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 March 2024 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.
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March 2024 – 7 Ideas and Views Newsletter by Van Mueller
Please consider this the third installment of the “Find The Money” issues. There will be find the money ideas in every issue of this newsletter from now on AND we will help you to learn the techniques as quickly as possible. It will become vitally important to find the money in the years ahead as discretionary money will be decreasing at breakneck speed because of higher taxes of all kinds, inflation and the American people suffering from stagnant incomes.
Before we get started, I must correct an error I made in the January newsletter. It occurred in the very first example labeled number 1 under the heading of a Married Couple Over Age 65. I must have been drinking too much Diet Mountain Dew and I made an error in my computations.
It offers up, however, two important opportunities that I would be remiss if I did not take advantage of them. I am glad that you will all understand that I still make many mistakes. It is more important to be well practiced at being conversational than it is necessary to be perfect. Your customers actually decide if they can trust you in a few minutes when they meet you and that decision literally occurs in a split second. It is vital that you practice, as much as you can. You endeavor to be AUTHENTIC. Asking questions is the fastest was to show someone you are only interested in them and their opinions. Telling is selling. Asking is advocating.
Asking questions is the fastest was to show someone you are only interested in them and their opinions. Telling is selling. Asking is advocating.
Here is the first of the two opportunities I would like to share with you because of my mistake. A very successful agent out west named Pete Wood discovered my mistake and texted me and called me to talk about it. The discussion we had was beneficial to both of us because he gave me feedback that will be helpful in future newsletters, and I was able to share a couple of additional ideas for using the now corrected information that were not in the newsletter. This information I am about to share is one of the opportunities I spoke of. I am sure there were many of you who discovered my error but did not ask me about it. The ultimate goal for all of us is to learn as many skills as possible to serve our customers and to be able to learn those skills as quickly and efficiently as possible.
The newsletter is not written every month to glorify me. It hopefully takes you and me on a journey of discovery where we all improve our skills exponentially. I want you to challenge the information if you feel it is incorrect. Even better, if you wish to recommend content that you would like to see covered, that I haven’t addressed, please make a recommendation and I will research it and provide useful ideas about the requested subject matter.
Please remember that this monthly newsletter is researched and written to help us all improve our service to the American people as well as dramatically increasing our appointments so that we can help our customers, the American people, “Find The Money.”
I will share the second opportunity after I illustrate the correction of number 1 under the heading of a Married Couple Over Age 65.
Here is the corrected information.
Married Couple Over Age 65
(Assumes $36,000 of Annual Social Security: This is the New Average Social Security for 2024)
| 1. Social Security | $36,000 |
|---|---|
| Standard Deduction in 2023 | $32,300 |
| Total Income | $68,300 |
| How Much is Taxable of the $68,300? | $11,100 |
(In the January Newsletter I Showed $6,300)
A married couple could withdraw $32,300 in addition to their $36,000 of Social Security and only pay taxes on $11,100 in the 10 percent bracket or $1,110.
| Standard Deduction | $32,300 = $0 Tax |
|---|---|
| This is the taxable Social Security | $1,110 Tax 10 percent |
| Total = $1,110 Tax |
This couple could withdraw $68,300 of Social Security and fully taxable money every year for 10 years for a total of $683,000 or $68,300 every year for 20 years for a total of $1,366,000 and pay only $11,100 in taxes in 10 years or $22,200 in 20 years in federal income taxes. That is 1.6 percent effective tax rate.
The number that MUST be given consideration in this example is $68,300. If any of your customers use less than $68,300 that includes their Social Security, couldn’t they withdraw the difference and pay income taxes now at THEIR effective tax rate? If a client has $60,000 of income including their Social Security, wouldn’t it be beneficial to withdraw another $8,300 of fully taxable income if it would only cost them $1,110 in taxes to eliminate the taxes on that money forever? In 10 years removing the income tax liability on $83,000 would only cost $11,100 in taxes. In 20 years, it would cost them $22,200 to permanently eliminate the federal income tax liability on $166,000. Ask your customer, why wouldn’t they want to take advantage of an opportunity like that?
