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%);
Job loss (18%);
Adult children returning home (18%); and
Uncertainty about how much to withdraw from retirement accounts (14%).
“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
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.