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.

Likening the retirement hopes of Americans to a slice of Swiss cheese, the EBRI adds that workers are not thinking about health care costs. They also aren't taking into account that our statistically longer lives are very expensive to maintain.

"Life expectancy has changed, and if people live just an extra 10 years, that's an awful lot of retirement that has to be covered through their life savings," says Rob Brown, chief investment strategist at Genworth Financial Asset Management.

Recent EBRI research showed that individuals aged 55 who live to age 90 would need to have accumulated $210,000 by age 65 just to pay for insurance to supplement Medicare and out-of-pocket medical expenses in retirement. This is far more than 90% of all workers have currently saved for all retirement expenses.

Savings, They Are A'Changing

One one hand, the prospect of living longer presents financial problems. If a person retires at 65 and leads an active lifestyle until 95, that's 30 years of food, shelter, travel and health expenses to fund.

However, Brown notes that it is this longer life expectancy that allows investors to have more risk in their portfolios, even as they near retirement age.

"Investors now have the benefits of time and diversification," he says. "Not only is there a need to be a more aggressive investor in order to fund retirement, there is the ability to weather market downturns later in life. If you have a diversified portfolio, there is time to stay in the stock market and wait for bear markets to bounce back."

He says that being more aggressive later isn't necessarily breaking the rules. It's a matter of acknowledging that, as people live longer, you can invest like you're 40 when you're 60 if you're going to live to be 100 rather than 80.

"It's not too late to get back into the market and it's imperative that you do. It's the only hope a person has to overcome this gap in retirement income," says John Sestina, a certified financial planner who serves on the ethics committee of the National Association of Personal Financial Advisors.

Sestina says that retirees make two errors: They get out of stocks, and they buy government bonds rather than higher-yielding corporate bonds.

"The myth is that Treasury bills are less risky than corporate bonds, and that bonds are less risky than the stock market, so this makes them good investments," he says. "It's interesting that with all the financial magazines and TV shows and articles, people have become numb. They hear that bonds are conservative, so they rush to that instead of doing their homework. But over the long haul the market has always outperformed bonds."

He agrees that people must turn to more aggressive portfolios, even as retirement looms, and that the downside presented by volatility can be managed with time.

Beyond Conventional Wisdom

Financial planners say that investors should assess their situation honestly and then create an investment plan that can serve those needs. "Ask how best you can invest this money, not what is the most conservative way," says James Kibler, a certified financial planner with Eldridge Financial Planning who specializes in asset allocation.

And in order for investors to tackle this reality, they must know their risk tolerance.

"If there's a mismatch between an investor's portfolio and where the person is at in terms of risk tolerance, then bad things happen. Inevitably, we'll enter a bad market environment, the portfolio will perform worse than expected and this will cause some panic. The person will take the wrong action at exactly the wrong time," says Genworth's Brown.

Kibler adds that investors should also be flexible. "If working three more years or taking on another job in retirement doing something you enjoy might allow you to have much more flexibility, consider this before saying you'll just shuffle assets around in your portfolio."

"The real issue is that retirement in America today is being redefined ... 21st-century retirees have more responsibility for their fates than at any time in recent history," says Prudential's Odenath.

And because of this, conventional wisdom that has pushed so many retirees into bonds just won't be enough.