Forty-nine percent of retirees said they felt less secure than when they first entered retirement, compared with 20 percent who said so last year. The findings come from a survey of retirees aged 56 to 77 with $100,000 or more in investable household assets, conducted by LIMRA, the Society of Actuaries (SOA) and the International Foundation for Retirement Education (InFRE).

The organizations released the findings recently in a report entitled “What a Difference a Year Makes,” highlighting changes in retirees’ attitudes from 2008 to 2009. (LIMRA is a worldwide research, consulting and professional development organization that helps more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness.)

Forty-three percent of the retirees surveyed said their tolerance for investment risk has gone down since last year, and many were concerned about the possibility of inflation.

The retirees whose investment risk tolerance declined in the past year gave the following main reasons:

* Concern about the economy, 79 percent of respondents

* Concern about future inflation, 45 percent of respondents

* Not enough time to recover from the economic downturn, 39 percent of respondents

* Change in house value, 28 percent of respondents

In spite of the decline in sense of security, there are still gaps in retirement planning, as more focus needs to be spent on managing long-term retirement risks. “Retirees are definitely feeling the effects of the 2008 financial crisis, and have begun changing their behavior,” says Sally A. Bryck, LIMRA associate research director, who led the research project. “While seven in 10 respondents said they can still cover their basic expenses and afford a few extras, the number who said they spend money on whatever they want dropped sharply from 38 percent in 2008 to 22 percent in 2009.

“We also see an increase in the number of retirees who have personal financial advisors,” Bryck adds. “Today 61 percent say they have a personal financial advisor compared to 56 percent in 2008. Seeking professional help shows how severely things have changed and how unsure retirees are about doing things themselves.”

The survey also found a significant decline in the number of retirees who feel very confident they have saved enough money to live comfortably throughout their retirement. Today, only one in four of the retirees are extremely confident they have saved enough, a 12 percentage point drop year over year.

One way to decrease concern over outliving money, risks of inflation, and other financial hazards is to use some financial assets to generate guaranteed lifetime income.

SOA member Anna Rappaport, FSA, MAAA, notes that, “Unfortunately, many retirees are not thinking long term. Even among retirees for whom Social Security does not cover their basic expenses, a guaranteed lifetime income, such as that provided by an annuity, is not a core focus of the retirement plans of the retirees surveyed. Among retirees whose core expenses are not covered by Social Security, 31 percent indicated interest in converting a part of their savings into guaranteed lifetime income.”

Rappaport adds, “To make sure they do not outlive their assets, retirees need to take an actuarial perspective in managing retirement risks and focus on long-term goals and challenges.”