A recent Google search of the words "retirement crisis, America" produced 35,600,000 results in 0.09 seconds. Granted, this might not be the best proxy to gauge the depths of the national savings shortfall, but you've likely seen numerous headlines of late chronicling the slow-moving train wreck that's predicted for the country's collective retirement.

The basic narrative goes like this: We're facing a perfect storm of low savings rates, increased longevity and rising health-care costs, pensions landing on the endangered species list as many vanish and some that remain are under assault from cutbacks and underfunding. Add to that uncertainty about the long-term viability of Social Security and fears that financial markets are more volatile than ever and can't be trusted to produce the long-term returns needed to pad a comfortable nest egg, and a gloomy picture takes shape.

These Jeremiah-like headlines aren't new. Witness the above-mentioned Google search where, oddly enough, one of the highest-placed stories--the third story on page 2--was a June 1998 announcement from the Concord Coalition (remember them?) of an upcoming Social Security forum it was hosting with the AARP on "America's Coming Retirement Crisis."

But as the first wave of baby boomers turn 65 in 2011, there's growing concern about whether Americans on the whole have enough resources to fund a potential 30-year retirement. Feeding the angst are surveys painting a dour outlook. Earlier this year, for example, the Employee Benefit Research Institute's annual survey of American attitudes about their retirement preparedness found workers' confidence in their ability to fund a comfortable retirement sank to the most pessimistic level in the survey's 21-year history.

Among the survey's stark findings, 56% of respondents said they have less than $25,000 in savings and investments (excluding their primary residence and any pension plans), and 29% said they have less than $1,000. In addition, 42% of respondents said they calculated their retirement needs by guessing.

As for the respondents' attitudes, 13% of workers said they're "very confident" of a comfortable retirement, which ties the 2009 survey as the lowest in survey history. And 27% said they're "not at all confident" about retirement, which is up from 22% the prior year and is also the highest level recorded by the EBRI's annual survey.

Jack VanDerhei, research director at the EBRI, a nonprofit research group in Washington, D.C., says a significant percentage of people have two choices. First, they can start saving now. Second, they can see what happens at their hoped-for retirement age, and if they don't have enough money they can keep working and defer retirement. "That will be feasible for some people, but it's a risky proposition for many because of health-related issues or because job opportunities might not be there for them," he says.

Affluent Aren't Immune
What exactly does a retirement crisis actually mean? Michael Henkel, managing director at Envestnet/PMC in Chicago, says he doesn't envision masses of people living on dog food and sleeping under bridges. But he does see the potential for a crisis of expectations. "There will be lots of people who'll be disappointed when they get to retirement and understand what they can actually afford to spend out of their accumulated portfolio," he says. "From a financial advisor's point of view, that'll be a tough crisis to solve."

It stands to reason that Middle America and lower have more to worry about than affluent folks who feel the need to seek out--and can afford to pay for--professional financial advice regarding their finances. But that's not a given. "This retirement discussion doesn't go away whether you have more assets or less assets," Henkel says. "It's potentially a universal problem."

Andrew Berg, principal at the Atlanta-based wealth management firm Homrich Berg, believes the retirement crisis exists on a case-by-case basis regardless of income. And he's seen that play out among clients at his own firm.

"We have clients with $7 million to $8 million who have a potential problem," he says. "Those people generally don't have a current or new source of earned income available to them, and they have a relatively long life expectancy."

Berg says his firm's planners talk about retirement at every client meeting, update lifetime cash-flow projections at least yearly, and sometimes have "difficult conversations" about lifestyle changes. "We'll talk about how much risk they want to take on the investment side, but with tepid expectations about future returns, it's kind of a bitter pill to swallow to take on additional risk," he notes.

Berg says his firm lost three clients during the past two years, two of them because they essentially ran out of money. He says one existing client is hanging on by a thread and is basically a lost cause. The client is a healthy 70-year-old woman whose husband, the breadwinner, left $2.5 million when he died about six years ago. The woman depleted her retirement kitty not only by living beyond her means, Berg explains, but because she also chose to support her adult daughter.

"It's imminent that she'll run out of money," Berg says. "It's disheartening." He says they'll work with this woman to the end. "But it's too late in this particular case because a lifestyle change will only delay the inevitable."

So what happens to her after she runs out of money? "I don't know the answer," he says, adding that her children or other relatives might have to step up.

"We're confident most of our clients will be OK," Berg continues. "But it's worrisome and frustrating when clients are unable to implement the lifestyle recommendations we offer."

