Accounting education

Howard Hook, CPA, CFP, is a retirement distribution planning expert with Access Wealth Planning. the wealth management firm with offices in Roseland and Princeton, New Jersey. He maintains that with the coming shift from employment to retirement, many Baby Boomers will be on their own when it comes to making decisions that could have a major effect on their retirement lifestyles. He points out that in talking to a goodly number of clients who are happily retired as well as counseling those who are thinking about packing it in, he has found that those who have worked through three specific issues prior to departing their full-time jobs have achieved the most post-retirement satisfaction. So, what are the three things to think about before you hand in your retirement paper? First of all, do you know how you are going to pay your bills when you are no longer receiving a salary? It seems rather obvious on the surface, but Hook says that many people kind of ignore the matter of how much income will actually be needed without that salary. In other words, it’s not as obvious as it sounds. He suggests that people should prepare a detailed list of exactly the expenses that are being paid and then a separate column on how much income is being received. He cautions that all expenses should be included. For example, consider income taxes. That’s going to come out of your revenue base; the employer is no longer paying or deducting it from your paycheck. And consider medical insurance. Who’s paying for that and what’s it cost? Hook points out that all income must be listed. For instance, consider Social Security. He says that many people don’t realize that a portion of Social Security is subject to federal income tax and that a spouse who is still working can cause up to 85 percent of the retired spouse’s Social Security income to be subject to income tax. Next, go back to those medical expenses. How you going to pay for them? Upon retirement, decisions and responsibilities will fall on the retiree. A break in coverage could result in extended waiting periods for those with certain pre-existing conditions. You don’t want coverage to lapse even for a moment. One has to consider when Medicare comes into play or if not, what are the options? Also, what about COBRA which requires most employers who offer group health plans to provide temporary continuation of such coverage to employees who do qualify? And what about a spouse’s medical plan at their place of employment for the retiring spouse? Each medical plan has unique advantages and disadvantages. In fact, some plans require a supplemental drug plan to be purchased to cover prescription medication, while other plans include drug coverage. And again, watch those waiting periods carefully! Finally, and perhaps most importantly, how are you going to spend your free time? All this free time certainly changes the parameters of your life. With people living longer, the average retiree could live upwards of 25 years or longer. Do you have a game plan? Keep in mind that in many instances more free time can also lead to increased spending. Having a plan for keeping busy, says Hook, can help ensure a smooth transition and ease the difficulty of managing large blocks of free time. He says that the idea is not to take out a calendar and full out each day with a different planned activity but rather to make a list of the things you would like to do and an approximate time frame for doing them. Naturally, Hook says that answers to these questions may differ because people are different. The key, he concludes, is to make appropriate decisions now that will allow you the flexibility to adjust those decisions in the future without compromising your lifestyle. Howard Hook can be reached at hhook@awplan.com.

The National Association of State Boards of Accountancy is looking into administering the Uniform CPA Examination outside the U.S.

According to recent surveys, Americans are lacking in preparation for retirement. In fact, many have little or absolutely no idea of how to achieve certain goals. To the rescue comes WealthRidge which is offering a free retirement planning White Paper to help people get on track to financial well-being in retirement. "Facts You Need To Know About Retirement Planning" can be obtained via www.wealthridge.com. Wealthridge points out that more than 65 percent of all retirees have saved less than $100,000, and they find that is nowhere near enough money for retirement. Michael Snowdon, CFP®, financial planning partner in WealthRidge says, "It's not uncommon to live in retirement for 20 or 30 years. Finding the funding to support those years has become, for many, an exercise in futility." Why? Here's an example he cites. An individual who wants to have an income of $75,000 per year in retirement, plans to retire in 15 years, and to live for 30 more years, may need as much as $2 million to fund the desired retirement income. How so? Because health care expenses represent a significant factor. A recent study suggests that a couple who reaches age 65 will need more than $200,000 to pay for their retirement health care expenses. With fewer company pensions, and living expenses at all-time highs, saving enough money for retirement can seem to be an almost impossible task. There are solutions, notes Wealthridge, and people can achieve their goals. They say that the retirement planning White Paper provides answers to how much money will be needed for retirement, how much healthcare will cost, and how much retirees can safely withdraw from their retirement portfolio to make sure it lasts as long as they do. The White Paper also identifies the tools that are available to save for retirement, along with some cautions about what not to do. For additional information, feel free to contact Michael Snowdon at (888) 326-5557. WealthRidge is an independent fee-based financial planning firm in the Denver metro area.

The American Institute of CPAs is helping to promote a movie on the financial challenges facing the U.S. today.

The Securities and Exchange Commission unveiled its next-generation system for online financial filings, IDEA, the successor to its EDGAR database.

The Securities and Exchange Commission said it would distribute millions of dollars to investors harmed by market-timing trading violations in mutual funds managed by Putnam Investment Management and Janus Capital Management.

Will health issues force your clients to retire earlier or spend their nest eggs quicker than they planned?Four in 10 Americans retire sooner than they expected. Of those, 40 percent do so because of health issues or disability, according to the Employee Benefits Research Institute.

HOUSE CONSIDERS MANDATING EMPLOYER IRA PLANSThe House Ways and Means Select Revenue Measures Subcommittee held hearings on bills that would encourage employers to automatically enroll their employees in individual retirement account plans. One bill is aimed at creating automatic payroll deposit IRAs for workers who do not have access to employer-sponsored pension plans.

