This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

So Long, Summer Home: Pre-retirees Adjust Expectations





Forget a trip to the Bahamas. The new retirement getaway may be a night out at the local Sizzler.

According to two recent surveys, pre-retirees are lowered down their lifestyle goals and investment expectations as they prepare to retire. After years of lackluster growth, it appears many older workers have abandoned the hope that economic conditions will improve significantly before their golden years.

Lowered expectations

An AIG study released this month found most of those 55 and older are taking a more cautious financial approach in the wake of the financial crisis. The slow economy has led many to second-guess their savings strategies, with 72 percent of survey respondents saying that today's economic climate has served as a financial wake-up call.

As a result, many older Americans are being more careful about where they invest their money:

  • 80 percent say they have a more cautious approach to their finances
  • 77 percent are looking for solutions that will provide lifetime guaranteed income
  • 69 percent value insurance and investments that offer financial stability

In addition, 32 percent of respondents indicated they plan to look into protecting existing assets -- eight times the number of those who said they plan to invest more aggressively to make up for lost time (4 percent).

This conservative thinking doesn't only extend to pre-retirees' investments. LIMRA, a consulting firm for the financial services industry, released findings this month that indicate most pre-retirees aren't expecting to live the lifestyle they'd prefer in retirement.

The group's survey of pre-retirees -- those between the ages of 55 and 70 who are not yet retired -- found only 48 percent believe they will be able to achieve their desired lifestyle once they stop working.

While the recent recession hit some investments hard, LIMRA indicates a bigger problem might be a lack of planning.

"Pre-retirees are feeling insecure about their retirement future, in part because they have not yet taken the steps to plan for retirement," said Matthew Drinkwater, LIMRA associate managing director of Retirement Research, in a written statement. "Our research indicates that retirement preparedness is strongly linked to the completion of key retirement planning activities like determining your income and expenses, calculating your assets and how long they will last, and identifying the things you want to do in retirement and how much they will cost."

Building savings while minimizing risks

Pre-retirees who are weary of risky investments may want to consider other savings options in addition to the stock market. Certificates of deposit (CDs) and money market accounts don't always offer the same returns as stocks, but they can be safe and stable options for those looking to place a portion of their savings in a virtually risk-free account.

Also, the best savings account rates not be far off the yields of conservative stock funds. Forbes recently reported that stable value funds, a conservative type of mutual fund, averaged an annualized rate of return of 2.36 percent over the past year. Meanwhile, the best savings rates available have been hovering around 1 percent.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,981.66 +21.09 0.12%
S&P 500 1,979.21 +0.87 0.04%
NASDAQ 4,448.0550 -1.5090 -0.03%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs