Business Innovators Radio - Kim Magdalein w/Magdalein Financial-How Social Security Planners of America Helps Advisors Reimagine Social Security for their Clients

Episode Date: November 28, 2023

Kim Magdalein entered the insurance industry in 1985. Opening a private practice in 2001, Kim marketed to retirees by means of seminars. He presented to over 800 audiences in the next seven years, producing $150,000,000 in annuity premiums. Kim left his practice to his two sons in 2008, continuing with a seminar marketing company, that he still owns producing over 17,000 seminars across the nation for financial advisors.Learn More: https://www.linkedin.com/in/kim-magdalein-6ab03817/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/kim-magdalein-w-magdalein-financial-how-social-security-planners-of-america-helps-advisors-reimagine-social-security-for-their-clients

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with this Kim Magdalene, who's the president of Magdalene Financial, and we'll be talking about how Social Security Planners of America helps advisors, reimagined social security for their clients. Kim, welcome back to the program. Oh, thank you. I appreciate you having me on. You're welcome. And, you know, I know a lot of advisors I've interviewed and know personally that talk about Social Security. It's such a relevant, needed

topic. So I'm excited to hear your perspectives on reimagining because that means that you've taken it to a whole other level. So get us started with what is your perspective on what reimagining social security is for clients. Well, let's begin. I had it on my mind. I wanted to kind of talk about it in a way that everybody would understand why we're doing this, why social security in the first place. And some of them are some of these reasons are obvious.

And then there are those that are not so obvious. One is everybody's going to get it. Practically everybody in America is going to get it. It's universally available. It's not something that, you know, is unique. it's unique in the fact that everybody gets it. Secondly, there's a deadline. We mentioned on the previous broadcast that they have to make the decision in a period of time.

And even if the decision is to postpone, that's a decision. It's a defined benefit. It's not ambiguous. We know exactly what it is. It gives us a great planning process because we know exactly what the numbers are. It's a logical supplement. An annuity is a logical supplement for it. Of course, AUM can come into play as well.

It's inadequate. It will not fulfill all of a client's needs, so they need an advisor to be able to help them to supplement that. And it has numerous options. So because of that, it can be confusing. It could be complex. That's in favor of us, because when something's confusing to clients, they need advisors to help them get them get through it.

So that's why social security. I've heard it said, when you confuse, you lose, you know, and you're exactly right. If you get too many choices, people tend to shut down and do nothing. Exactly. Well, and your question was, you know, taking it to another level. Well, taxes actually takes it to another level. But what has been done in the past with Social Security actually has not been helpful. I'll give you kind of a history on why Social Security has been, it was successful, and then it became not so successful.

And that's why we're bringing it back the way we are. When it started out, there were options available in Social Security that were really dynamic. And when Social Security administration got the playbook that the advisors were using, well, they changed the rules. And when they changed the rules, they took away a lot of the options that, that advisors could use to get to help the client. So when I discovered a while back, I had mentioned on the previous broadcast, a fellow named Bruce Larson who taught me something about taxation,

I discovered a few things that were amazing, not only the things that he taught me, but by playing with the software, I discovered about two or three items in here that were shocking because it's sort of like, you know, if you don't know the obvious, then it becomes obscure. And sometimes you can look past the obvious.

And when you do, you can make bad decisions. So, you know, that's what clients do. They don't, since they, look, they've never been retired before. They've been putting into Social Security all their lives. But they haven't now, they're taking money out of Social Security. And they don't know how taxes affect that. So if we just use generalities with taxation, we're not held. helping the client make a decision. We have to be specific. And the software helps us to be specific

for them so they can make absolute, correct, and proper decisions about retirement with Social Security. Yeah, that's a good point. You know, also, I think that in the previous talk we had, you were mentioning how you serve your advisors with helping them with messaging and how to be confident and presenting things. So how do you work with advisors and what are some of the key factors they should keep in mind when they're working with their clients? Because I think that, like to your point, what is, you know, not here's a point right in front of us. It's obvious to the advisor, but it's not obvious to the client. So what are some of those key factors that you help the advisors make sure that they're clearly communicating to their clients about security benefits?

