Business Innovators Radio - Pete Tychsen, President and Founder of Preservation Financial Group Discussing Having a Retirement Income Plan in Writing

Episode Date: November 11, 2024

Pete Tychsen is the President and founder of Preservation Financial Group in Tallahassee.Pete has been helping local residents plan their retirement since 1996 and focuses on the areas of IRA/401(k) distribution, tax strategies, asset protection, and income planning. Pete’s approach has helped his clients:• Avoid needless taxation on IRAs/ retirement accounts• Protect their principal and create a secure retirement income• Avoid unnecessary risks with their retirement assets• Use Retirement Plans to build a lasting legacy for children and grandchildrenPete regularly conducts seminars on a variety of financial topics to groups including Executives, Educators, Government and State employees – as well as to the general public. Pete is author of Retire Worry-Free: Your Guide to A Simpler, Safer Retirement.Pete is an FSU Alumni and lives in the Tallahassee area with his wife LeAnne and their five children, Andrew, Anna, Arden, Christopher, and Sarah. When not working to help secure the financial future of retirees, Pete enjoys involvement at his church, fishing, hunting, and spending time with his family.Investment advisory services are offered through Gibbs Wealth Management, LLC (Preservation Financial Group), a SEC Registered Investment Advisor. Insurance products and services are offered through Preservation Financial Group. Gibbs Wealth Management, LLC (DBA Preservation Financial Group) and Preservation Financial Group, are unaffiliated companies.Learn more: https://www.PFG12.com or https://www.preservationfinancialgroup.comThis interview includes opinions and insights that do not guarantee any specific investment outcomes. Past performance is not indicative of future results. All investing involves risk, including potential loss of principal. The IAR in this interview may benefit from certain products or services discussed. Please consider this potential conflict when evaluating any statements. This interview is for informational purposes only and does not constitute an offer to sell or a solicitation to buy any securities. Gibbs Wealth Management is an SEC-registered investment adviser. Please consult a financial professional for personalized advice.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/pete-tychsen-president-and-founder-of-preservation-financial-group-discussing-having-a-retirement-income-plan-in-writing

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 us Pete Tyson, who's the president and founder of Preservation Financial Group, and we'll be talking about having a retirement income plan in writing. Pete, welcome back to you the program.

Thanks, Mike. Glad to be here. Hey, you know, it's kind of like knowledge is power. Well, knowledge is only potential power. You've got to put it into action. Well, having a retirement income plan is wonderful and nice, but when it's in writing, it kind of brings it to life. It kind of makes it real. It gives you that train track to run on.

So I really resonate with having things in writing. So I'm excited to hear what you have to say. Where do you start working with your clients on when you take, that retirement plan and bring it to life? Well, that's a good question, Mike. Before we kind of jump into that, I'd just like to tell you a quick story that I think is applicable to what we're talking about. And I like to ask people or talk to them about the people that climb Mount Everest, right? And what is actually the goal when people climb Mount Everest? Most people would say, well, it's reaching the top, right? The goal isn't to just reach the top, but to get back home, get to the bottom so you can tell

the story. It's not just about getting there. It's about getting there and then getting back home safely and surviving. And on a serious note, in a recent article I read, there had been about 320 deaths on Mount Everest. And 115 of them happened in the first few hours after they had already reached the summit and started their way back down. Yeah. And if you think about it, 115 people literally stood on top of the earth the highest place you could ever be, and they never got home to tell the story. And obviously, this is very, very sad. And did you know that the Mount Everest record holder says it's not the hike up that kills people,

but the trek down. Because on the way down the mountain, they either fell, collapsed, died of exhaustion, or stopped to rest and mysteriously expired, or went to sleep and never awoke. They put all their effort and planning into reaching the top, but they never fully planned on what was needed to get back down the mountain. Now, Mike, you might be asking, what does that have to do with financial advice or retirement income planning? I like to ask folks, is the point just to get you to retirement or is to get you through retirement? Let me say that again. Is the point just to get you to retirement or is the main point to get you through retirement?

