In tough times many dip into retirement savings

A bad time for retirement?

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NEW YORK (CNNMoney.com) -- As the economic crisis continues to hammer Americans, many are turning to desperate measures by dipping into their retirement funds to make ends meet, according to a survey released Thursday.

The 2008 Bank of America (BAC, Fortune 500) Retirement Savings Survey revealed that current financial conditions forced 18% of respondents to withdraw from their retirement accounts prematurely.

Accessing their retirement funds "should be at the bottom of the list," said Craig Averill, personal retirement solutions executive at Bank of America."They need to be cognizant of what this decision means."

The top three reasons for the early withdrawals include: credit card debt (25%); mortgage payments (22%); and recent job loss (22%), according to Bank of America.

Findings revealed 62% of the general public and 44% of affluent respondents are either behind schedule or have not started retirement planning - compared to 53% and 36%, respectively, in a March survey.

The March survey was the first conducted by the bank. The current survey was the first time it asked respondents about premature withdrawals due to the poor economic conditions.

Still despite the dramatic upheaval in the U.S. economy, Bank of America said, 68% said they haven't changed the way they save, invest, or manage retirement assets in the last three months.

"In today's economy, people are bombarded with messages that create a great deal of anxiety," Averill said. "It puts them in a position of indecision. They're concerned about making the wrong choice, so they do nothing."

The "most significant roadblock" most people face is being unable to save earlier for retirement, the report said, with 52% of the general population and 48% of the affluent responding as such.

"What the survey says on the whole is, people need to go back to basics," Averill said. "Remember the fundamentals. It can be painful sometimes to do a cash flow statement, but it's necessary. Focus not just on today, but the reasons you put a retirement plan together. "

The report states that for many Americans retirement has been pushed back. 43% of overall respondents said they believe they now face more years in the work force compared to a year ago. 36% of affluent Americans and 31% of those 50 or older expect a longer career.

Half of affluent respondents said they planned to "pursue a more cost-effective lifestyle," Bank of America said.

The bleak situation in many Americans' finances is compounded by future plans that are hazy, the survey found. Most - 59% of the general public and 52% of affluents - don't know or don't have a good idea of what they'll need to save to maintain their current standard of living, the report said.

Four in 10 Americans do not plan to change the way they save or invest for retirement in 2009, though 16% of the general population reported that they may not save anything for retirement in the coming year, the report said.

Almost half (44%) of the general population and close to two-thirds (61%) of affluent Americans are putting their investable dollars into savings accounts, where cash can be accessed easily, the survey said.

According to the survey, 37% of the general public and 33% of affluent Americans who have access to 401(k) and 403(b) plans do not participate in them. But 40% of the general population and 45% of affluents rely on defined contribution plans, including a 401 (k) as their primary source of retirement funds, Bank of America said.

Forty-two percent of Americans don't work with a financial professional, the report stated, but 22% said they would have, if they could have changed how they approached their retirement plan.

"Americans need to avoid panicking," Averill said. "Understand that there is a lot of information flying around. Find out what your retirement number is. Do the research, seek advice. And don't forget to breathe."

The survey, conducted by Braun Research via telephone, sampled 750 Americans from all economic strata, with a margin of error of +/- 3.6%, plus 250 affluent individuals with investable assets between $100,000 and $3 million with a margin of error of +/- 6.2%.