Workers find can’t retire with shriveled portfolios

At 63, Jennie Heywood thought she had it all. She’d spent her career working in private practice as an addiction counselor, made a good salary while putting some money away, and finally she was ready to retire.

But she quickly learned the money she saved would not last very long.

“I really wasn’t spending anything at all, but it was just going down fast and furious, and I just couldn’t keep on in retirement. I had to come back to work,” she said.

After searching for a job for a year, Ms. Heywood finally found work as a senior aid with Alexian Brothers Senior Neighbors.

Ms. Heywood is one of many retirees who suffered as a result of the economic crisis of the past year. A survey shows that more people are less confident they have saved enough for retirement, and as a result, many of them are becoming more conservative and less willing to take risks in their investments.

The survey, “What a Difference a Year Makes,” was conducted by the Society of Actuaries, International Foundation for Retirement Education, and Limra, a life insurance and market research group. The survey respondents ranged in age from 56 to 77. It shows that 49 percent of those who responded said they felt less secure that when they first entered retirement, compared with 20 percent last year.

Chattanooga financial adviser Chris Hopkins of Barnett & Co. said people often do not know their risk tolerance until it is tested. When the stock market crashed last fall, it was a wake-up call for many people, he said.

“A lot of people crossed that threshold,” he said. “We definitely saw clients get more conservative as this thing dragged on.”

Concern about the economy was the biggest reason retirees gave for the decline in their risk tolerance, according to the survey.

“Retirees are definitely feeling the effects of the 2008 financial crisis, and have begun changing their behavior,” said Sally A. Bryck, Limra associate research director, who led the research project.

For Ms. Heywood, those changes have meant no dinners out, no vacations and no new clothes.

Her life has changed dramatically, she said. She fills her time by working, cooking and reading when she’s not at work. While she didn’t have big plans for extensive travel, her retirement has not ended up as she imagined it would.

“I thought I could lay back and just enjoy it, and that just isn’t true,” she said.

And she isn’t alone. Seven in 10 retirees said they still can cover their basic expenses and afford a few extras. Just one in four retirees say they are extremely confident they have saved enough, 12 percent less than last year, according to the survey.

CPA and financial adviser Jefferson Wells said his clients are less confident about their retirement plans.

When clients come to him looking for retirement advice, he works with them to preserve their principle, their income and make sure they are well prepared for inflation. He also helps them with the taxes they will incur in future years.

Older clients need different guidance than younger ones, and the one-size-fits-all approach does not work, he said.

“I will suggest to people, what exactly is the long haul for someone who is 75 years old,” Mr. Wells said.