The Dow Jones Industrial Average dropped 2% last week, amidst renewed concerns about the looming fiscal cliff after President Obama’s re-election. The same market sentiment seems to have prevailed among Baby Boomers.

While more than a third of Baby Boomers said they expect Social Security to be a major source of income in retirement, nearly 40% were not confident that the system will have money to pay benefits throughout their retirement, according to a recent survey by MFS Investment Management.         

"The survey findings point out a big disconnect between what investors say they plan to live on in retirement, and what they actually can count on for that income,” said William Finnegan, senior managing director and head of Global Retail Marketing for MFS. 

The online survey, administered from Aug. 29 to Sept. 10, drew from 923 individual U.S. investors with $100,000 or more in household investable (non-retirement) assets and 603 licensed US financial advisors who have been licensed for at least three years with $500,000 or more in annual mutual fund sales. 301 of the participants were Baby Boomers, between the ages of 48 and 66.

Among major concerns to retiring comfortably, about half of the respondents cited a significant rise in health care costs (10% or more), followed by substantial cuts in Social Security benefits and a U.S. recession. All are points that Democrats and Republicans will negotiate as they work towards compromising the fiscal cliff and the $16 trillion U.S. debt.

In the case of financial shortfall in retirement, Baby Boomers were far more likely to have adjusted their lifestyle (63%) than to have saved more for emergencies (44%), with the most popular solutions being a cut in spending, working part time during retirement, and pushing delaying retirement age.

"While pursuing a healthy lifestyle is laudable, it is far from a risk-free strategy in terms of the health of your retirement," Finnegan said. “Advisors have an opportunity to help their clients focus on solving for this critical shortfall before it's too late."