The U.S. economy has been so sickly for so long now it's hard to remember just a few years ago, people in this country were blissfully, ignorantly riding the wave of a housing bubble into what they figured would be a long and fruitful retirement.

Exotic vacations, a second home, golf outings, ski trips-life after work was going to be an endless holiday.

But of course, that's not the reality of how things are shaping up. People are out of work, and if they're employed, they may be underemployed or feeling stagnant. Their savings are depleted, their homes are foreclosed, and they are delaying retirement or have no plans for retirement anymore.

There is an intense wave of pessimism about the present and the future. Following last week's wacked-out Jet Blue attendant Steven Slater jettisoning himself down the airplane chute to escape an abusive passenger-the new term being bandied about is that America has now entered "The Age of Rage."

Given these dour prospects, it was a bit surprising, and perhaps encouraging, to see a new study from MainStay Investments and Harris Interactive that shows a defiant level of optimism among Baby Boomers when it comes to their expectations for retirement. Called the "Boomer Retirement Lifestyle Study," the survey finds Boomers are redefining what they consider to be basic needs.

Clothes, shelter, food - Sure, these are things we need, but for Boomers the list expands. How about an Internet connection, pet care, shopping for birthdays and special occasions? Basic needs. The majority of Boomers, 57%, consider a professional haircut and coloring a luxury, but 43% consider it a basic need. Sixty-six percent of Boomers say that ordering takeout is a luxury, but for 34% of cooking-averse Boomers, this is a basic need.

This is not to imply that Boomers have their priorities out of whack, because healthcare coverage is still the top priority for 98% of those surveyed. But when you consider that an Internet connection came in second, with 84% of Boomers listing it as a basic a need, it's very clear that this is not their parent's retirement.

Bottom line, according to the survey, is that Boomers want the "good life" when they retire, the Great Recession be damned.

The encouraging news for the mutual fund industry, though, is that Boomers are willing to sacrifice now in order to meet their retirement goals. About three in four of those surveyed (76%) said they would rather spend less now to invest for a comfortable retirement, than live the life they want now and spend less in retirement later.

Another 40% acknowledge that they will have to delay retirement in order to achieve their desired retirement lifestyle. Nearly half, 47%, said they would downsize their home in retirement in order to afford their luxuries. And 55% said they are willing to work longer in order to pay for healthcare during retirement, rather than give up luxuries.

"Clearly, we see Boomers expanding beyond the necessities of basic needs during retirement," said Matthew Leung, director and head of practice management programs at MainStay Investments. "They associate those things with the way they live their life now. They have grown accustomed to a certain quality of life. Boomers have always wanted it all and they're willing to make sacrifices to really find the balance and have that life."

Although investors have historically moved more toward bonds as they retire, a majority of Boomers, those age 46 to 64, or older do not plan to consolidate their assets or reduce their equity exposure in retirement. An overwhelming majority (84%) also said they would be willing to allocate a portion of their assets to a product that gave them guaranteed income for life.

"I'm not really surprised that they are staying loyal to equities because longevity risk is something that Boomers are really concerned about," Leung said. "They need to have growth potential in their portfolio."

Leung added that the high level of interest in guaranteed-income-for-life products is something new. "Advisers need to look at the changing needs of the Boomers," he said. "As their demands increase and put pressure on their portfolio, we need to come up with new and innovative ways to generate an income stream."



Americans of All Ages View Social Security as a Safety Net

Three out of every four adults age 18 or older are factoring in Social Security income when planning ahead for their retirement, according to a survey released Wednesday by AARP. Even among younger people aged 18 to 29, 62% expect to rely on Social Security.

Eighty-five percent oppose cutting Social Security to reduce the federal deficit, and 72% are strong opposed to the idea, the survey conducted by GfK Roper found.

"The message from people of all ages to Washington is clear: Don't erode the one bedrock of retirement security that unites all Americans," said AARP Executive Vice President Nancy LeaMond. "Americans see Social Security as a benefit they're earned over a lifetime of hard work, and they opose it being used to reduce the deficit."

LeaMond went on to describe Social Security as a "lifeline to millions of friends, family members and neighbors for 75 years" that should be kept intact for "future generations [of] younger Americans."

- Lee Barney

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