Will boomers “spend it all” by the time they die? Many think they will do just that, according to a recent survey from AXA-Equitable, New York. This has important implications for financial advisors and planners, experts say.

Even if boomers plan to spend their entire nest egg, they will still need–and want–information, education and ideas to help make financial decisions, says Gus Catanzaro, a financial planner and partner at Professional Planning Services, LLC, Melville, N.Y.

But their objectives will differ from legacy-minded boomers, he indicates. The planning conversations may be different, too. This article examines the planning implications of this trend.

In the survey, 64% of 435 American workers indicated they expect to spend their entire nest egg in retirement.

That “may be a shocking thought,” says Catanzaro, who represents AXA Advisors. But many workers “are realizing they can’t give their assets away or spend assets quickly, because they may need the money longer” than previous generations, he says.

Furthermore, people are realizing they will need a lot of money in retirement, says Kenneth Gelman, vice president-market research (U.S.) for AXA-Equitable, New York. They are becoming aware of long term care and medical costs, longevity realities, and inflation, for example.

For them, “leaving a legacy to the children is [becoming] a secondary or tertiary issue,” he says.

(The survey was part of the 2005 AXA Retirement Scope, a probe of retirement issues faced by 6,915 people in 11 countries. AC Nielsen conducted the U.S. part of the survey, sampling 435 workers and 413 retirees by telephone.)

Norm Mindel is not a bit surprised to hear the survey finding. A financial planner with Genworth Financial in the Schaumburg, Ill., office, he says retirement is “the No. 1 concern of boomers. It takes them a while to get to the estate planning.”

Boomers often tell Mindel, ‘I’m not that concerned about my kids. I had a good job; I raised them and paid for their college education. Now, I want to be sure there is enough money to last the rest of my life.’

This isn’t coming from greed, he says. “It’s coming from fear and survivability.”

If people have large estates and no retirement income issues, they tend to be “more interested in estate planning,” he says. So are boomers who have special needs children.

But most of the rest want to spend and enjoy life, Mindel says. They also look at their mortality and morbidity risks, and “they don’t want to end up bankrupt.”

Even relatively affluent boomers are thinking more about spending on themselves than legacy planning, adds Gelman. AXA focus groups have found that many such boomers who delayed having children ended up paying for college late in life, he notes. “Now, they can’t even think about retirement expenses,” let alone estate planning.

Other affluent boomers are simply big spenders. Planners tell Gelman it is difficult to get some of them even to sit down and make a budget, let alone to plan.

Therefore, even though affluent boomers are the ones most expected to leave money to children, that doesn’t always happen. “Some would like to,” Gelman says, “but many worry about having enough for themselves. They say, ‘maybe my kids will have to do things on their own.’”

What are advisors to do when working with boomers who plan to spend it all?

Cantaznaro says he believes his job as advisor is to point out what pre-retirees and retirees are facing in retirement, and to facilitate their decision-making. This is true for those with legacy goals, as well, he says.

That conversation includes discussing trends in Social Security, pensions, inflation, LTC, Medicare, and so on. Then, he helps pre-retirees project what they might need in retirement. “We work on how much money they might save, and focus on building a prudent portfolio and using asset allocation,” Catanzaro continues. (With retirees, he looks at “how to get income from the assets and make it last.”)

People want to find out how the trends will affect them specifically, he explains.

Boomers will still develop wills and trusts, he says, but his underlying approach is: 1) don’t give away what you might need; and 2) find out what you might need based on your lifestyle, assets, risks, inflation, etc.

Actually, says attorney Timothy Turner, “boomers should have a will, even if they plan to spend it all.”

If there is no will and the boomer dies early, in most states, the kids will share equally in the assets, continues Turner, who is founder of Torrid Technologies, a Marietta, Ga., firm providing retirement planning software to advisors. These are the very assets the boomer had planned to spend down. “If the boomer wants that money to go somewhere else–e.g., to a foundation or an alma mater–the boomer will need a will,” he stresses.

Turner has some other suggestions, too:

o Find out why the boomer wants to spend it all. “This might help you find a better solution than what the boomer is thinking. For instance, if the reason is ‘worry about leaving assets to spendthrift kids,’ ask: ‘what about the grandkids?’”

o Examine the life circumstances. “Some boomers say their children haven’t visited for 20 years, so ‘not a dime’ will go to them. Document that, and remember your duty is to the client, not the children.”

o Model how long the boomer’s money will last. “Point out that people don’t know how long they will live. That makes it hard to know how much to spend, even if the plan is to spend it all. So, use modeling software to help illustrate how long the boomer’s money is expected to last under different scenarios.”

o Help younger boomers accumulate enough money. “Some boomers may say they plan to spend it all because they believe they can’t accumulate enough for retirement and so can’t leave a legacy. Help them turn that around, if possible.”

o Get the family talking. “Most parents don’t talk with their children about their financial situation or about who will take care of them in old age. The result is, the boomer might make a huge decision–e.g., not to leave anything to the children–that affects everybody. The advisor could act as an intermediary in these cases. For instance, urge boomers to get their kids’ input.”

o Show the impact of financial choices. “It makes a huge difference, for instance, whether the boomer puts the spend-it-all money into CDs or elsewhere.”

Advisors also need to examine product choices to be sure they align with client objectives, stresses Catanzaro. For instance, consider products with guarantees for such boomers, he says. On the investment side, consider using wrap accounts with a “prudent portfolio” allocation that provides for growth to fight inflation, pays the income and provides stability.

Another idea is to recommend creating a personal pension with part of the boomer’s assets, suggests Gelman. By putting money into income-for-life annuities, he explains, boomers can do on their own what the old traditional pensions used to do for their parents. “Some of these products can be structured for legacy purposes, too, so the boomer has a choice.”

In any case, Gelman says, the strategy today is “not to earmark automatically a client’s assets for legacy.”

The most affluent clients will still seek out legacy planning, he says. “However, advisors serving the mass affluent are finding many other boomers are more interested in products that provide income for life, with flexibility to get access to the money if needed.”