Okay, so some of the things, the things that are obvious and simple, they can get, the client can get from ssa.gov, then get it online from the federal website. And those are the options available. You can take your money now. You can take it a little bit later. You can take it a lot later. Take it all the way up to age 70. So those are obvious. But when you are considering adding an IRA, which is going to be a taxable event, typically, then. That changes the dynamics of how you, when you want to take your check. And it depends on how much money you have supplemental or how little you have supplemental. So when those things have to come into play. And for us to believe that the potential client understands and knows what to do with this is not wise for the advisor, they have to assume that they do not know because in most cases they don't, even if they tell you they do because you can ask them,

give me an example of how you think this is going to work. What they come up with is gobbledygook. They don't know. And it's not their fault. It's just, it's a new world to them. And you have to kind of handle them with kid gloves. But, you know, you're the authority. You're the person who's the expert.

So you also have to be pretty firm. And you have to bring up things that are sort of obvious and risk, you know, hurting their feelings and even even insulting them a little bit. But, but that's going to be helpful to them in the long run. Yeah, because it's for their own good. It sounds cliche to say that, but it's like, hey, this is for your own good. So it's going to hurt for a minute. And, but we need to do this so that we can get to to, to there. So what do you do to help advisors understand how to effectively communicate that value of Social Security to their clients? Because I think that too many times people see things in a silo, like, oh, Social Security is an election. I'm going to

to choose this, I'm done, and then now let me start focusing on retirement. Well, they go hand in hand. So what are you doing to help advisors really realize how to effectively communicating value of Social Security in how it impacts retirement? Okay. So Social Security is the base. It could be anywhere from 20% to 40 or 50% of a person's income. And in some cases, 100%. Obviously, the 100%ers are not somebody we can help because they don't have any other supplement to pull from. And, you know, unfortunately, you know, that would be that would be work we couldn't do. But with the people with with extra money, it has to be, it has to be distributed properly because there are taxation windows. And you can get yourself in a position where you're overtaxing yourself unnecessarily.

That's an important issue. Now, we can get in a little bit into the weeds here on a couple of things that might be helpful. But for instance, I can prove with the software that they can earn a significant amount of money in retirement and not pay any taxes at all. I just illustrated one for a potential client that showed that they were going to have an $88,000 income in retirement, which was adequate for them because they had no debt. And they weren't paying any taxes. If they had taken a few.

more dollars out of their IRA, it would have triggered taxation. Now, this was a client who does not like taxes and they made that a huge point in our discussion. I don't like them. I don't like paying them. Can we avoid them in any way? Well, I was able to show them how to do that and stay under the tax, the tax ceiling or tax floor rather. So those are important issues for people. Even with higher net worth clients, Mike, a lot of these higher net worth clients, clients, if they could save a couple of thousand or three thousand or five thousand, you'd think that it wouldn't matter to them. But it does.

You'd be shocked at how much it does matter to them. I literally spoke to someone yesterday that's a affluent, highly successful advisor. And we were talking about that very point that you just said. He goes, let me explain something to you. I literally right now have a penny in my shoe that I saw on the parking lot walking in. I've been over picked up. He goes, I'll pick up a penny. It's, it's money.

So I think you're exactly right. It doesn't matter your net worth. If we can save 1,000, 2,400. Why not? Right. So, you know, so like for instance, part of the seminar is they can use it if they want to. They don't have to if they don't want to. I enjoy using it because it's fun.

But I take a dollar bill. And I hope there's no secret service people. listening in on this because I'm going to tear up that dollar bill, okay? I'm going to talk to them about taxes, inflation, other things like that, bring them all up. And every year, that dollar, you think you own a dollar and you don't. You own a portion of that dollar. You're just holding the difference and you're going to give it to the IRS later. So here's what's going to happen.

I hold a dollar up and I tear the end off the dollar a little bit, just a little bit of it, maybe 5% of it, 10% of it. And I'll throw it on the floor. I had been doing that for a long time. And I had clients who came to me years later and said, the most interesting thing that you did at your seminar is what got my attention is when you started tearing that dollar up. Because that showed me specifically right there. It was a picture on my mind that that's exactly what was happening.

And so, yeah, we get their attention, but it's real. You know, this is not, this is not, you know, something that is not. real. And what people have presented in the past is only, you know, portions of their Social Security check being taxed. But the fact that matter is up to 85% of that Social Security can be taxed. And because of that, we want to reduce that to zero if we can, or at least keep it down. Now, even if it is taxed, guess what? You may not have to pay the tax. So we can show you with the software where if certain things were not available in the tax code, then you would have to pay that tax. But there are options in the tax code that keep that from, keep that from happening.