Ask your customer, why wouldn’t they want to take advantage of an opportunity like that?
Now let’s assume we have a retired couple living on $36,000 of Social Security and must now take a Required Minimum Distribution (RMD) of around $11,000. That would be the approximate RMD on $300,000 of qualified money on a 73-year-old. That $11,000 would NOT cause a taxable event. Shouldn’t we ask them why they are not taking an additional $21,300 out of their qualified money over and above the $11,000 RMD? That $21,300 is the difference between their $11,000 RMD and the standard deduction of $32,300 for a married couple over age 65 filing a joint return. Wouldn’t that additional withdrawal only cost them $1,110 in federal income tax? Over a 10-year period if they took their RMD plus the additional amount from their qualified money equal to their standard deduction, wouldn’t it only cost them $1,110 per year or $11,100 over 10 years to permanently eliminate taxes on $323,000. Really, think about all the life insurance and annuity opportunities. Cash value life insurance would easily be the best choice. It is essentially one dollar doing the work of many dollars.
Now, let’s examine the second opportunity I spoke to you about. I am excited to share this opportunity with you because it is a foundational idea that will help you find the money in any situation and under any circumstance.
I want to share with you a process that you can use in any conversation with anyone. If your prospect or client is rich or poor or middle class or they are young or old, you can develop a wonderful conversation with them.
This is very important. I will share a process with you that if you practice enough, you will Always have enough appointments and you will Always have interesting conversations.
This Is A Process!
The process is based on knowing a small amount about income taxes and how to convert Marginal tax rates into Effective tax rates. The examples in the January and February newsletters are only there to help you develop and learn a process. There are hundreds of thousands of examples. There might even be millions of permutations. However, if you understand the process, the calculations are actually quite easy. Instead of giving just those examples, it is important that I help everyone, even my customers learn the process. The goal is to make it ridiculously easy. That is why a process used over and over makes it easy to simplify these conversations dramatically.
Instead of giving just those examples, it is important that I help everyone, even my customers learn the process.
The foundation of the process is based on Federal Income Tax Code.
You must be comfortable going to www.irs.gov. Please click on the heading “Forms and Instructions.” Then, please click on the heading “Form 1040 Instructions.” There are 114 pages. I would print out and then read all 114 pages 5 or 10 times with the ultimate goal of knowing inside and out, pages 32, 34, 109 and 110. The reason you print out ALL the pages is to show customers that those four pages have not been edited for your benefit. They are directly from the 1040 instructions.
HERE ARE THE FOUR PAGES FROM THE 1040 INSTRUCTIONS:
1. Page 32
This page is used to calculate if your Social Security is taxable and how much of your Social Security is taxable.
2. Page 34
This determines the standard deduction for people over and under age 65. Please remember that the standard deduction is how much taxable income you can have before you pay one cent of federal tax. This is tax free income.
3. Page 109
This page shows two pie charts explaining how and where revenue or tax money is taken in and a second pie chart which shows where that money is spent.
The reason I wrote revenue OR tax money is because in the first pie chart it shows that our country borrowed 22 percent of its revenue in 2022. It also shows that 24 percent of all revenue taken in goes to Social Security, Medicare and unemployment and other retirement taxes. That is why there will always be benefits for those programs because they are “pay as you go” programs. They will never completely run out of money. However, if new additional revenue is not created either by borrowing or taxing, benefits could be reduced.
In the “outlay” pie chart, the government shows where the money is allocated, including any interest we are paying on the debt, which by the way, is increasing exponentially. You could actually do an entire sales presentation or conversation as I like to call them, just using page 109. Are the outlays increasing? Where are we going to get the income to support those increasing outlays? Will we get the additional money from people who don’t have money or are we about to begin the biggest transfer of wealth in the history of our country? Ask their opinion. Then ask if they know any ways to prevent the government and the Internal Revenue Service from taking all their money. Ask them what they think they should do.
