Outliving Savings Is Top Retirement Concern

Americans fear that health care costs, inconsistent returns and lifestyle expenses will drain their savings.

More than half (57%) of Americans say their biggest fear about retiring is that they will outlive their savings, according to an American Institute of CPAs’ survey of their CPA financial planners, many of whom work with high-net-worth investors.

Asked what could be the top three reasons their clients’ savings will run out, the planners first cited health care costs (76%), market fluctuations (62%) and lifestyle expenses (52%). Planners also cited other reasons their clients could suffer stress in retirement:

Unexpected costs (47%);
Caring for aging relatives (28%);
Their own diminished capacity (26%);
Being a financial burden on loved ones (24%);
The desire to leave an inheritance for children (22%);
Divorce (18%);
Job loss (18%);
Adult children returning home (18%); and
Uncertainty about how much to withdraw from retirement accounts (14%).

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“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,” says Lyle Benson, chairman of AICPA’s Personal Financial Planning Executive Committee. “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.”

Retirement planners need to approach their clients with a sophisticated strategy customized to their specific needs, adds Jeannette Koger, AICPA vice president of member specialization and credentialing. “AICPA’s Personal Financial Planning Division is dedicated to offering our members tools and up-to-date guidance and resources, so they can continue to meet the complex needs of their clients.”

This approach includes helping their moderate their lifestyle expectations, selecting the right Medicare and insurance options, possibly moving to a continuing care retirement community, investing in assets with a lower tax rate, maximizing Social Security benefits and diversifying their portfolio.

The survey was conducted among 547 CPA financial planners between February 3 and February 28.

ABG Southwest Is New Retirement Services Unit

The certified public accounting and business consulting firm REDW has created Alliance Benefit Group Southwest, a separate company for retirement plan recordkeeping and third-party administration (TPA) services.

Alliance Benefit Group Southwest (ABG-Southwest) was formed as a sister firm to focus exclusively on providing retirement plan administration services. The change took effect earlier this year, when all REDW team members in the group transitioned to the new organization. Its name derives from the group’s established participation in Alliance Benefit Group, a nationwide network of independently owned retirement administration firms.

The creation of a separate company allows the firm’s current clients to access dedicated services that meet the needs of retirement plan sponsors and plan participants, says Carol Cochran, REDW principal and head of ABG-Southwest.

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According to Dennis Davis, senior manager of ABG-Southwest, the independent, standalone firm ensures continuity of service to its clients by the same team of professionals, some of whom have been with REDW for more than two decades. It also enables the creation of program enhancements and of services, he adds.  

The power of the Alliance Benefit Group brand is evident in REDW’s move, says Don Mackanos, president of Alliance Benefit Group. “As the need to retain and attract top talent becomes increasingly more critical, ABG-Southwest is the firm companies want to have on their side,” he says.

Cochran states that the company is not the result of a merger, acquisition or other change in ownership. “This name change does not affect the accounting services offered by REDW,” she says. “We expect ABG-Southwest to grow as prospective clients who need retirement plan administration services—but not the traditional accounting services offered by REDW—engage the new firm.”

ABG-Southwest is planning several programs and enhancements, including a new website for clients, upgrades to the website experience for plan participants, and offering SmartDollar, Dave Ramsey’s financial wellness education package that aims to engage employees in taking control of their finances. SmartDollar is already offered by ABG in Illinois.

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