Withdrawal Rates
Roger Gibson, chief investment officer at Gibson Capital LLC in Wexford, Pa., says his firm's clients range in assets held from a couple of million dollars to more than $100 million under advisement. He notes the vast majority of them are OK when it comes to retirement.

"The key to being OK is having a very reasonable withdrawal rate relative to a portfolio's growth rate," Gibson says, adding that his firm doesn't have a ballpark withdrawal rate for its clients. "We have a fairly time- and energy-intensive portfolio design process for each client, so we don't have a fixed answer."

Going forward, Gibson anticipates lower-than-normal returns for equities and a lousy environment for bonds due to low returns and the prospects for rising interest rates that could compress the principal value of bonds. Plus, he frets about the increasingly volatile state of the world and the likelihood of global risks that can shock the system--the types of events that are hard to plan for. "As Paul Volcker said in the early '80s, 'You can't hedge the world,'" Gibson says.

Throw all of that together with a requirement that a portfolio generate an inflation-adjusted income over a potential multi-decade timeline, and he says it can result in a rather small withdrawal rate. "Even for a client with $1 million, that sounds like a lot of money, but in terms of sustainable withdrawal rate from that, it's not as big as most people would imagine."

Withdrawal rates have long been a source of discussion--and at times, controversy--within the financial advisory industry. One of the thought leaders in this area, Jonathan Guyton, principal at Cornerstone Wealth Advisors Inc. in Edina, Minn., posits that a withdrawal rate in the 5.5% area--give or take a half percentage point--can be appropriate, particularly if small midcourse adjustments are made in response to market conditions.

Beyond that, Guyton believes people tend to manage their ability to have a successful or comfortable retirement in monetary terms without thinking about what he calls "lifestyle dividends."

"One of the key elements to retirement planning is discovering the things people are passionate about and places in the world where they want to make a contribution," Guyton says. "When you have something to keep your blood flowing, you're engaged and not spending money trying to find things to alleviate the boredom. And a plan with less spending will have a better outcome."

For some clients, Guyton says his firm divides their total portfolio into a core portfolio to fund regular retirement expenses and a discretionary portfolio to meet various spending needs that arise beyond established income payments. The latter account is set aside in a managed portfolio of equities and fixed income with allocations that depend on a person's time horizon, and it ideally represents 5% to 10% of the overall nest egg. "It's a way to take out money in a way that follows the best practices and research that helps ensure the money will be there for clients over the long haul," Guyton says.

He adds that the discretionary portfolio has two rules. First, clients can use it for anything they want. Second, once it's gone, it's gone unless the client falls into an unexpected windfall or takes normal sustainable income from the core portfolio and puts what he doesn't need into the discretionary portfolio.

As for what constitutes a comfortable nest egg, Guyton offers that a person in his mid-40s probably needs about $2 million by retirement age to have the same purchasing power with his portfolio withdrawal stream as a person today with $800,000.

Taming Volatility
The unnerving financial collapse of '08-'09, coupled with fears that market volatility will be more commonplace going forward, made a lot of investors jittery about the long-term health of their portfolios. Michael Henkel at Envestnet believes that annuities, along with alternative investments, commodities and basic diversification, can help mitigate those fears.

Henkel offers that the collective aversion to annuities is a mistake. "I'm not talking about variable annuities, which are kind of different beasts," he says. "I'm talking about annuities that are really more mortality pooling vehicles. There's an underuse of these long-term longevity, guaranteed payout products by both advisors and investors. These types of products should be in the mix, just like you wouldn't consider a portfolio without stocks and bonds."

Henkel says annuities, in tandem with some sort of systematic portfolio at a given risk level, will maximize the investor's probability of not running out of money while he's alive. He notes that Envestnet is putting a single-premium, immediate annuity onto its platform that's commission-free. "Annuities are beginning to change," he says. "Carriers are creating products that appeal to fee-based advisors.

"If you have guaranteed payment every day for the rest of your life, that and Social Security can cover a good portion of your monthly fixed costs, enabling you to take more risk with the rest of the portfolio," he continues.

Saving Retirement, One Investor at a Time
Melody Townsend, a financial planner in Mount Sterling, Ky., says her clients have assets between $250,000 and $1 million, including their homes and 401(k) plans, with the average being in the $500,000 to $750,000 range. Most of them are in their late 40s to early 50s and want to retire between the ages of 60 and 65. Townsend feels comfortable that most of her clients are on the right track because they don't have grand retirement aspirations to travel the world and live it up.

