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) -- The idea of retiring comfortably has become the

new American dream

for many households, but all too often it's a dream that doesn't come true.

In what may be the most depressing study to come out in recent memory, researchers from MIT, Dartmouth and Harvard found that nearly half of retirees had less than $10,000 in their retirement savings plans the year before they died and 55% had less than $25,000. To make matters worse, many of these people had no home equity to speak of either.

The sad truth about planning for retirement is that too many Americans just don't.



, published this month by the National Bureau of Economic Research, reaffirms a point that many financial advisers have been hammering for years: Americans do not set aside nearly enough money and investments to last through their retirement. The result is that many retirees find themselves broke or close to it in their final years.

Much of the reason for this, according to Jean Setzfand, AARP's vice president for Financial Security, is that about half of today's retirees assumed they could rely solely on Social Security as a source of income and so they didn't get into the mindset of saving for retirement. These are most likely the 46% of retirees who passed away with less than $10,000 in savings. The other half, she says, were the ones fortunate to be covered by pensions. Unfortunately, the dynamic may not be much better for those who have yet to retire.

"Only about half of workers are covered by employers from a retirement benefits standpoint. That hasn't changed," Setzfand says. What has changed, she says, is that those retirement programs are now more employee-driven (meaning 401(k)s) rather than employer-driven (meaning pensions). "I'm not sure that we are in a better position. If you look at the numbers on how much people have saved for themselves - the numbers aren't great."


one survey

put out by

Wells Fargo

(WFC) - Get Free Report

last year found that 29% of workers in their 60s had saved up less than $25,000 for their retirement even though they expected that money would have to hold them over for more than two decades. When you combine those anemic savings with the fact that people are living longer and the ever-increasing

cost of prescription drugs

and treatments, it's little surprise that so many would come close to running out of money later in life.

There are

plenty of steps

workers can take to prevent this from happening before you retire, as several financial planners we spoke with were quick to point out. These include everything from re-allocating some of your funds into riskier investments, working a few extra years if your health permits and delaying collecting your Social Security benefits until you're closer to 70.

For those who are already retired and in danger of running out of money in the near future, though, there are fewer options available and most tend to be more extreme. Still, these may be your best bet to avoid going completely broke in your old age:

Cash out your life insurance policy

Even those with little to no money saved up for retirement may have another cash reserve they forgot about: their

life insurance policy


"If you have cash-value insurance policies, turn them in. You probably don't need the insurance anyway," says Frank Boucher, a certified financial planner with

Boucher Financial Planning Services

. Those in dire straits have the option to trade in the entire policy for its cash value or borrow some money back, thereby reducing the total death benefit one would get.

Use your home equity

Many seniors might think of their home as less of an investment than something they'd like to pass on to their family, but when times get tough, taking advantage of your home may be your best bet for staying afloat financially.

"There are a lot of people out there who are house rich and cash poor," says Rose Greene, a certified financial planner with

Rose Greene Financial Services

. "They have to recognize that they are not going to be able to leave that house to their heirs and that they need to use that house and its resources."

The financial planners we spoke with suggested three possible options to take advantage of the value of your home. You can sell the property and downsize to something smaller or you can try to rent out the property to bring in some extra cash. Finally, if you want to hold on to the property, you can take out a

reverse mortgage

on the home, meaning you borrow money from the banks against the value of the property. It's worth keeping in mind that this can lead to you losing the home as well if you're not careful.

Fall back on family

It may sound obvious, but some seniors may be too proud to consider asking their relatives for help. But the advice from our financial advisers is simple: Do it anyway.

"If you are lucky enough to have a fairly functional relationship with your kids, and your kids are in a position where they can help subsidize your independent living or fold you into their household, then you should consider that option," Greene says.

Along the same lines, Greene also emphasizes that seniors shouldn't feel too obligated to pass on a large inheritance or to continue providing for their family even as they run the risk of going broke. As selfish as it may sound, if you absolutely need the money, then you should be willing to cut off others.

"Family can work for you or against you," she says.

Take advantage of government assistance programs

Those who don't have family to turn to should consider leaning on

local and state assistance

to help subsidize their living costs. For starters, Medicaid can help seniors shoulder their health care costs and the Supplemental Nutrition Assistance Program can help fund food costs. Then there are other programs such as Section 8 housing that are intended to help low-income individuals and the elderly find affordable, safe housing.

The AARP has an

excellent roundup

of other programs that can help the elderly in each state.

Make your money work harder for you

Overhauling your investments so late in life can be a frightening idea and one that probably won't carry quite as much benefit as investing better from a younger age. That said, there are a couple of tricks one can use to make the most of the funds they have.

As Boucher and others note, more conservative options such as CDs, savings accounts and mutual funds continue to have very low returns on investment. Instead, retirees might consider shifting some of their assets around to preferred stocks funds and other high-yield investments. Of course, these tend to carry a little more risk than those conservative options, so you should be sure to consult a financial adviser first.

Rethink your lifestyle

As with any age group, when retirees notice funds are running low, it's time to find ways to change their lifestyle and tighten their budget.

Boucher suggests being honest about what you do and don't need. For example, if you have two cars, sell the extra one. If you live in an expensive city such as New York or D.C., consider moving. And if you have accumulated collectibles and antiques, it may be time to start selling some to bring in extra revenue.

Consider group living

No, we're not talking about moving to a nursing home. Instead, Greene says she's noticed more seniors combining their resources and moving in together to make their funds last longer.

"It wouldn't be real easy for me to do personally, but I would recommend it for some people who have always lived with lots of others in the house," she says. "It may not only have a financial benefit, but also a mental and social benefit."

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