Are CPAs on Track With Their Retirement Plans?

New survey findings may surprise you.

by CPA Wealth Management Insider staff
Based on research findings from Bay Street Group LLC

Study after study shows that CPAs are the most trusted advisors to small businesses and to many high net worth individuals. But when it comes to keeping their own savings and retirement plans on track, more and more CPAs are admitting they have some work to do to get ready for their golden years.A recent poll of CPA Wealth Management Insider readers conducted by Bay Street Group, LLC found that nearly one in four readers overall (24%) did not consider themselves on track with their own savings and retirement plans. Perhaps our readers have higher standards of ?readiness?, but that?s still an eye-opener since most readers are currently offering ? or soon planning to offering ? financial advisory services to their clients.

?I?d like to retire from public accounting at 65 (five years away) and work part-time for myself,? said one senior staffer. ?It takes more money than I would have thought ? I started too late.? A mid-level manager confided ?I?m currently maximizing my pension contributions, but have not implemented a serious additional savings plan. I have taken steps to adjust my portfolio to my plan, but I am still more conservative than my plan requires.?
Of readers who are currently offering financial planning services to their clients, nearly one in five (18%) confide they that their own savings and retirement plans are on track and more than one in four (28%) who are not currently financial planning services, feel the same way.

?I am currently investing and putting into a 401(k), but with kids, it?s hard not to put money into an account for college even though they could get a loan? said one under-40 reader. ?I am contributing the max to a profit-sharing plan and a Roth IRA, but that alone gives away that I?m not making a lot of money,? said one mid-level manager. ?I?m very concerned that this will not be enough to retire on comfortably.?

Like many professions, CPAs at the top level seem to have a better handle on their retirement goals than the newer entrants to the profession. Nearly four in five (79.7%) readers in top management said they had their retirement plans on track, compared to 73.8 percent at the senior staff/general management level and 60.1 percent of readers at the internal audit/mid staff level.

Are your savings and retirement plans on track?
(% of CPAs who agree)
82.5% — President/CEO/CFO/Partner
73.8% — Sr. Staff/General Mgmt.
60.1% — Mid Level Staff/Internal Auditor…..
(Source: Bay Street Group, LLC 2006)

How Those on Track Are Doing It

Overwhelmingly, readers who consider themselves on track for retirement say they?re living below their means in terms of housing and vehicles so they can max out savings and pay off debt as aggressively as possible.

?Take advantage of 401k catch up provision,? advised one middle-aged reader. ?Save as much as possible and live below your means,? advised another.

?I plan to pay of the house by the time my oldest child is 16,? said one senior manager. ?I?ll continue to contribute the maximum allowed by the IRS in the company 401k, contribute to maximize the life of automobile and contribute into savings the amount of the prior car payment after the loan is paid off.?

[First published by the AICPA]

Posted on March 22, 2006