Today’s accountants don’t just crunch numbers. They advise their clients on how to reach their short-term and long-term financial goals, including saving retirement. Retirement is one of the biggest long-term savings goals, not to mention life changes, your clients are looking forward to. While you can give them valuable financial advice on managing their money after retirement to ensure that it doesn’t run out, you don’t have to – and shouldn’t – wait until they reach retirement age to start talking about the subject. Instead, bring up saving for retirement early on to help your clients start preparing now, no matter how far away retirement is.
Explaining the Types of Retirement Plans
The Internal Revenue Service (IRS) lists 15 different kinds of retirement accounts. For the average person, it can be difficult to distinguish between these types of accounts or to determine which one is right for them personally. Which rules and policies apply to which account is a mystery, and names like 401(k), 403(b), Roth IRA and 457 don’t do much to describe the accounts. Many clients may need the benefit of your accounting knowledge to figure out what type of retirement account to choose or, if their employer has chosen one, what the implications of that choice are for the worker.
Budgeting for Savings
In a tough economy, it can be hard enough for workers to pay the bills and manage even a meager amount of savings. Many put off saving for retirement simply because it seems so far away – but by doing so, they can lose out on the power of compounding interest and ultimately come up short in their retirement savings. In fact, failing to save might be why 18 percent of Americans surveyed reported delaying retirement for financial reasons, according to Accounting Today.
Saving isn’t easy. However, you can help your clients understand the importance of starting early and budgeting carefully to set aside money for retirement each month – because every little bit helps.
Making Retirement Money Last
For a startling number of Americans, the biggest problem isn’t what retirement account is right for them or how they will save for retirement, but whether the amount they manage to save will last. Just 12 percent of Americans surveyed felt completely certain that they would have enough money to last throughout their retirement, Accounting Today reported. Nearly one-quarter of respondents felt “unsure,” while almost a third thought the chance of outliving their retirement savings is above 50 percent. With almost a third of Americans afraid that they can’t rely on the continued existence of the federal Social Security program to help them, these numbers are especially troubling.
As an accountant, you need to have your clients’ best interests at heart, and that includes helping them prepare for the financial adjustments involved in major life changes like retirement. In your future career, knowing about retirement savings can make a big difference in helping clients achieve their goals.