You could actually do an entire sales presentation, or conversation as I like to call them, just using page 109.
I hope you are beginning to see the wonderful conversations you can have with customers that will inspire them to take action. You will never be a salesperson again.
4. Page 110
This page shows the Marginal tax brackets for single persons and married couples filing joint returns and married couples filing separate returns and finally, Head of Household status.
There are seven brackets. They start at 10 percent and continue to a maximum of 37 percent. This is where the process comes into use. You don’t have to memorize this, although I would recommend it. Just print out those four pages and become comfortable with how they apply to your prospects and clients.
I am going to share two examples in the newsletter. Starting with a couple over age 65, in the hopes that I can encourage you to use the Process to inspire these customers to take action.
Step 1 Of The Process If The People Have Social Security
Always determine if their Social Security is taxable and how much of their Social Security is taxable. You determine that by using Page 32 of the 1040 instructions.
In this example I am going to use a husband and wife who both worked, and each made enough income to qualify for the maximum retirement age and then they both deferred until age 70 which is the maximum deferral age. Their combined monthly Social Security is $9,746 per month or $116,952 per year. They also have $600,000 in an IRA that they must take Required Minimum Distributions of approximately $22,000. Their total income is $139,152. Their taxable income is lower because only 85 percent of their Social Security is taxable. So only $99,409 of their $116,952 of Social Security is taxable. Their taxable income is $121,609. They could withdraw another $5,000 per year from their IRA and buy enough death benefit using a 10-pay life or survivorship policy to pay the income taxes on the $600,000 that their children would pay to inherit the IRA. At 33 percent that would be around $200,000. Let’s take a look at the math in this example.
Taxable Income $121,609 = $10,241 tax
Marginal Tax Rate 12 Percent
Effective Tax Rate ($10,241 ÷ $139,152) 7.36 Percent
The reason the effective tax rate is so low is because $17,500 of the Social Security is not taxable. (15 percent) The standard deduction is $33,200. Together that is $50,000 that has no income tax liability.
Think about this. Without moving your customer out of the 12 percent marginal tax bracket you found $5,000 annually at an effective tax rate of 7.36 percent. That money can be used to buy cash value life insurance that will pay the taxes and probably reimburse the family for the premiums paid. Doesn’t that mean that the family inherits the entire $600,000 IRA without paying one cent of the tax out of their pocket? Isn’t that genius?
Without moving your customer out of the 12 percent marginal tax bracket you found $5,000 annually at an effective tax rate of 7.36 percent.
If that’s all there was, they should start this right now, but it’s even better. Did you know it doesn’t have to go through probate with a named beneficiary? Did you know that this program is incontestable and private? Isn’t it a wonderful benefit to be able to control this money from your grave? Do you know that this money has creditor and predator protection? Finally, are you aware that you can convert this lump asset to an income stream, so you won’t have to spend down to qualify for Medicaid benefits?
Do you know anything else that can do what was are talking about here? Do you have any idea how many people this example would apply to?
One final thing; do you realize that in 40 states there is no tax on Social Security? So, with only $22,000 of taxable income left there would probably be no state income tax on this money. WOW!
Process Step 2
Now, it is important to determine their effective tax rate whether they receive Social Security or not. People in the 12 percent marginal tax bracket or less will always pay single digit effective tax rates. That means less than 10 percent. Knowing that helps you to start a conversation like this. If you could eliminate the taxes on your IRA, 401(k), 403(b) or 457 plan or the gains on tax deferred non-qualified annuities for less than 10 percent while you were alive, wouldn’t that be beneficial for your family and your business? Won’t your family have to pay 30 or 40 percent if you wait to eliminate the taxes on this money after you die?
