Retiring Old Thinking

When Prudential conducts a retirement study and the findings could double as an ad for its batch of insurance products, you take the results with a shaker of salt.

But in addition to making a case for its variable annuities, the company said the real message of the survey is that investing conservatively isn't necessarily the best strategy for graying baby boomers.

"The thrust of the results is that conventional wisdom may leave retirees short," David Odenath, president of Prudential Annuities, told reporters when the "Retirement Red Zone" study was released late last month.

The study sought to find out what issues were most important in the five years before and the five years after a person's planned retirement age -- dubbed "the red zone" because it is when people face the reality of their savings situations. Over half of the 1,038 participants said that the information they learned made them want to hire a financial planner to re-evaluate their investment strategies. And 50% said that their investing strategies were too conservative.

Standard financial planning calls for investments to become increasingly more conservative, toward fixed-income products and away from stocks, as retirement approaches. But Americans, who have been widely deemed ill prepared for the new realities of retirement, must reconsider their retirement strategies so as not to outlive their savings.

Ominous drumbeats about Americans' lack of savings seem to be sounding almost weekly through studies finding that retirees may come up short. For instance, the Employee Benefit Research Institute's 2006 survey found that 24% of people surveyed said they are very confident they will have enough money to live comfortably in retirement, and another 44% said they are somewhat confident. However, 88% of workers between the ages of 25 and 35 said they have saved less than $50,000 in retirement savings, while 52% of workers aged 55 and older said the same.