by Phyllis Bernstein

Someone just sent me an e-mail with new lyrics to old songs for today’s baby boomers. They ranged from Herman’s Hermits’ “Mrs. Brown, You’ve Got a Lovely Walker” to Bobby Darin’s “Splish, Splash, I Was Havin’ a Flash” to Leo Sayer’s “You Make Me Feel like Napping.”

If this puts a smile on your face, you better start planning for the big event. Not your 50th birthday party, but retirement. The old norms of retirement and retirement planning are old — and they are out of date. Our communities, workplaces and society will need to accommodate boomers who will move into retirement healthier, better educated and more energetic than any previous generation.

The big story is that boomers will transform the very meaning of retirement, as we have transformed institutions and expectations as this large group has  moved through kindergarten, college, early adulthood and midlife.

This article will discuss some basic issues that are important for planning for retirement. Basically, the retirement planning process is:

  • Calculate what the would-be retiree has;
  • Estimate what they will need;
  • Choose appropriate investments; and,
  • Manage their portfolios on an ongoing basis.

I will not have space in this piece to discuss that process, but you must do it with your clients. I will cover some of the questions and factors for clients to consider:

  • What kind of retirement do they want?
  • Have they thought about long-term care insurance?
  • Will they have to help support their parents or children along the way?

Your clients are boomers, so some may have a specific goal of early retirement. You had better find out what they think retirement is and what they mean by “retire.”Are they talking about a second career? What will they do with their time? Are they talking about not working or changing their lifestyle? As the largest generation nears retirement with longer-than-average life-spans and far greater time spent in retirement, well-documented demographic trends make this a hot topic.
Yes, many people are saving for a comfortable retirement, but they are doing so with blinders on. According to an Employee Benefits Research Institute study, respondents are more likely to:

  • Spend more time on fun than on finances. They spent four or more hours in the past year planning for the holidays (74 percent) or social events (57 percent) than planning for retirement (49 percent).
  • Save blindly. Sixty-one percent of workers and more than half (53 percent) of all worker households have not calculated how much money they will need to save by the time they retire. Thirty-six percent of those who have done a retirement calculation do not know or remember how much they will need to save by the time they retire. In addition, many who say that they have done a calculation have used less-than-reliable methods such as guessing or estimating a figure based on the state of the economy or inflation.
  • Not factor in health insurance in retirement. Survey respondents have given little or no thought to the need for long-term care insurance for nursing home or home health care (79 percent) or the need for general health insurance coverage (56 percent).

Clients don’t know they need help
This needs to change. Before retirement, most people are uncertain about the amount of the money that they will need, the duration of retirement, and retiree expenditures, so you have to set them on the path to success.What kind of retirement do they want? For most baby boomers, retirement is a new beginning, not the end. People find that all types of exciting opportunities can open up when they say goodbye to the 9 to 5.

Shakespeare asked: “To be or not to be?” Now, the question is, “To work or not to work?” This is also what any client with goals for early retirement needs to think about. For clients who have worked hard enough and saved enough to retire early, there’s a good chance that they haven’t spent a lot of time on non-work activities. Executives and professionals need to plan for separate retirement careers, or for financing a very long period of skiing, fishing and swimming.

Another important issue for clients to ponder about retirement security is large unanticipated health care costs — particularly if retirees need extended nursing home care or extended home health care. Furthermore, fewer retirees are going to have health insurance from a former employer, and Medicare is projected to be severely underfunded once the baby boom generation starts retiring. All of this indicates more insecurity for future retirees about their ability to cover health expenditures.

Will they have to help support their parents or children along the way? Many boomers had children later in life, so they could be paying for college at the same time that they are ready to retire. So the question becomes retirement or college.

Many planners say, “Put your retirement first.” The amount of money clients have for retirement after Social Security and any company pension depends on how much they have been able to save in their 401(k) and other retirement plans. If they get to age 65 and have not been able to build a decent amount of assets in their various retirement portfolios, there’s no friendly financial aid officer waiting to give them a retirement grant. They will have to muddle through on what they have saved.

However, there are many options for financing college costs, such as scholarships, grants, government loans and private loans. Some parents will have to say that they do not have a problem with letting their children fund a good portion or even all of their college education costs with loans that will be paid off once work begins. After all, this builds character.

Planning really helps
Those who plan for possible retirement in their 50s are likely to be happier in their retirement years. In addition to those who use retirement for leisure activities, many volunteer to help small businesses in developing countries, or volunteer as a mentor; for others, it’s playing sports, while others have started their own small business in retirement. The trick is to stay busy — but a little less busy than before retirement. Quitting cold turkey is tough, so it’s important to segue into other activities.

You might do a quick estimate to see if your client is close enough to consider retiring. This quick calculation can be a very rough estimate using today’s dollars. To calculate the projected retirement income, take a total of the following: the Social Security Administration Statement’s personalized benefits information,  any traditional pension payments, any part-time employment income, and other income expected, such as from 401(k)s, IRAs or other income from personal savings outside of work.

You then compare the projected retirement income wanted with the projected income expected, to see if there is enough money to retire. If there is not enough money, you can use this information to determine how much additional money the client needs to save each year. Software programs today are able to help.

If the client does not know how much she will receive annually from a traditional employer pension or defined-benefit plan, they should contact the benefits or human resources office. Some clients anticipate receiving income from an annuity in retirement, while others plan to spend money from their retirement accounts. This is helpful to know.

Many workers are likely to expect that their biggest source of income in retirement will come from personal savings, either from money that they or their spouse have put into a retirement plan at work or from other personal savings outside of work. If this is what they think, make sure that they are correct.

To Lennon and McCartney, retirement meant, “You can knit a sweater by the fireside; Sunday mornings, go for a ride. Doing the garden, digging the weeds — who could ask for more? Will you still need me, will you still feed me, when I’m 64?”

I suspect your clients have another image of retirement for their future years, so your role is to help them realize their dream and make it happen.

Phyllis Bernstein, CPA, PFS, headed the Personal Financial Planning Division of the American Institute of CPAs for 16 years, and now serves as president of Phyllis Bernstein Consulting Inc., in New York. Reach her at

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