Few people actually know what a credit score represents. For example, less than one-third of Americans understand that credit scores indicate risk of not repaying a loan and not knowledge of, or attitude toward, consumer credit. That is what has come out, among other things, from a new survey commissioned by the Consumer Federation of America (CFA) and Washington Mutual Bank, the guys you call WaMu. Moreover, the survey reflects the fact that most Americans fail to understand that one’s credit score shows only how they use credit and does not include factors such as income and age. Those that have obtained their scores are generally the most knowledgeable, says the survey. But if you have clients who have low credit scores, what can you advise them about raising such scores? Here are some ways they can do it:

An Ernst & Young partner has teamed up with a movie studio accountant to produce an online comic book based on the TV series and recent movie Get Smart that provides an overview of tax deductions for the film and TV industry.

Education consultancy Professional Education Services has created an affiliate program for CPAs and certified financial planners to give them access to its college-funding software.

The American Institute of CPAs and Texas Tech University's Division of Personal Financial Planning have teamed up to offer a new educational program for gaining the AICPA's Personal Financial Specialist credential.

I am never ceased to be amazed at the misinterpretations of what a certain financial planner does or how the planner acts in conjunction with the client. Let me explain. For one, there is the definition of commission-based and fee-based. Actually, there are three aspects here. A fee-only planner is one who is paid based on a set hourly rate, a project rate, an annual retainer, a percentage of assts under management, or some combination. The planner does not receive any compensation contingent on the sale or purchase or a financial product. A commission-based planner may include brokers who receive compensation based upon commissions paid by the client or by the mutual fund company or insurance company, or other product provider, each time the client is sold a security. A fee-based compensation is not to be confused with fee-only. This indicates that compensation occurs by way of both fees and/or commissions. Now as to those artful terms of advisor, planner, et al, consider this. The term investment advisor describes a rather wide range of people who are in the business of giving advice about securities and they may use a variety of titles such as investment manager, investment counsel, asset manager, wealth manager, or portfolio manager. An investment advisor then provides ongoing management of investments based on the client’s objectives. The terms broker and broker-dealer refer to firms who are in the business of buying and selling securities on behalf of customers. Individual salespeople employed by brokerage firms are usually called stockbrokers and are officially referred to as registered representatives of the brokerage firm. They may also use other titles such as financial consultant, financial advisor, and investment consultant. A financial planner, unlike an investment advisor and broker, is not a legally defined term and it usually refers to providers who develop, and may also implement, comprehensive financial plans for clients based on their long-term goals, or who may prepare plans to address specific issues their clients may face such as retirement income planning, funding of educational expenses, and the like. When you talk about a comprehensive financial plan, you can turn to the National Association of Personal Financial Advisors who defines comprehensive financial planning advice as the coordinated consideration of each of the following areas for a client: income tax, cash flow, retirement planning, estate planning, investments, risk management, and any special needs planning.

The Securities and Exchange Commission has issued a warning about the use of 401(k) debit cards that allow employees at some companies to borrow money from their retirement plans.

The Internal Revenue Service has issued a guide sheet for organizations that maintain donor-advised funds to help safeguard against abuses.

The Marketplace provides you, the tax and accounting professional, a tool to help find the products and services you need to easily and efficiently run your practice or to recommend to your clients. Browse by category below or search by company name.

Retirement management may be a classic win-win scenario.A fast-growing segment of the population urgently needs sound retirement advice and related services, while the accountants who provide them can derive considerable economic (and emotional) rewards for doing so.

As the life settlement industry grows at an accelerating pace, an increasing number of life insurance producers are opting to transact directly with life settlement providers -- companies that actively purchase life insurance policies in the secondary market.While executing life settlement transactions through a specialized life settlement broker is beneficial for life insurance producers who do not have the know-how, resources or desire to transact directly with life settlement providers, producers who do elect to work directly with life settlement providers may benefit from the significant opportunity to execute more efficient transactions, while raising the level of the total policy sale consideration for their clients.

CFP BOARD DELAYS NEW STANDARDS

“Women, Money and Power” is a new study released by Allianz Life Insurance Company of North America that says more than half of all women want to learn about retirement planning and try level-saving and investing, although many are not sure where to begin. Allianz examined two key questions: what women want to learn about finances and how they want to learn it. It found that while the Internet is the most consulted resource, it is the least trusted. Apparently, human contact remains the most meaningful and effective source of information. The study identified the financial planning topics women want to learn about most. The top five subjects include: · Planning for retirement/maintaining lifestyle in retirement · How to start saving or investing on very little income · Basics of buying smart (savvy shopping, buying vs. leasing, etc) · How to buy/select the right insurance products (life, long-term care) · Definition of basic financial terms (IRAs, annuities, mutual funds) According to Allianz, single women with children were overwhelmingly interested in planning for retirement, with 68 percent saying it was a topic of interest. In addition, 47 percent of that group was interested in how to buy or select the right insurance products, and 49 percent wanted to learn the definitions of basic financial terms. Single women were particularly interested in educating themselves. Forty-five percent of single women with children and 55 percent of single women without children expressed interest in learning about financial planning. Divorced women were also above the group average, at 42 percent. “This intense interest by women, especially single women with children, demonstrates that all women are thinking about finances for themselves and their families, and are ready to take control, with a little bit of help,” says Sherri DuMond, vice president of Marketing Solutions for Allianz. Difficulty in understanding financial information is a critical barrier for many women, the Allianz study finds. When asked about their financial planning concerns, women responded: · Information is overwhelming/too much/hard to sort through · Information is complicated or hard to understand · Materials are really boring and dry · Don’t understand terminology/materials seem foreign Despite their reservations, more than one in three respondents, some 35 percent, said they were very or quite a bit interested in learning about financial planning, retirement planning, and investment decisions. Tom Burns, senior vice president and chief distribution officer, says, “I’m excited about this opportunity to really take a look at what women need from a financial services company. This study represents a clear opportunity for Allianz and the financial services industry as a whole to break the cycle of women’s hesitance to be involved in financial planning.”