retirement. We can't just arrive at retirement. Go ahead. Yeah, I love that, that two or through. It's kind of like, you know, did you get to retirement? That's at whatever age you are, but you're going to live quite a few years past that age. So what about through retirement? I love that, that wordplay. Yeah. So like I saying, we can't just arrive at retirement. We've got to get through retirement and hopefully have some fun along the way, right? So if we want to make sure that you don't run out of money, then we have to make sure that you have a retirement income plan in writing showing exactly how long each pile of money is going to last and what pile of money to spend next. Then once we have a written retirement income plan, we can discuss how much risk you can

afford to take. And we want to help you properly balance your money between safety and growth. Because if the stock market is down, let's say, for example, 30%, and you draw another 5% to live off, What is that going to do to your accounts? It basically is going to compound your losses if you're taking withdrawals while the accounts down. If you're concerned that you may not make it through retirement, okay, or if you feel that you are taking too much stock market risk, we can help you with a retirement income plan in writing that will help you begin and finish your retirement journey while having some fun and enjoying yourself along the way. You know, you've said enjoy and fun a couple times. I sometimes think that people put off, air quotes, retirement planning until it's too late because it's like, oh, somebody will do that or, oh, I'm sure I'm fine, but they're not. And then when they finally do get around to it, the time crunch is so tight that it does it become fun?

And in reality, it could be and should be fun, but when you do it in the right timing. So I think that's a really neat observation that you're bringing up. Yeah. Some people call it creating paychecks for life. Now, you know, what we often see with many people that we talk with that might be within a few years of retiring or they may already be retired. And many of them don't have, but many of them really don't have a written retirement income plan that mathematically proves there's money, their money is going to last as long as they'll need it. That's the problem. And for many of the folks that we meet with, the biggest concern is, will I actually outlive my money or not?

Now, we don't know how someone retires, at least with any of the problem. real comfort without knowing they're going to be okay. Yeah. They got to be okay financially, right? 100%. Yeah, that's putting food on the table and keeping a roof over you had. Yeah, and you know, recently we met with a couple. I'll change your name to Bob and Mary.

But when we met, they sat down and they slid a stack of papers. And sometimes I have meetings face to face. Sometimes it's through Zoom. It's virtual. We sat down in this appointment, this visit. They slid a stack of papers and folders across my desk and said, you know, Pete, I really don't need you to do anything. I just need you to look through this stack of stuff because I'm going to retire in the next few months and I just want to make sure I'm not missing anything. I said, okay, so are these investments in things you've done yourself?

I asked them. They said, no, we have an advisor and we've had that advisor for more than 10 years and they had a really good relationship. and even on Incation, they did something socially with that advisor. And they reminded me they probably didn't need my help. They just needed me to look things over and give them the okay. So without digging into their stack of stuff, Mike, I just want to ask them a few questions. So I said, so the gentleman that you've been working with,

do you know what his plan is to start tapping into these things here to create paychecks for you here in the next few months when your paycheck stop? and they just sort of gave me a blank stare. They said, what do you mean? I said, well, I'm assuming this stack of things before I really look through it is likely your 401ks, IRAs, and maybe some other investments and savings and things. And do you know which one of these things the current advisor is planning to use first? I asked them to create paychecks for you.

And did he give you a written retirement income plan that shows you exactly how long each pile of money will last before you need to move on to the next pile. Mike, they had no idea what I was talking about. And unfortunately, I see this problem quite often. And it's actually kind of frustrating. You know, these good folks had worked hard for over 40 years to save and invest for retirement. And a few months from retirement, their financial advisor hasn't even sat down with them to go over a detailed written income plan on how they're going to spend these accounts. You know what thing you were mentioning there, Pete, when you were talking, I thought of something. You tend to hear a phrase and think you understand it, but you really don't.

And I think that when people hear retirement income plan, they hear retirement and plan. And they go, oh, yeah, yeah, I need to plan for retirement. But what you're bringing up is, wait, let's pause and underline it highlight and bold and circle the word income. It's not just your retirement plan. It's how are you going to turn on this income stream so that you can, keep the roof over your head, pay for bills, and extract out the money from that retirement savings. So I just think that people maybe could be missing that, you know, and really you need to focus on that income side of the equation. Yeah, exactly.

