Retirement Planning: Your Clients May Know Less Than You Think

by Rick Pendykoski, Self Directed Retirement Plans LLC | May 4, 2020

Most Americans are scared when it comes to retirement planning and need help mapping out one of life’s biggest expenses — retirement. Undoubtedly, they turn to CPAs for planning their financial future in retirement. But if you and your clients are not on the same page, they’ll be struggling to understand the complex financial planning strategies involved. 

It’s important to take a comprehensive look at their goals. How do they envision retirement? Where will they live? What kind of lifestyle? What will they do? 

Here are some common assumptions that CPAs often make about their clients:

1. Clients know when they should start taking their Social Security.

You may assume that clients already know that it’s a smart decision to wait until age 70 to claim their Social Security. But, the majority of people collect it as soon as they are eligible. Your clients need to understand the following:

  • For each year that they wait past their full retirement age, their social security increases by 8 percent. 
  • If divorced, they can claim on their ex-spouse’s social security. 

2. Clients have a fair idea of how much they will need for their living expenses in retirement.

Don’t assume that clients can make life expectancy projections and understand their impact on finances. Here are some factors to consider:

  • Half of the population may live longer than the average life span, and a half may live less. This means that 50 percent of the time, their life expectancy projections may fail. You should ensure that your clients take into consideration the consequences of dying younger than expected so that they have a plan in place for living a shorter life and planning for the surviving spouse.
  • The expenses in the early years of retirement are often higher than anticipated because, all of a sudden, your clients have the time and the money to go out to eat, travel and do all those things they’ve always wanted to do.
  • They need to consider long-term care coverage. Having insurance can avoid humongous medical costs later in life. 

3. Clients are aware of how to minimize tax liability.

Most of your clients may not understand the tax implications on their retirement income. They should look at a 10-year tax plan (encompassing ages 60 to 71) and predict what tax bracket they will fall in. Here are some points to consider:

  • In order to ensure that they stay in the lowest tax bracket each year, they need to consider converting a traditional IRA to a Roth IRA.
  • Talk to your clients about the tax liabilities in the state where they live. It may be more economical to move their residence to a place where there is no individual income tax.

Though retirement planning can be a difficult topic, that’s precisely where CPAs can add value. 

Rick  Pendykoski

Rick Pendykoski

Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He brings over 30 years of diverse experience as a financial advisor. He can be reached at

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