Here's an example of a couple who are 50 years old and make $124,000 per year in income and have saved nothing for retirement. They decide to put $10,000 per year into a 401(k) at work. Please tell them how wonderful that is. Then ask them if they have ever done the math on that transaction. Would you like to see the math?
This couple’s income is $124,000.
| Their Standard Deduction Is | $29,200 - no tax |
|---|---|
| Their 10 Percent Bracket Is | $23,200 - $2,320 tax |
| The 12 Percent Bracket Is | $71,100 - $8,532 tax |
| Total | $123,500 Total Tax $10,852 |
$10,852 ÷ $123,500 = 8.79 percent
If this couple contributes $10,000 per year to a tax deductible 401(k), they will only save $879 in taxes per year. So, if they save $150,000 over the next 15 years to age 65, they will only receive $13,185 in tax savings. If in 15 years this money would grow to $300,000 which is approximately a 6 percent return, when they die the children could easily pay 25 or 30 or even 40 percent in taxes to inherit this money. Please ask them if it seems beneficial to save $13,185 in taxes so their family can pay $75,000 to $120,000 in taxes later. Then ask them if it could even be higher in the future.
Would it be more beneficial to you first and then your family later if you paid the $879 now and transferred to the future $10,000 per year that could never, ever be income taxed again? Ask them if they know they could do that. Also please ask them how much longer the government will allow Americans to put money into vehicles that they can never tax again. Finally, ask them if it’s true then, that only people who already have strategies and products that allow tax free buildup will be the only people who can keep them. Shouldn’t every one of our customers be allowed to know this information? Let’s make sure we allow them to make that decision.
Step 3 In Process
ONLY ASK QUESTIONS!
The only way to build trust quickly is to show the customer that your only interest is serving them. Isn’t it impossible to do that if you only talk about you, and your company and their products? People will give you an appointment if they like you. They will only buy from you if they trust you.
The process does not take long to learn and is not that hard to learn. The hard part is the practice. Where you have practiced so much that it looks like a common occurrence for you to have these conversations with prospects and clients.
Most of our customers do not buy because they believe. They buy because you believe.
Here are this month’s sales ideas.
Idea #1: Great Conversationalists Are Great Listeners
This information is from a TED talk that discusses the lost art of listening. Being a great listener is more than about talking less.
The article explains something I have discovered and have been sharing with subscribers and audiences for years. Our job, our goal, is not to show people how smart we are, but to help them, our customers, to realize how smart they are. It is shared with us by all sorts of experts that our customers barely remember anything we tell them, however they do remember 100 percent of how we made them feel. Remember our customers decide in a short amount of time if they trust us and it literally happens in a split second. People buy from people they trust!
Title: The lost art of listening
https://ideas.ted.com/ (IDEAS.TED.COM, February 3, 2024)
https://ideas.ted.com/the-lost-art-of-listening/
Idea #2: No Retirement Savings for Almost 60 Percent of Americans
The fact that most Americans have less, and less discretionary income makes this a catastrophic problem in the future We can alleviate this issue in several ways. Here are a couple of ideas.
We sell cash value life insurance. It is one dollar that can do the work of several dollars and it has leverage. Leverage allows you to use the cash value while alive. While the tax-free death benefit replenishes what was used after death.
The second idea is to have a conversation with every grandma and grandpa in America and ask them if they would prefer that the Internal Revenue Service is the biggest beneficiary of their assets or if they would prefer their children and grandchildren to be the biggest beneficiaries?
If you ask about the challenges that their children and grandchildren will face in the future, wouldn’t it be beneficial to make sure their assets stay in the family? This article is a great conversation starter. This works.
Title: Almost 60% of U.S. Adults Don’t Have Retirement Savings, Data Shows. Here’s What Might Happen If You Don’t Build Any
https://www.nasdaq.com/ (Nasdaq.com articles, February 10, 2024)
https://www.nasdaq.com/articles/almost-60-of-u.s.-adults-dont-have-retirement-savings-data-shows.-heres-what-might-happen
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