Tom Murphy
RedwoodAge.com

Forty percent of affluent boomers are "downsizing" their lifestyles in response to the current economic slowdown, according to a private nationwide survey.

The survey, conducted in April by Opinion Research Corp., also found a quarter of the well-to-do respondents were changing their retirement plans due to the souring economy. That included 31 percent of the women and 19 percent of the men.

The 500 survey participants were all 60 years old, placing them on the cusp of retirement. But they are luckier than most of their 78 million peers, holding "investable" assets of $1 million or more, according to Bell Investment Advisors, which funded the survey. The Oakland, Calif.-based firm manages $500 million for 650 clients.

The changes they're making will have impacts far beyond the country club, with ramifications from nonprofits to the service sector to the job market. 

Among the lifestyle changes noted, 22 percent said they were contributing less to charity, 21 percent changed vacation plans, 18 percent said they cut their retirement savings and 11 percent planned to postpone retirement.

It isn't the first time a survey has shown fear among the boomers, who are often incorrectly stereotyped as hoarding cash. Another recent study  found two-thirds of relatively wealthy boomers - those with $100,000 to $500,000 in assets - were worried about running out of money as they age. 

Numerous other studies have shown a broader range of boomers are worried they didn't save enough for retirement while raising their kids or tending to aging parents. There is even limited evidence that less-fortunate boomers are even starting to inflate the ranks of the homeless as they retire in what the president calls "tough times" without pensions, savings or adequate social safety nets. 

Long-term View
"The key to navigating the slowdown is to remain rational and stick to a plan, rather than letting emotions steer you off track," said Jim Bell, founder of the investment firm. "An economic slow-down is measured in months in contrast with retirement, which will last several decades for most boomers."

Many of the millionaire boomers said they were changing investment strategies in response to a potential recession. Only one in five planned to invest more in stocks and stock-based mutual funds. Instead, 37 percent planned to focus on money market funds and 32 percent were taking new interest in bonds.

Bell disagreed with that conservative response, saying "boomers must learn to live with the volatility" of stocks.  He said the more conservative investors "are actually putting their retirement at greater risk, since bonds and money-market funds have trouble keeping pace with inflation."

About 30 percent of the boomers said they felt more financial stress than six months ago, and one in four said they either lost a job or knew someone who lost a job in the past year. Women were more likely to feel stress than men, and people on the East and West coasts reported more stress than those in the central states.

Two in five of the affluent boomers were cutting spending, including half of those in the northeast and 46 percent of those in the west. But only 4 percent said they had moved to cheaper housing.

About 54 percent said their primary goal in savings was to achieve higher returns in the next five years, which Bell noted runs counter to the idea of investing in more conservative instruments.

"Boomers will not achieve higher returns if they shift to more conservative investments as the survey findings suggest," said Bell, who advocates higher risk with more assets in volatile growth-oriented stocks.