The economic downturn made many respondents feel the need to take steps to improve their financial situation. While only 23 percent feel they have to go back to work, 64 percent of pre-retirees indicate they now feel they need to work longer. However, working longer may not be feasible for many people approaching retirement due to job losses and the difficulty of finding work in the current job market. More than four out of 10 people end up retiring earlier than planned.

While concern about retirement risk has remained stable among those already retired, pre-retirees have been more affected by the economic turmoil of 2007-2009. Both retirees and pre-retirees expressed concern about maintaining the value of their savings and investments with inflation (58 percent of retirees very or somewhat concerned, versus 71 percent of pre-retirees). Half of retirees and more than six in 10 pre-retirees also expressed concern about having enough money to pay for adequate health care (49 percent of retirees, 67 percent of pre-retirees), and their income varying from changes in interest rates (52 percent of retirees, 62 percent of pre-retirees). Despite these concerns, only a small minority of retirees (17 percent) and pre-retirees (25 percent) feel an increased need for professional financial advice as a result of the recession.

Retirement assets tied up in homes

Declining housing values are another issue related to the economic downturn and recovery that have impacted both retirees and pre-retirees. Housing is a major asset for many Americans nearing retirement age, and many have little retirement savings beyond whatever pensions they have plus the equity in their homes. The economic downturn had serious implications for retirees with large mortgages, or those who had planned to sell their house to help finance retirement – but now either can't or won't. Only roughly two in 10 retirees (16 percent) and pre-retirees (20 percent) have already used or plan to use equity in their home to help finance their retirement, according to the report.

Except for outright sale of their homes and downsizing, options for the use of such equity to help finance retirement are not part of the plan for most retirees. Those who do plan to tap into their home equity plan to do so by selling their home (45 percent of retirees, 56 percent of pre-retirees). They are much less likely to access this equity to help finance retirement through a home equity loan (20 percent of retirees, 9 percent of pre-retirees), a reverse mortgage (12 percent of retirees, 9 percent of pre-retirees), or a new mortgage (5 percent of retirees, 0 percent of pre-retirees). To complicate matters, retires are less likely than they were in 2005 to have paid off their mortgage going into retirement (48 percent down from 56 percent).

Retirement savings strategies

The main focus for managing retirement risks for most retirees and pre-retirees is eliminating consumer debt, particularly by paying off credit cards and other loans. This strategy is favored by 81 percent of retirees and 90 percent of pre-retirees. Fifty-six percent of retirees have cut back their spending, up from 48 percent since 2007. Additionally, there was a 10 percentage point increase in the number of retirees who were investing their assets conservatively (43 percent up from 33 percent).