Running Out Of Wealth, Running Out Of Health: Financial Advisors' Daily Digest

By SA Gil Weinreich :

A new survey of CPAs who serve as comprehensive financial planners breaks no new ground in revealing that baby boomers' biggest fear is running out of money in retirement. We discussed that very issue last week here , here and here .

But coming from this elite group of CPA planners (who are credentialed as both CPAs and personal financial specialists, thus marrying the critical tax dimension to financial planning considerations), the survey of 500 of these practitioners may carry more weight in underscoring the imperative to plan. The American Institute of CPAs (AICPA) put it this way in its press release announcing the survey :

What do you get when you have 10,000 baby boomers retiring every day, at an average retirement age of 62 with a life expectancy of about 22 years, and retirement savings of only $104,000? If you answered a recipe for fiscal disaster, you'd be right.

The thrust of my commentary last week was that retirees - and of even greater value, pre-retirees - ought to stress the liability side of their balance sheets, i.e., their personal spending. One reason is that individuals have an ability to control how much they spend and how much they save (which is tantamount to deferred spending), but they have no influence on market conditions and results - witness all those retirees who have waited fruitlessly for a return to higher yields on savings.

Another key finding of the CPA survey is the degree to which retirees, and particularly older ones, fear the onset of dementia and diminished capacity. After 10 years of retirement, Americans start to fear running out of health more than running out of wealth. The implications of the survey are far-reaching: Namely, that some form of planning (individually or with the involvement of a professional advisor) is called for. Obviously, the sufferer of dementia has lost the ability to make such plans and is dependent on his family. All sorts of difficulties can be avoided by planning for contingencies early on.

As always, I encourage readers to share their thoughts on this in the comments section, and below please find today's advisor-related links.

See also Retirement Risk: A Better DG Portfolio Tells A Different Story on

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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