And we're able to show that to them right there on the screen. You know, when you mentioned tax code and we don't want to get into the weeds, but last I heard the tax code is tens of thousands of pages, right? So it's not like something that the general person, business owner or retiree can go, oh, I'm just going to review that real quick. And I'll figure out what floor, ceiling, you know, opportunities. people just can't do that. So you being able to guide that process is pretty amazing. Well, yeah. And as an advisor, and that's great, it's great. It's great. We just crossed our minds because as advisors, you don't have to know all that. The only thing you have to know is how to use this software because all we're plugging in is income and income sources and deductions. And most deductions are going to be standard deductions because they're not going to have enough in retirement to have an effect on the taxation. they'll use the federal deductions that are allowed. And this year, the federal deductions are actually going up. Right now, it's 277 that you can deduct. It's going up to 30,700, I think. They're over 30,000.

And another tool. So, yeah, all they have to know is literally, you know, a teenager can handle the software. Proof that the software is easy to use is I'm using it. Okay. Yeah. I'm not. So if I can use it, they can use it one of those things. Sorry, I'm taking your, your excuses away from you. But it's really, really simple. Well, I think a lot of people think, you know, like the traditional approach. Well, this age I'm going to claim or I'm going to delay to this. And that's just kind of the scratching the surface.

You've mentioned some innovative strategies and methods. What are some other ideas that people can think of again, without getting into details and specifics? but what are some things that that can give people the idea and the oppression that there's some really creative and legal and ethical, of course, but innovative strategies that can be used so that advisors can guide their clients in this Social Security maze? Okay. So people think of tax strategies as some type of sleight of hand that they're getting it under the radar or the IRS. And if you if you're if you're clever enough and don't get audited, then you can get away with it. Well, you can get away with practically anything if you're not audited. If you're not audited, yeah, right.

If an audit doesn't come around, you know, you're home free. Well, we're not trying to do that in any way, shape, or form. We're looking straight at the situation, and we're showing them exactly what it is without any slight of hand. And as a matter of fact, the developer of this, who is an enrolled agent, that's Bruce, he can't do that. Enrolled agents can go before the IRS, and the IRS just pretty much accepts what they say

because that's what they're trained to do. They're trained to be that accurate. So we're not any slight of hand here. This is simple. I'll give you an example real quick, okay? And I'll ask you this, because I haven't talked to you about this before, and I'll get your reaction to it.

Did you know that an IRA, you can actually take a distribution on your IRA each and every year and not ever have to pay a tax on it. Did you know that you could do that? No, because my thought is IRA is pre-tax money going in at the beginning and at some point when it comes out, you have to be taxed. That's right. So the answer is that's not right. No, I didn't know that. Okay.

You do. There's a certain amount of income you can take in Social Security and from your supplement. IRA that will keep you under the tax window based on the deductions and the way you actually take your income from Social Security. So you can engineer it so that you can keep the taxes under control. Now, of course, if you want the income fine, then you may have to live with some of the taxation. But for instance, you can, at age 70, for instance, you can probably take the distribution or at age 72, you can take the distribution on your required minimum distribution

on up to about $350,000 to $400,000 of IRA, and you won't pay a tax on it. And you'll be able to take those required minimum distributions for the rest of your life and never pay a tax again, if you engineer it correctly. Yeah, that kind of gets back to the phrase properly structured. You know, don't think that you hear this and can go out and do it on your own or Google it. It's got to be properly engineered, properly set up at the right timing, the right amount for your situation.

But it's really neat to hear that these are opportunities because like you tested me, I assumed one thing and that was not the case. Right. And I've got five more bullet points like that that come up in the seminar. Can you imagine being in a seminar and making the statement, how many of you believe that you have to pay taxes on your IRA. Well, everybody's going to raise their hand. Well, what's the old story? You know, everybody's going to have two things you have to do in this world, pay taxes and die. Well, die is really the only one if you engineer it right. Okay. So, and do you want to leave those taxes to your kids? Now, so there's another question. Okay. If I, if I want to get rid of the taxation,

I just mentioned to you there's kind of a ceiling where the amount of an IRA you can take. Is a Roth IRA a good idea or is a Roth IRA a bad idea in conversion? In other words, if I take an IRA and want to convert it to a Roth IRA because I want to avoid the tax later on, is that a good decision to do? I don't know. Okay. I feel it's a trick question, but I'm going to say I'm going to answer yes. I already caught you once. I'm going to say yes.

