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Protection costs based on liquid net worth Mistakes made as
someone leaves
Liquid net worth Annual premium % of liquid net worth
full-time employment
$1 million $3,500 0.35% can cause significant
financial problems for
$5.7 million $3,500 0.061%
the rest of their lives.
$11.4 million $3,500 0.031%

employment can cause significant finan-
$20 million $3,500 0.0175%
cial problems for the rest of their lives.
CPAs know more about a client’s finan-
cial, estate, business, and family situation
than any other professional they work
Online calculators you can use or insurance and homeowner’s insurance with. CPAs work with very diverse client
have your clients use to test for longevity without hoping to use the policies. Why bases, so they have the experience and
include the Social Security Administra- should LTC insurance be any different? expertise in many areas. CPAs continu-
tion’s Retirement & Survivors Benefits: The insurance industry has responded to ously deal with clients’ questions about
Life Expectancy Calculator, the Actuar- the need by offering not just stand-alone saving for college, saving for retirement,
ies Longevity Illustrator, and the Living LTC policies but also adding long-term cash flow, insurance needs, and estate
to 100 Life Expectancy Calculator. care as a rider to life insurance policies or planning. Clients deal with each of these
One way to protect a future cash flow as an LTC rider to an annuity. items only once in their life. They want
is using a qualified longevity annuity Many of the author’s clients are their CPA to help. ■
contract (QLAC). Using IRA funds, a guided by the chart “Protection Costs
client can purchase a QLAC as early Based on Liquid Net Worth” (see above) Contributor
as age 55 and choose when he or she to show the cost of a stand-alone LTC
would like the annuity to begin paying policy as a percentage of their net worth. Theodore J. Sarenski, CPA/PFS, CFP, is
benefits. The largest expense that can The chart shows the small percentage a wealth manager at Capital One/United
ruin a financial plan for a healthy spouse necessary to protect all their wealth. Income in Syracuse, N.Y. Mr. Sarenski is
is a long-term-care (LTC) event for chairman of the AICPA Advanced Per-
the less-healthy spouse. Suggest to your Lasting financial security sonal Financial Planning Conference.
clients that they purchase LTC insur- The CPA profession is in the best He is also a past chairman of the AICPA
ance, or at least speak to them about the position to assist clients in the many Personal Financial Planning Executive
costs of long-term care, whether at home transition phases of their lives. Clients Committee and a former member of
or in a facility. No matter how much need the proactive planning CPAs can the Tax Literacy Commission. For more
wealth someone has, why not protect provide to assure a financially secure information about this column, contact
assets by passing the risk to an insurance lifestyle for the rest of their lives. Mis- thetaxadviser@aicpa.org.
company? People purchase automobile takes made as someone leaves full-time

AICPA RESOURCES

PFP credential “Social Security and Medicare: Maximizing Retirement Benefits”
Personal Financial Specialist Experienced CPA Pathway
Publications (for PFP Section members)
Videos from the PFP Learning Library Webcast Archive Guide to Social Security Planning
“Estimating the End of Retirement” Guide to Retirement & Elder Planning: Healthcare Coverage
“Financial Independence: Rethinking Retirement” Planning

www.thetaxadviser.com March 2022 51