Baby boomers still in the work force have some time left to boost their nest eggs. But people who retired before the recession began have less hope for recovering diminished retirement funds. Almost half of retirees (49 percent) are feeling less financially secure than when they first retired, according to a new survey. When these same 1,011 retirees ages 55 to 75 with $100,000 or more in household investable assets were interviewed in February 2008, 20 percent had less confidence in their financial prospects than they did when they first retired. Only one in four of these relatively affluent retirees are very confident they have saved enough for retirement, a 12 percentage point drop from last year.
To cope, many of the retirees are now seeking safety in their investments. The proportion of retirees describing themselves as conservative investors increased from 53 percent in 2008 to 70 percent in April 2009, the study by the Society of Actuaries, International Foundation for Retirement Education, and LIMRA, an association of insurance and financial services companies, found. While only 12 percent of the retirees considered themselves aggressive investors in 2008, that number has since dropped to 7 percent. About a quarter of the retirees now say they are evenly balanced. The retirees that changed their risk tolerance say it was due to concerns about the economy (79 percent), inflation (45 percent), not enough time to recover from the downturn (39 percent), and the value of their house changed (28 percent). A few of the retirees also sought out a financial adviser to assist in growing their assets. About 61 percent of the retirees surveyed have a personal financial adviser, up from 56 percent last year.
In addition to tweaking their investment strategy, many of the retirees have also become more frugal since 2008. Only 22 percent of the retirees now spend whatever they want compared to 38 percent in 2008. Most of the retirees (71 percent) now describe themselves as having enough money to cover basic needs and some extras. There was a modest increase in those who are now on a strict budget from 4 percent in 2008 to 7 percent this year. Slightly less than half of the retirees reported not receiving enough income from Social Security and traditional pension plans to cover their basic living expenses without using their savings in both 2008 and 2009.