"They're mostly middle Americans who want to garden or volunteer or go away to the beach for vacation," Townsend says. "They're not looking for a lavish lifestyle. It always goes back to the notion that it's not about what you make, it's what you keep."

And it helps that her client base predominantly lives in Kentucky, a low-cost-of-living state.

Townsend is part of the Garrett Planning Network, whose advisors charge hourly rates for planning services. But she does have a retainer service to help manage client portfolios on a year-round basis. For retirees, Townsend meets with them annually to update their retirement plan and make sure they're still on track to meet their goals. "I usually project out to age 95," she says. "If they're going to live a long time, I don't think they'll be mad at me if they still have money left."

One of Townsend's retainer clients is a 64-year-old woman who didn't save enough money and is in a public pension. To supplement whatever guaranteed money the woman will have, Townsend meets with her monthly to go over her budget and plan her monthly spending. Townsend says the woman has gone from no monthly savings to saving about $300 per month since they started meeting regularly a couple of years ago. That is more than 10% of her monthly take home pay.

"I feel like it's a big success," Townsend says. "Initially, you have to get spending under control. That's how we can ease people into it who haven't started saving yet."

Selling the Dream
How did the modern notion of retirement come into being, or even become a "lifestyle?" When the U.S. was an agrarian society, people worked until they couldn't do the heavy lifting anymore, and then downshifted toward lighter chores when the younger generation took over the farm. Essentially, there was no retirement to look forward to and no backstop to support people in old age.

According to the book, The Evolution of Retirement: An American Economic History, 1880-1990, by UCLA economics professor Dora Costa, more than 75% of men over age 64 worked in 1880, and that number was as high 47% in 1950. Today, it's less than 20%, a decline that is partially explained by the dramatic rise in the number of octogenarians and nonagenarians.

Industrialization and urbanization transformed the American social and labor landscapes, and mandatory retirement laws that hit the books during the 20th century pushed older citizens out the door--many of them against their will. Social Security and pensions helped cushion the blow, and eventually "Retire at 65" became another rite of passage to mark one's life.

Meanwhile, several decades worth of marketing by the financial services industry has sold Americans on the idea that retirement will be a golden period of leisure. And for some folks smart and/or lucky enough to cash in on the new wealth-creating industries of the past couple of decades, retirement at 50 has become a new mantra.

"People are now looking at 20 to 30 years of retirement," says Troy Daum, founder of Wealth Analytics, a San Diego-based financial planning firm. "Nobody has ever done that before."

Daum feels that given the education demands of today's economy before people even enter the workforce, many workers aren't productive until they're in their 30s. "You take somebody like that, and the idea they'll work for 20 to 30 years and then stop, and then live off of their nest egg for 30 years, that isn't realistic," he says.

There are many studies showing how much better off most people would be if they: a) didn't take early Social Security at 62, b) kept working until 65 and then began collecting Social Security, or c) kept working past 65 if they enjoyed working and had the ability to do so.

Given the financial savings predicament faced by many people, it's not surprising that the EBRI's recent annual retirement survey found 36% of respondents expect to retire after age 65, a number that has gradually increased from the 11% registered in the initial survey in 1991. In that vein, 74% said they plan to work in retirement, which is far more than the 23% of retirees surveyed who actually worked for pay in retirement.

If working is the new retirement, then try telling that to the French, who last autumn took to the streets to protest plans to raise the retirement age from 60 to 62. And in the U.S., efforts to raise the Social Security age and keep people working longer is seen as a very tough--though perhaps, inevitable--sell.

Working through one's 60s and 70s isn't appealing or feasible for everyone, and in many ways it's easier to do for individuals in the creative and knowledge-based industries. But for the most part, human beings need to be engaged with something to stimulate them or keep them out of trouble. A retirement built around sitting on one's keister is neither physically nor financially healthy.

"What I refer to as good retirement planning is helping people recrafting those expectations from sitting on a cruise ship to realizing that even if you're not required to generate an income, you'll probably want to be engaged with something that's meaningful and enjoyable," Daum says. "With some creativity and perhaps some retraining, there are a lot of things you can do during your retirement years."

Daum believes the retirement crisis is real. He also thinks it's solvable. "It'll have to be solved on a case-by-case basis, and you have to challenge the notion of what the financial services companies have laid out as being the ideal retirement," he says. "If you can do that in a creative and positive manner, and be engaged and involved with something you have a passion for, that's a solvable solution to the problem."

It helps to have some money in the bank, too.