Retirement & Financial Planning Report

A report by the Center for Retirement Research at Boston College said that individuals typically change their retirement plans when they carefully consider the prospects of a less secure lifestyle in retirement due to inadequate retirement savings.

It noted that the stock market downturn of late 2007-early 2009 caused a drop in retirement assets for many workers nearing retirement, and that the typically expected response in such a situation would be to work longer, save more, or do both. However, based on a survey of individuals between 45 and 59 years old, 43 percent of those who had suffered such losses had not initially planned to do either—many of them "may have been stunned into inaction," as the report put it. Only 9 percent planned to do both.

However, it said many of them changed their minds when they saw how lowered retirement savings could translate into changes such as a lowered standard of living and having less money to provide as an inheritance. At that point, only 5 percent said they planned to neither work longer nor save more, and the percentage of those deciding to do both rose to 51 percent.

"In short, those who planned to do nothing were spurred into action by having the trade-off made explicit," while many of those who had planned to do one or the other—work longer or save more—were motivated to diversify by doing both.

There was less change in planning by those who had already thought a great deal about the effects of their losses, suggesting that they already had reached the conclusion that they had to take steps in response.