It turns out, affluent Americans are not so different from the Average Joe.

Both laugh when they are tickled. Both bleed when they are cut. And neither prepares adequately for retirement, according to a recent study conducted by MFS Investment Management.

The more affluent you are doesnt make you the smarter person, said Neil Benedict, managing partner of Affluent Dynamics, a company that conducts marketing research among the wealthy.

In its survey of 422 individuals with at least $100,000 to invest, not accounting for real estate or retirement accounts, MFS found that among those that had retired, one in three had no plan for income. Among those age 55 or older who had not yet retired, 52% had no plan and 33% said they did not plan to speak to their advisers about post-retirement income for at least six more years.

Although these people are more prepared in terms of gathering assets, they are absent a plan of how to disperse that over time, said John Reilly, a spokesman for the Boston-based firm. These investors felt as though they have done a good job saving, but theres a nagging feeling that they have not done enough, he added.

Affluent retirees included in the survey said that they had quit their day jobs, on average, before they reached 60. Pre-retirees, on average, expect to work until 66, while 17% of those interviewed planned to keep clocking hours into their 70s. Even when they do retire, affluent, older workers said, on average, they hope to delay withdrawing from their retirement accounts until they are 68.

Fifty-five percent of affluent pre-retirees said they may seek supplemental income after retirement through part-time work, but only 18% of those who have already retired actually work part time. The study blames concerns about inflation, the rising cost of healthcare and fears about outliving their savings for the perceived need to keep working even after calling it quits.

Such uncertainty is rooted in a series of factors, said Don Cassidy, executive director of the Retirement Investing Institute in Denver.

Money in general is taboo, and in this area, there are a number of unknowns. People do not like to make decisions under uncertainty and suspect they may not like the answer, so they shy away from looking, Cassidy said.

Thus, its the role of advisers to force their clients to take a hard look, said Keith Gregg, executive vice president of Dunham & Associates in San Diego, and a director of the Wealth Advisors Institute, in Washington. We sell short-term benefits of the investments they put their money in, but we dont sell the long-term benefits.

Most advisers agree thats a tough task, according to MFS. In fact, two out of three advisers surveyed said that developing solid retirement income strategies is more difficult than developing strategies for clients still in their working years.

Clients themselves are not likely to question an adviser who does not address the issue of financing life after retirement. Thats in part because when it comes to this type of planning, Cassidy said, People expect to be greeted by sales pressure when they seek expert assistance.

But Gregg believes the high-pressure, boiler room days are over. Selling products is long gone, he said. Education is definitely the key component.

Motivated investors can educate themselves about how much they think they will need to retire comfortably through basic online calculators and pretty simple formulas, and then take that information to an adviser they trust, Cassidy suggested.

But others need their advisers to push them to determine just what they will need, and then choose smart, not just safe, options. The MFS study shows that even though investors claim to believe they need to continue to generate income in retirement, 35% of pre-retirees and 40% of retirees said since the market correction of 2000, they have begun investing more conservatively.

For its part, MFS offers products that combine income generation and growth, such as its Diversified Income Fund. Advisers say there are plenty of products ranging from real estate investment trusts, to lifecycle funds, to dividend stocks and even bonds that can offer a stable income for those approaching retirement.

Whatever the choice, its all a matter of planning.

Not knowing the answer is a pretty weak reason for not doing anything, Cassidy said.

The point is, people need to get to work on it.

(c) 2006 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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