You know, for them, they had no plan, and this is very common. And more importantly, to me, they hadn't tested any plan in advance to make sure it was going to hold up as long as Bob and Mary would need it. Now, Mike, this is generally not the client's fault whatsoever. I want you to realize that. This isn't something you're supposed to specialize in when you don't do this for a living. But if your advisor who specializes in helping or hasn't even told you where your retirement income is coming from, would you say that's a problem? Yeah. Yeah, I would too, because I've been doing this for many years and I've yet to see someone retire who doesn't need a steady retirement income to do it, just like you were saying.

saying. So what are some of the sources for retirement income? Because in my mind, I hear, you know, like you've mentioned buckets before, like, oh, you need to have money in this kind of an account or that kind of account. But what about retirement income sources? What does it actually look like? Yeah, well, that's a great question. And that actually was appropriate right here because the next thing we talked about is I asked them, I said, so, you know, as I continue talking about their stack to papers and folders on my desk, I kept asking questions. And one of the questions I asked had to do with not just the retirement income plan, like you just said, Mike, but also the risk tolerance in the stock market.

And I said, well, Bob and Mary, with you being just under a few months from retirement, how much of all this stuff here would you be comfortable in losing? In other words, how much of this could you afford to lose? And they looked at me sort of puzzled and said, well, we don't know what you mean. I told them, well, I'm assuming at least some of this stuff here is in the stock market, right? You know, it's invested in 401ks, IRAs, maybe some mutual funds or stocks and things. So I'm just curious, how much of this stuff would you be comfortable losing with you being this close to retirement? And they said, they both looked at me like I was a little crazy and they said, well, we don't want to lose any of it.

I said, well, hey, Bob Murray, I completely understand what you're saying. but whenever you have money in the market, you have to be okay with some percentage of risk. So I'm just asking what percentage would you be comfortable losing if the stock market were to take a big spike down? They thought for a few moments, and they said, Pete, we think about 8 to 10%. We would not want to lose any more than that

since we're so close to retirement. I said, would it be okay with you if I was to review all of this stuff to see how it's actually positioned right now. That way we can make sure you're not taking on any more risk in the market than you feel comfortable with given that retirement is just around the corner for you both. They both agreed. They thought it would be a good idea, smart idea to check things out. Now, Mike, I feel that running these financial tests, actually it's called a financial audit is what we call it. It's kind of like taking an x-ray of your financial accounts to tell us exactly.

how they're performing, how much risk you're taking, and how much fees you're paying. So my team and I reviewed all of Bob and Mary's investment portfolio and retirement accounts, and here's what we found. They had approximately 74% of their assets exposed to stock market risk just a few months prior to Bob's retirement party. They both said they couldn't tolerate more than 8 to 10% loss, more than an 8% to 10% loss. yet they had 74% of their money exposed to potential loss in the market. And they needed that money to provide income for them. So Mike, we see this time and time again,

and it frustrates me to think that couples who have worked their entire lives to save retirement don't have someone checking to make sure what their actual risk tolerance is and how long their money will last. You know, any time that you assume that, oh, I'm good. that's the time when someone comes in from, you know, maybe a fresh perspective and runs that audit or that analysis or that stress test on whatever that it is. We can talk about audits or analysis in any area of our life. And I feel like life examined is really, really a powerful thing to make sure that you give that peace of mind. I love that example of your audit because they're going, oh, well, we need to have no more than 8 to 10% at risk, but yet they've got 74% at risk.

So without getting into details or recommendations or anything, what were some of the things that you started to lay out for them to consider after then that point was made? Well, can I just go over a question I like to ask people first before I do that? Oh, yeah. Okay. I don't know if you've been, Mike, but I like to ask people, have you ever been on a cruise before? And a lot of people have. Yeah, a lot of people. I've been also.

