Fifty-seven percent of CPA financial planners say running out of money is their clients’ top retirement-planning concern, a new AICPA survey found.
According to the Q1 2015 AICPA CPA Personal Financial Planning Trend Survey, 76% of financial planners, many of whom serve high-net-worth individuals, named health care costs as one of the chief factors causing their clients stress about outliving their money. The survey, which polled 548 members of the AICPA Personal Financial Planning Section in February 2015, found that 42% of clients had experienced unexpected health care concerns that affected their retirement planning. Fifty-nine percent of respondents have seen an increase in the number of health care problems affecting their clients compared to five years ago.
The rise in dementia rates is also affecting retirement planning, as 26% of clients have unexpectedly had to cope with dementia or diminished capacity. Troublingly, just 11% of the respondents said their clients are taking proactive steps to deal with the possibility of dementia. An additional 55% of respondents said their clients discuss dementia with them, but that the clients aren’t sure what to do about it.
The survey sheds light on how complex retirement planning has become due to the aging of the Baby Boom generation and the economic challenges of the past few years. Clients and advisers must cope with unexpected events that can alter their retirement plans, including needing to care for aging relatives (29% of clients have experienced this event), divorce (18%), job loss (18%), adult children returning home (18%), and other occurrences such as income and market changes (30%).
These challenges do present more opportunities for CPA financial planners to discuss strategies for ensuring a steady income stream throughout retirement with their clients. Sixty-three percent of respondents said that 50% or less of their clients had talked to them about Social Security benefit maximization strategies. Only 21% of clients wait until age 70 to take Social Security, suggesting that the strategy of deferring Social Security benefits may be underutilized. Likewise, only 15% of respondents said that more than one-quarter of their clients used annuities.
This quarter was the first time the survey was administered.
— Courtney L. Vien is an associate editor for the AICPA.