CPAs Can Take the Lead in Boomer Financial Planning

By Amy Marchant, J.D., AICPA, Durham, NC

The baby boomers are rolling toward retirement, and there is much concern about the strain they will put on Social Security and the relatively few active workers who will support them. For CPA personal financial planners, however, this demographic event could be quite profitable: The boomers (defined as those born in the years 1946–1964) will need a wide range of financial planning services and have the money to pay for them.

The following statistics demonstrate the boomers’ size and financial power:

  • Over the next 20 years, 80 million boomers will retire (Social Security Administration, “Nation’s First Baby Boomer Receives Her First Social Security Retirement Benefit” (February 12, 2008), available at
  • Americans over age 50 earn nearly $2 trillion annually, control over $7 trillion in wealth, and own 77% of all financial assets in the United States (Ken Dychtwald, cited in L’Allier and Kolosh, “Preparing for Baby Boomer Retirement,” Chief Learning Officer (June 2005)).
  • Americans over age 50, though only one-quarter of the population, account for almost half of U.S. consumer spending (Capgemini, “The Boomer Effect: The Impact of Baby Boomer Retirement on Corporate America” (January 22, 2007), p. 6, available at
  • Boomers spend $241 billion on insurance and financial services, ranking fourth after housing, transportation, and food (id., 8).
  • High-spending boomers are ex-pected to inherit $17–20 trillion from their frugal Depression-era parents (id., 10).

Boomers have in common some particular retirement problems, all of which present opportunities for a savvy CPA financial planner.

The Keep Working/Retire Early Contradiction

A critical trend for CPAs to understand and be prepared to address is the disconnect between many boomers’ stated intentions to work past the traditional retirement age and the current reality that relatively few workers actually do work past retirement age.

According to the AARP, 80% of boomers say they plan to work at least part-time after retirement age (Roper Starch Worldwide, “Baby Boomers Envision Their Retirement: An AARP Segmentation Analysis” (February 1999), p. 6, available at However, people typically retire today at age 62, according to the Employee Benefit Research Institute (cited in Weston, “7 Pitfalls Retiring Baby Boomers Must Avoid,” available at Moreover, illness, disability, and layoffs have been significant factors in 40% of unintended early retirements.

If this trend continues, many boomers will need CPAs to help them create workable retirement plans if they are not willing or able to continue working past 62 or 65 as they have planned. Or they may need a dose of reality, according to Theodore Sarenski, CPA/PFS, CFP, a financial planner in Syracuse, New York, who has advised many spendthrift boomer clients that they simply cannot retire as early as they would like to. Whatever the case, boomers will need creative financial planning and wise counseling.

The Need to Plan Retirement, Not Just Plan for Retirement

With all the emphasis on saving for retirement, there is a dearth of information about managing finances during retirement (Weston, “7 Pitfalls”). An especially tricky area is how much income to draw down from existing principal.

A CPA with expertise in distributing income during retirement will be well positioned to serve boomers. This may include offering new products and services to manage distributions, not simply accumulations; modeling draw-down plans; and understanding the wide range of income distribution methods, including annuities, equity from homes and businesses, and viatical settlements.

Risks Many Boomers Will Face

While a 2004 AARP survey found that a large majority of boomers believed they were financially prepared for retirement, a 2008 Gallup poll found that 43% of those in the boomer age range fear they will have to retire later than they intended; 53% are worried that they will outlive their money. Indeed, many boomers’ expectations of a stimulating, carefree retirement are at odds with financial reality, as the following numbers demonstrate.

  • There is a 50% chance that one member of a 65-year-old couple will live past age 90 (Fidelity Investments, cited in Weston, “7 Pitfalls”).
  • In 1980, 83% of workers’ pension plans were defined benefit; today only 21% are (Magnusson, “Today’s Do-It-Yourself Pension,” AARP Bulletin (June 2006), citing Depart-ment of Labor statistics).
  • A couple has a 50% chance of needing long-term care (Raham, quoted in Weston, “7 Pitfalls”).
  • Americans’ anticipation that their homes will appreciate annually by 5% or more is inaccurate when compared with historic values (Schiller, Irrational Exuberance, cited in McArdle, “No Country for Young Men,” Atlantic Monthly (January/February 2008)).

Thus, boomers represent a remarkable opportunity for CPA personal financial planners. They are rich in assets. They want vibrant retire-ments. Yet they are facing serious risks to their long-term financial security. CPAs who become experts in serving boomers’ unique wishes and tackling their specific challenges may well discover a wealth of rewarding business.


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