Two members of the Financial Planning Association testified to Congress on the impact of the failing markets on the country's retirement outlook. In separate congressional hearings last week, FPA Board member Deena Katz spoke before the Senate Special Committee on Aging about the financial issues facing baby boomers, while Andrew Keeler, former FPA government relations committee chairman, asked Congress to bolster a tax credit to help small businesses offset costs in setting up defined contribution plans.

Katz, an associate professor in the personal financial planning department at Texas Tech University and chairman of Evensky & Katz, a Coral Gables, Fla.-based fee-only planning firm, laid out ways to help improve the odds that people won't outlive their assets. Among them: people will need to work longer and laws should be changed to make it easier to do that, planners need to design total-return portfolios, advice needs to be based on fiduciary principles and retirees should be encouraged to get financial education.

"The economic typhoon of the last year has seriously damaged boomer portfolios and even the gurus in Washington and on Wall Street have no clue how long recovery may take," Katz said. "Although the risks of outliving one's assets are present in any economic climate, the current crisis has unquestionably heightened those fears and caused professional advisors and their academic colleagues like myself to review how our investment strategies correlate with system risk in the marketplace."

Katz cited mortality tables suggesting that a couple 65 years old would have a 95% chance of one of them living to age 91. "Boomers have an unrealistic view of their own mortality," she said. "What keeps me up nights, and ought to keep you awake, is that you will outlive your assets."

Two years of pummeled portfolios and reduced home values have devastated many portfolios, Katz said, at a time when the shift away from defined benefit plans to defined contribution plans has eroded the retirement cash stream. As a result, many boomers will work during their so-called retirement years, she added.

"The 2007 Annual Gallup personal finance poll discovered that 78% of the people surveyed will continue to work," Katz said.  "We have been seeing this trend in our practice recently. Of course, for many boomers, there may be fewer work opportunities and less flexibility in their choices. Unfortunately, with the myriad of financial risks facing us, neither working longer nor simplistic, safe-product solutions are likely to be a total solution to funding our retirement.

"The solution is to design a total return portfolio, one that focuses on the return and not fixed-interest payments. As planners, we can then help our clients implement a more flexible strategy by diversifying assets to generate higher investment returns over the long-term, and protect ourselves against inflation and the real risk of outliving our assets."

Among Katz' suggestions to Congress to boost boomers' chances for a satisfying retirement is to insure that all financial advice offered to investors "be based on fiduciary principles; i.e., the simple and equitable concept that recommendations will be made based on the best interest of the client, that conflicts of interest will be minimized and that any remaining conflicts be clearly disclosed."

"As in the case with ERISA," she said, "hold all professionals who provide advice to retirees to that fiduciary standard."

Katz also said Congress should encourage financial education for retirees that focuses on financial planning as a process, not one that promotes product-centric solutions.