Baby Boomers fear outliving retirement savings

Baby Boomers face so much uncertainty that nearly half of them fear that their retirement will result in poverty, according to a new study by California-based investment advisers Financial Engines.

The growing concerns are causing indecision and inertia at a time when Boomers need to be more involved in their retirement future, financial planners say. As pensions disappear, many of them must rely on 401(k) plans.

"They woke up one day to find themselves responsible for saving and investing and generating retirement income," says David Ramirez, portfolio manager at Financial Engines, which interviewed more than 300 near-retirees and retirees.

Because of the stock market crash, real estate downturn and recession, many Boomers are now terrified that they will outlive their retirement savings. One woman, age 60, who was interviewed by Financial Engines said that she "might be forced to become a bag lady."

Those interviewed by Financial Engines bring up several other common worries:

•More than half of those interviewed expressed uncertainty about their retirement future.

•Nearly half said they were distrustful of financial services and insurance firms.

•More than one-third said they did not feel confident about making financial decisions.

Even those who have saved more than $500,000 are uncertain about how long their nest eggs will last. But many others have more serious concerns.

Among Boomers, 45% are at risk of running short in retirement, according to the 2010 Retirement Readiness Ratings by the Employee Benefit Research Institute. And one in four older workers have exhausted all savings during the recession, according to a new survey by AARP Public Policy Institute.

A growing number of older Americans are piling on debt and filing for bankruptcy. Many have lost their jobs and can't get new ones, says Marvin Wolf, a northern New Jersey bankruptcy lawyer. Much of their savings are trapped in their homes, which have lost value.

It's understandable why Boomers feel so insecure. "When you're in retirement, the stakes are high," Ramirez says. "When you spend money, it's gone."

While working longer may be the best way to boost savings, health issues and job loss can interfere.