikoff believes the real U.S. national debt has now risen to $230 trillion. We will soon see two trillion dollar deficits every year which will increase our debt to $40 trillion by 2028. Interest on the debt will eat up all the money meant for benefits for the American people. According to the World Economic Forum, state, federal and local pensions in the U.S. are short by $7 trillion. Boston College believes 25 percent of U.S. private pensions will go broke in the next 10 years.
So, what can we do? Let’s tax the hell out of the rich. In 2016, 16,000 returns claimed income of $10 million or more. That is out of 150 million tax returns. Those 16,000 returns reported around one half trillion in income and they paid 121 billion in income taxes.
11.7 million returns reported incomes between $75,000 and $100,000. Those 11.7 million returns only paid $108 billion in taxes. Thirteen billion less than the 16,000 taxpayers. Social Security reports that 90 percent of Americans made less than $100,000 in 2017. Does any of this sound like we can tax our way out of this mess? No. Will we try? Of course we will.
Will we try to invest our way out of this? Yes, but even the great stock market bulls believe the stock market will have all it can do to have 4 percent returns over the next 10 years. I have seen many predictions for stocks and bonds in the one to two percent range. Only international stocks are being predicted to have 4 percent average growth over the next 10 years.
Even the great stock market bulls believe the stock market will have all it can do to have 4 percent returns over the next 10 years. I have seen many predictions for stocks and bonds in the one to two percent range.
So, what will happen? We will see smaller growth, an increase in taxes and an ever-increasing desire by global governments to print more money. We must review the following issues with our prospects and clients.
- Taxes
- Loss of Benefits
- Inflation
- Volatility
- Longevity
We must plan. We get into trouble when we don’t plan. Mark Twain has been quoted saying, “it ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
One of my favorite writers is Michael Lewis who wrote Money Ball and The Big Short. In The Big Short Michael Lewis quotes Leo Tolstoy. “The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of a doubt, what is laid before him.”
When the information changes do we adjust? Will our prospects and customers be inspired to take action if we tell them they are wrong, or they do not understand, or will they take action when they reason out for themselves that the current information is not being used appropriately for their benefit? Only questions will help us inspire our prospects, customers and clients to consider taking action they might not have considered previously. That is as enlightening as I can make this information.
Only questions will help us inspire our prospects, customers and clients to consider taking action they might not have considered previously. That is as enlightening as I can make this information.
One final thing before we start the sales ideas. If we are professionals wouldn’t this be easier to assimilate if we had a coach? I just spent time with a man who is very important to my productivity as an insurance and financial professional. Every professional must have a coach. Think of all the greatest athletes, scientists and leaders. They all had coaches and mentors. I am very lucky. On of my coaches and mentors has been Jim Ruta. Jim coaches agents and advisors in Canada and the United States. He has been vital to my continued growth and success as an insurance agent, speaker and writer.
Here’s an example of what he does for me. I take in so much information it actually becomes overwhelming and disorganized. Jim immediately helps me to organize my thoughts and ideas. Instead of being scattered, I am focused and that makes me a more powerful presence. We all need coaches and mentors: Especially me. Please think of it this way: If you could pay $2,000 per month and it would help you make $20,000, $40,000 or $60,000 per month extra would that be an expense or an investment? Make an investment in you career. Call or email Jim and see how he can help you increase your production quickly and efficiently. His phone number is 1-905-333-8882 and his email is support [at] @jimruta [dot] com.
Let’s get to our first idea.
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 #1: What Is the Best Age to Take Social Security?
Do you know that only one of every 10 Americans knows how to maximize their Social Security benefits? It is a great question to ask to get appointments. “What is the best age to take your Social Security?” I get so many appointments asking that question.
Listen to this: Because Americans are living longer the best recommendation in these articles and many websites and many studies is to defer until age 70. That will increase your Social Security by 32 percent if your full retirement age is 66. It will increase your Social Security by 24 percent if your full retirement age is 67. These articles will help you develop a discussion that will help our prospects and clients maximize rather than minimize this very important retirement benefit we call Social Security. This is a benefit that must be optimized. For many Americans it may be their only retirement income. We must help them discover all they can about their Social Security benefits.
Title: Best age for Social Security retirement benefits
https://foxbusiness.com (Fox Business, May 9, 2019)
https://www.foxbusiness.com/personal-finance/best-age-social-security-retirement-benefits
Title: 9 in 10 Americans Don’t Know How to Maximize Their Social Security Benefits
https://www.fool.com/ (The Motley Fool, May 18, 2019)
https://www.fool.com/retirement/2019/05/18/9-in-10-americans-dont-know-how-to-maximize-their.aspx
Idea #3: Milliman Medical Index
This is not an article. This is information I would like you to do a Google search for. The new information comes out every year at the end of May or early June. This information inspires easily 30 percent of my sales.
Please do a Google search for “Milliman Medical Index.” It will show you the cost of healthcare every year for a family of four from 2002 to the present.
In 2002 that number was $9,235. In 2010 that number was $18,074. Last year that number tripled in 16 years to $28,166. If it triples again in the next 16 years that number will increase to around $85,000 per year. I show Generation Xers and Millennials what kind of money they will need for healthcare in the future.
I inspire every grandma and grandpa in America to take action sharing this information. I show them that their money won’t be wasted. It will be used to provide healthcare to their children and grandchildren. Then I show them how using life insurance, they can use all their money for themselves while they are alive and replenish what they started with when they die. If they don’t need their money while they are alive they can leverage and create a larger amount of money for healthcare and retirement income for their families. They can keep their money in their family. Please ask this question of every grandma and grandpa in America; “If I could show you a way to stay in control of your money until you take your last breath, but instead of giving that money to the government, nursing home or hospital, you could keep that money in the family for generations to come, at the very least wouldn’t you want to know how to do that?” People don’t buy life insurance. They buy what it does. This gives them a concrete reason to take action.
Title: Google: Milliman Medical Index
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