Okay. All right. Well, see, the answer is almost in all instances, everybody believes that it's a wonderful idea to convert from an IRA to a Roth IRA in order to not have to pay taxes in the future. So they take this blanket idea and say, everything should be done that way. And the fact of the matter is, no, that's not true. Because there are certain situations where you will be able to take a distribution on your regular IRA and not pay a tax on it.

So why would you convert it pay the tax, thinking that you don't have to pay the tax later when on the original IRA, you wouldn't have had to pay the tax in the first place? I showed a client that they had a $250,000 IRA and they wanted to convert it $50,000 a year to a Roth IRA. They were going to pay $35,000 in taxes in the conversion. And I showed them that if they did that,

They were foolish because I could take the distribution on that IRA straight up and not pay taxes on it. They would have sent the IRS $35,000 on the conversion for no reason whatsoever. And their advisor was advising them to do it. Even their tax guy said it was probably a good idea. Yeah. It's all in knowing the code and how to apply it. That's a bullet point in the seminar. Can you imagine how people were.

respond to that. Wait a minute. I was always told. Yeah, well, you were always told wrong. And those kind of questions at bullet points in a seminar sure will increase the chance that you're going to book appointments for the one-on-ones. With the people with money, with qualified money, everybody out there knows what qualified money is, who's listening to this, an IRA 401K, 43B, 457 plan, all those, you're talking about. about taxation. Okay. So it's very important for them to be clearly, clearly understand and have a resource like me as well as even much better, Bruce, to be able to answer some of these questions when you run into it because Bruce is also available to answer the questions on the more complex problems. Yeah. Well, last question is, I know you talk a lot about helping advisors

communicate, what are some of the top level key points on how advisors can simplify the decision making process for their clients to kind of make it a really clear point so that they take that next step? So they make an appointment? Appointment or understanding their steps in security impact for their retirement. I want them to know enough to where they want to know more. So that's what the seminar is designed to do. It's a 45 minute to 50 minute seminar. And it only gives them enough information to wet their appetite and make them want more. It's sort of like salt licks for a for a deer, okay? You put it out.

They come over. They like it. It's tasty. They lick it, but they got to have more now. They want water, right? So they're going to come and get some water at the conference table. And that's where we're going to divulge everything. But in order to do that, we have to have data.

We have to have input from their 1040. last year's 1040. We have to have information from them on their sources of income. So we're going to ask for all that. And we do that at the seminar. And this is one of the, the primary way we do that is I have a form that we hand out. And they're going to give you what's most interesting to them and what's most important to them.

So you're going to be able to make appointments with qualified people. And you will be able to prepare for those appointments in advance by doing, by running software, the software for them and being prepared for the first appointment. And you're going to let them know that, that you're going to that much trouble. It's going to take you a half hour to 45 minutes just to input the data to be able to give them the information they need in order to make a good decision. Excellent. And again, like we've said before, it's the data that helps substantiate the points. And then from there, it's like take the next step.

Let's learn how this applies to you. and these bullet points of did you know, did you know, let's see where we can apply these techniques to help you retire well and preserve as much of your revenue and capital as possible. So Kim, again, it's just been a real pleasure talking with you. What's the best way that someone can reach out and connect with you? Well, they can get a hold of me at Seminarsforless.com. That's an easy way to find my phone number and my email address. They can go to LinkedIn and look up my name, Kim Magdalene. It's M-A-G-D-A-A-A-A. I'm all over the internet. It's easy. I'm easy to find. Just give me an email, send me an email or, you know, also my email when I respond to you, they'll have my Calend Lee link there so they can just make an appointment.

Excellent. Well, thank you so much for coming back on. It's been a real pleasure talking with you, Kim. Oh, it's my pleasure. Thank you. You've been listening to Influential Entrepreneurs with Mike Saunders to learn more about the resources mentioned on today's show or listen to past episodes. Visit www.

influential entrepreneursradio.com.