CPA Client Bulletin Select July 2017

CPA Client Bulletin Select July 2017

CPA Client Bulletin Select
July 2017

What’s Inside

Calculating Retirement Needs
Taxable Versus Tax-Deferred Accounts
Small Companies Can Do Well While Doing Good
Tax Calendar

Factoid: Exporting Energy

From January to February 2017, U.S. oil exports jumped by 35% to a record high of over 1 million barrels per day.

Did You Know?
Up to 43% of U.S. employees spend some time working outside of the office. Moreover, 35% of employees say they would change jobs to have flexible working locations where they can choose to work off-site full time. Employees who sometimes work remotely show greater levels of engagement; the optimal engagement boost occurs when employees spend 60—80% of their workweek (or three to four days) working off-site.
Source: Gallup

Article: Calculating Retirement Needs

A staple in retirement planning is the search for “your number.” That is, how much money do you need to accumulate in savings and investment accounts so you can afford to stop working? Life expectancy is increasing, so the amount you have when you retire might have to last for decades.
To find the number, you can start with a target for cash flow in retirement. Then determine how much you can expect from all anticipated sources of income: Social Security, a pension, rental income from investment property, and so on. The gap will probably be filled from your financial resources.
Example 1: Linda Morgan, age 52, hopes to retire at 65. Linda expects to need about $75,000 a year for a comfortable retirement, with approximately $25,000–$30,000 coming from Social Security. She will not receive a pension from any employer and has no other obvious source of retirement income. Therefore, Linda will need about $45,000–$50,000 a year from her savings and investment accounts.

Doing the math

How can Linda find “her number,” the amount of financial assets she’ll need to generate $45,000–$50,000 a year in retirement? One tactic is to go online, where she’ll find many retirement calculators to crunch the numbers. Social Security, for instance, has a “Quick Calculator” at to help you estimate future payouts from that source.
Many other websites offer more comprehensive retirement calculators. Frequently, they allow people to enter their personal information, then make various adjustments to future plans to see what methods might increase their chances for financial security after the paychecks stop.
Example 2: Linda uses a retirement calculator provided by the AICPA at
She enters the information from example 1 and other requested data into the calculator. In this hypothetical illustration, Linda is single, earning $100,000 a year, and saving 15% of her earnings for retirement. Her future expectations include salary increases (2% a year), investment returns (6%), inflation (3%), and living until age 95. Linda has $300,000 in current retirement savings.


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