How Good Is Your Retirement Plan?

CPAs Sound-Off with Planning Advice.

By Rick Telberg
At Large

Finance and accounting professionals are never shy about giving their opinions, especially when it comes to individual financial issues. So it’s no surprise that when we opened the door to their views, we were overwhelmed with responses. Considering the state of the nation’s savings rate and its health insurance, retirement and pension systems, we asked how people should protect themselves financially. The answers ranged from obvious to optimistic to outrageous. All were passionate.

Some of the advice we’ve tried ourselves. And we were comforted by the fact that nearly half of all CPAs admit candidly they’re not following their own advice.

The most obvious advice was also the most common: “Save.” In all, several hundred comments started with that very word. An amazing number said it three times in a row, some with as many as three exclamation points!!! As in: “Save, save, save!!!”

“Max out” came up a lot, too, as in “Max out Roth/IRA/401k.”

And many had more specific advice.

“Have 20 times the annual income needs in savings and expect to live off 5 percent pretax,” said one adviser. “Save till it hurts.”

We’ve done that. Ouch. And it’s still not enough.

Cheryl Brown Biondolillo, a CPA in Gloucester, PA, doesn’t mean to dash your dreams, but she goes beyond savings into harsh cold reality: “I believe people need to plan to work longer,” she told us. “People cannot work for 40 years and be retired for 25 years and expect there to be adequate funds available.”

Unfortunately, we heard similar words from a lot of respondents. “Work longer,” said one. “Do not retire early. When you do retire from your primary job, work on a part-time basis doing something that you like.”

That’s exactly our plan: A part-time job snoozing in a hammock between palm trees on the beach.

And that plan works well with another piece of anonymous retirement advice: “Marry a younger woman.” Right. A rich younger woman.

Somebody else had a similar idea, though not quite as good: “Have a rich uncle.”

And who’s the clown who offered only “Buy a lotto ticket”? That one goes well with another bit of anonymous advice: “Pray.” We’ve tried both, so far without results.

We liked “Vote Democratic,” and we’ve tried that, too. It didn’t work. Neither did voting Republican. We’ve tried both.

Not one person suggested depending on Social Security. Quite to the contrary, advisors told us Social Security, if any, will be “gravy” or “icing on the cake” or a “windfall.”

“You have to plan for yourself,” advised Jinhong Zhang, an accounting manager with NHS in Los Angeles. “Never trust the politicians.”

Somebody else had the same idea: “Take more responsibility for your own retirement, depend less on the company or government promises that may not be fulfilled.”

It might have been Lao Tzu himself who tendered a tight little paragraph with a ton of good advice. Maybe it went like this:

“Don’t retire ? work smarter/fewer hours. Integrate revenue generation into a relational and healthy lifestyle. Live within your income, save and give. Refine financial goals, understand risk tolerance then develop a personal risk level. Gain patience, then diversify investments in areas of interest, skills, and knowledge. Observe and understand the sacrifices made by grandparents and parents that provided the platform for your current position. Read history, economics, vote, search for God, cherish your freedom, teach your children well, by example. Help others. Hope for a big inheritance from your parents.”

In the end, of the 1,269 pieces of financial wisdom, none of it was bad advice. Eliminate debt. Control spending. Pay off the house. Stay healthy. It all made sense to us, even “Die early,” as long as it’s in a hammock between palm trees on the beach.

[First published by the AICPA.]

Posted on February 13, 2006