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CPA Financial Planners Say Clients’ No. 1 Concern is Outliving Their Money

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Apr 9th 2015
Staff Writer and Editor AccountingWEB
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CPA financial planners say their clients are most worried about outliving their money in retirement, according to the results of a new survey from the American Institute of CPAs (AICPA).

The AICPA polled 548 CPA financial planners, many of whom work with high-net-worth individuals, for its Personal Financial Planning (PFP) Trends Survey. Fifty-seven percent cited running out of money as the top retirement concern for their clients, followed by uncertainty on how much to withdraw from retirement accounts (14 percent) and healthcare costs (11 percent).

When it comes to their clients’ concerns about outliving their money, the financial planners who responded to the survey said healthcare costs (76 percent), market fluctuations (62 percent), and lifestyle expenses (52 percent) were the primary issues. Other causes of financial stress were unexpected costs (47 percent), the possibility of being a financial burden on their loved ones (24 percent), and the desire to leave inheritance for children (22 percent).

“With all of the financial uncertainty surrounding retirement, running out of money is directly tied to a number of issues that high-net-worth clients are juggling simultaneously,” Lyle Benson, CPA/PFS, chair of the AICPA PFP Executive Committee, said in a press release. “To help alleviate their clients’ longevity concerns, CPA financial planners integrate tax-planning strategies to maximize income in retirement. This approach considers a client’s current situation and anticipates their lifestyle spending in retirement to ensure they stay on track in the event of an unexpected life event.”

The survey results show that unexpected life events are definitely having an impact on retirement planning for many clients. Such issues include:

  • Long-term healthcare concerns (impacting 42 percent of clients)
  • Caring for aging relatives (28 percent)
  • Diminished capacity (26 percent)
  • Divorce (18 percent)
  • Job loss (18 percent)
  • Adult children returning home (18 percent)

When asked about client experiences now compared to five years ago, CPA financial planners reported increases in clients being unexpectedly impacted by long-term healthcare concerns (59 percent), taking care of aging relatives (43 percent), and diminished capacity (39 percent).

“The PFP Trends Survey found that the issues impacting retirement planning are constantly evolving, underscoring the need for a sophisticated financial plan that changes with a client’s situation,” said Jeannette Koger, CPA, CGMA, AICPA vice president of member specialization and credentialing.

According to the survey, some of the strategies planners are currently using with their high-net-worth clients include:

Lifestyle. Helping clients understand the impact of their lifestyle spending and implementing a plan that balances their current income level and asset base with their retirement goals.

Health care. Working with clients to understand their Medicare and insurance options so they can better plan for potential healthcare costs they might need to cover.

Living situations. Identifying strategies, such as the use of continuing care retirement communities, to both control costs and save on taxes.

Tax savings. Coordinating Roth conversions with IRA-required minimum distributions, investing in assets with a lower tax rate, and maximizing Social Security income.

Diversity. Mitigating the effect of market fluctuations with proper asset allocation, bucket strategies, and use of single premium annuities.

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