In the last six months of 2008, the financial future of retirees and pre-retirees took a huge blow, according to a recent report released by Ernst & Young an update to Ernst & Young’s July 2008 Retirement Vulnerability Study.

The stock market decline combined with the economic crisis has had a disastrous effect on the retirement savings of middle class Americans, the report said, and this has reduced the likelihood that middle-income retirees will have sufficient finances to last them through their lifetime.

The 2008 Study found that almost three out of five middle-class new retirees could expect to outlive their financial assets if they attempted to maintain their pre-retirement standard of living.

“When you look at the effect of the market downturn on retirement vulnerability, there have been some fairly significant changes, and sometimes, a 40% chance of people not having sufficient financial assets in retirement,” says Ernst & Young’s Tom Neubig, author of the report.

The study also determined that many Americans will be forced to reduce their standards of living, to avoid outliving their assets.