Even well-off boomers now rethinking retirement plans

(StatePoint) It's not exactly boom to bust, but many Americans nearing retirement are being forced to revamp their retirement plans due to the economic downturn. A new survey of Baby Boomers at the age of 60 reveals many now are planning to work longer and cut spending. The new retirement reality Almost 75 percent have reduced spending, with more than half of affluent 60 year-olds revamping their retirement plans double the number who reported making changes a year ago, according to the fourth annual national "Affluent Boomers at 60 Survey" by Bell Investment Advisors. "It is critical for investors to realize there is no bailout package for retirement," said Jim Bell, founder and president of Bell Investment Advisors. "The current economic situation is a wake-up call for investors at 60 to have a clear retirement plan that incorporates a sound investment strategy." Of those who report changing their retirement plans, two out of three are delaying retirement to add more working years. And when it comes to investing, the majority of aging boomers surveyed think the stock market is too risky for people their age. The goal for many is to rebuild retirement savings hard hit by tough times. "Merely increasing savings and working longer will not fill the gap for most boomers approaching retirement," said Bell. "Recent stock market volatility has many boomers reconsidering risk, but it's critical to keep in mind that when you reduce investment risk you also reduce the upside potential to rebuild wealth. Boomers who choose to wait for a market recovery to decide when to reinvest will miss early gains." Start making plans According to the experts at Bell, there are several smart money moves to consider: Determine how much you need: One rule is to multiply your annual income needs in retirement by 20. If your investments can average at least an eight percent return annually, you can plan to withdraw up to five percent yearly in retirement. Create a withdrawal plan: A few years prior to retirement create this plan. Consider setting aside up to five years of your projected income needs toward lower risk investments, such as fixed-income funds. This can help protect money needed for the first years of retirement, enabling you to weather short-term market downturns. Don't bank heavily on your home: Many think their homes are worth more than they are. Also, to realize its value, you'll have to move to a lower cost home which will require cash up front, plus moving expenses. Plan to live long: The average life expectancy is approaching 90, so invest a portion of your portfolio in long-term investments. Interestingly, despite the radical changes many boomers are making to retirement plans, the market downturn hasn't altered their positive feelings about life. A whopping 97 percent said they feel great about their lives. For more information about managing your investments for retirement, visit www.bellinvest.com.