And I always like to ask people, what's the first thing that they make you do after you board the ship? you remember what you do? After boarding a cruise ship, passengers typically go through a five-step safety meeting. I'll just go over in real quick because it's really applicable to what I'm talking about. And the crossover of the analogy, I think, makes sense. But the first thing that make you do is a mustard drill. This is mandatory safety briefing where passengers learn about emergency procedures and location of life jackets. They go through safety videos to make sure they outline important safety information. They go through a life jacket demonstration. Crew members demonstrate this often putting one on you so to make sure you know how to use it. Number four, they go over

emergency exit and routes. Number five, communication of safety protocols. So passengers are informed about the ship's safety policies for both weather, fire, and other emergencies. I mean, all these procedures in place that you practice before you actually go on the crews are so important. These procedures are designed to ensure that all passengers are aware of safety protocols and can respond appropriately in case of an emergency. Now, Mike, if it makes sense is what I like to ask people or tell them, if it makes sense for people to go through a thorough five-step safety meeting before a cruise to protect them over the next seven days, shouldn't people at a minimum have a retirement income plan in writing before they retire in order to protect them for the next 15? or 25 years? Well, of course, I would say yes.

And then you would say, yeah, you need to have it more than just in writing. It needs to be tested, analyzed, audited, and verified, and all of that that you're saying, because just having some income plan, it might not be the right one. So like what we were saying before about, you know, perfect practice. That's kind of where it's at. But yeah, I love that analogy. Yeah. So, you know, you can also break it down into three steps.

you're asking me, well, Pete, can you tell me a little more detail of what that is? So let me tell you what it is. Let me tell you what it does and let me tell you what it means. Okay. So what a retirement income plan in writing is, it is an in-depth review of your various retirement income sources, okay? That might be, you know, everything that you get as income. Now, what this retirement income plan does for you, it tests your income sources prior to retirement, or even during retirement to see if folks will run out of money prematurely before they pass away. What this analysis means to most people, Mike, is we can't, first of all, we can't help everybody with this, but we can help a lot of people if we look at it early enough. But for many folks, when we've completed our retirement roadmap process and gone through this retirement income plan,

they will have a completed written retirement income plan in their hands, and you can officially stop wondering if you'll outlive your money and instead rest in the knowledge that we've mathematically tested your strategy and proving your money will last as long as you'll need it. In other words, you can put that concern to bed and get back to the things you've wanted to do all these years. Just imagine what it will feel like not to wonder about that again. Yeah, that's huge.

and I would also probably say that you would agree with this, of course. You don't just check the box and go, I've got the plan check. It's in writing, check, and then leave it and hope for the best. You got to make sure that every six to 12 months, like you said previously, double check. Let's do a quick little annual review or every six-month review and make sure that those suppositions that we put in there are still viable because you never know what can change. markets can change, inflation can change taxes, just make sure the plan is right in place. But having that written plan in place, boy, that's a peace of mind there that you're delivering to your clients.

Yeah, absolutely. So let's wrap up. Any final thoughts on having that retirement income plan in writing? Yeah, I would say, you know, folks don't have to do it through me, but if they need some help, let me know. But make sure somebody is sitting down with you, whether it's been an advisor you work with for 10 or 20 years or someone that's going through the details of telling you, what are you going to spend first, also looking at the taxation of it, how long it's going to last, and what

pile of money are you going to spend next when that one runs out? Yeah. Yeah, exactly. That's a great, great point. Well, if someone is interested. Oh, go ahead. I didn't mean to interrupt you, Mike. Sorry.

And one other thing before I forget, it's also so important if you're married to know what incomes are going to continue to the surviving spouse. You know, 80% or 81% of the time us guys pass away first, let's make sure, no matter if he dies first or she dies first, let's make sure the surviving spouse is going to have enough income and enough income to keep up with inflation. Yeah, that's so true. I've heard that before, that females typically are living longer than males and that needs to be factored into at what age do you want to have your money last through retirement,

like what we were saying, not just to retirement, but through. And if the woman lives longer, you got to make sure that's taken care of and factored in. And some of those calculations might need to be tweaked and polished. So that's a really good point there. Yeah. So if someone is interested in just double checking and making sure that they have a retirement income plan or having that audit done, what's the best? way that they can learn more and reach out and connect with you. Okay, well, they can reach out to us

through our website, Preservationfinancialgroup.com. That's Preservationfinancialgroup.com. Or go to our YouTube channel, which is balanced retirement. Excellent. Well, Pete, thank you so much for coming back on. It's been a real pleasure talking with you today. My pleasure, Mike. Good talking to 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. www.Influential entrepreneursradio.com.