NEW YORK - After suffering deep losses in their retirement savings accounts, most Americans appear to be in a state of shock, unsure where to move next.

"People are shell-shocked, paralyzed and afraid to do anything," said Christopher "Kip" Condron, chairman and CEO of AXA Equitable at a "thought leadership program" last week here. "Their retirement accounts have taken a terrible beating. There's no question that virtually everyone is being affected in one way or another by one of the most severe recessions in generations."

Mutual fund companies, insurance providers and banking advocates all want to help and are naturally pushing their own products, but battered and weary investors aren't sure whom to trust.

About the only thing everyone can agree on is that Americans haven't been saving enough.

"People start saving too late," said Pamela Perun, policy director for the Initiative on Financial Security for the Aspen Institute. "We've been waiting until midlife to save. We need a saving system that covers people from birth to death."

Employer-sponsored 401(k)s play a valuable role in getting people to put a little extra aside every month, she said, but the tax-deferred incentive is not enough to convince people to change from being spenders to being savers.

"It's not just how much we save, but how and where we save," Perun said. "The problem is bigger than just retirement. Saving needs to mean more than just saving on taxes." Perun noted that 20% of Americans are not in the banking system at all, and the bottom 40% to 60% of Americans may or may not save, but they certainly do not invest.

For decades, there have been major imbalances between big savers and big spenders, particularly among nations, said Eric Chaney, chief economist at the AXA Group. The savings rate in the U.S. dropped from around 8%, where it hovered for decades, to practically zero in recent years as equities continually pumped up stock portfolios.

The extended bull market created the illusion that equity and real estate growth could take the place of saving for retirement, he said. With equities down 50% and the average defined contribution account balance down 27% in 2008, everyone has been reminded of the bitter truth: markets are volatile, and stocks don't always go up. Financial advisers may be preaching that everything is on sale and now is a great time to load up on bargains-but most investors just aren't buying it.

A February survey conducted by AXA Equitable found that 65% of Americans were worried about meeting everyday expenses should they lose their job, up from 54% in a similar study last year.

"Our research showed that paying bills was a middle-of-the-pack concern last April," Condron said. "The fact that it is now a top priority underscores how the year-long market volatility has shaken Americans' sense of security about their immediate financial future, most notably as a result of job instability."

Securing guaranteed income for life remains the top priority for 69% of Americans, particularly among women, who tend to live longer. Approximately 75% of women surveyed said getting guaranteed income payments for life was a top priority, compared to 58% of men.

Annuities can provide that guaranteed income stream later in life, but many cash-strapped investors are hesitant to lock up money they need right now for an uncertain future.

AXA found that 61% of men said they planned to shift the asset mixture of their investments to react to the changing markets, whereas women were less likely to act, with only 51% saying they would make changes. Half the survey respondents said they had taken no action to change their financial situation.

"Women continue to show more concern than men as the period of economic instability lingers on," said Barbara Goodstein, executive vice president and chief innovation officer at AXA Equitable. "What is troubling is that it appears that their sense of caution has morphed into an inability to take the prudent steps necessary to navigate through this crisis."

"The fact that people are still concerned about the health of their retirement during the market volatility we are experiencing makes it clear that they still understand the importance of preparing for their financial future," Condron said. "What is alarming, however, is that so many are still not taking the steps needed to achieve these goals."

Beyond working longer and spending less, most Americans don't seem to know how to recover their losses. The fastest way to recover their losses might be to take another risky gamble on equities, but most investors can't afford to lose any more of the money they have left.

Approximately 40% of men and women within 10 years of retiring said they planned to delay retirement. Among the men surveyed, 40% said they would work an extra three years to retire at 64, while 39% of women said they would work an extra four years, retiring at 66.

Contrary to many reports, Social Security is not doomed, and experts say the program should have no trouble providing retirement benefits to future generations of Americans for the foreseeable future. It might not be much, but Social Security should provide most elderly Americans with enough money to survive. For those who can save a little more, it will provide a steady and reliable income supplement.

Unlike a personal retirement account that has a set period of wealth accumulation followed by an open-ended period of decumulation, the nation's Social Security program is structured so that the income for the monthly payments to retirees are generated by current members of the workforce. Payments can keep up with inflation because the average income keeps rising.

Since the program began, there have always been more workers than retirees, providing the system with a net surplus, said Peter Brady, a senior economist at the Investment Company Institute. When the Baby Boomer generation begins retiring en masse, this situation will temporarily reverse, causing a deficit, he said.

"The demographic shock of Baby Boomers is a one-time event," Brady said, but it won't break Social Security because the income payments from active workers will keep coming in. The Congressional Budget Office estimates payroll taxes will cover at least 80% of benefits.

When the income/payment deficit happens, the government will have to either reduce payments or increase taxes. Others have suggested raising the minimum withdrawal age, but because of its inherently political nature, most experts don't think older voters would approve of such hardships on themselves.

(c) 2009 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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