The primary responsibility of many CPA’s is acting as financial planners for clients hoping to retire with decent savings or escape from potential fiscal failure. Consistency is important in both these realms, especially as it relates to retirement funds. A recent survey by the American Institute of CPAs endeavored to discover what factors are most likely to cause an individual’s retirement plans to change and lose that valuable consistency.
400 CPA’s were surveyed and 76 percent reported back that the number one cause of changing retirement plants is client overspending. Clients who spend beyond their means in the moment quickly find themselves having to alter their plans for the future.
Second to spending by just four percent were health care costs and medical expenses. There is little that an individual can do to prepare for unexpected medical expenses, and it is reasonable to expect that retirement plans would have to be adjusted to compensate.
Other factors that appeared to have a significant impact on changing retirement plans were poor estimates of retirement income, financial assistance for family members, and additional travel.
Still, most financial planners seemed hopeful in the survey. Nearly half reported that they believed their clients would be proactive about addressing potential problems with their retirement, 28 percent going so far as to say that they believed their clients would be willing to reenter the job market. However, 29 percent did not believe their clients would be willing to change their habits unless they were forced to by drastic circumstances.
Furthermore, rather than choosing to work more, most CPA’s believe their clients would instead choose to reduce spending by cutting things like gifting (54 percent), travel (52 percent), or by downsizing their residence (46 percent).
CPA’s should consider all of these factors when helping their clients to make plans for the future. Helping them to set realistic expectations and to understand the actual amount of money they will need to support their retirement goals can be a complicated task. Using tools like this survey can go a long way towards identifying potential crisis points in your client’s retirement plans
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