Three ways economy is destroying retirement and what boomers can do

US News & World Report lists three problems hitting boomers hard during the economic downturn and how boomers can cope:

Stock market declines — Retirement accounts have lost $1.6 trillion or 18.3 percent of their value, according to Urban Institute calculations. Individual 401(k) participants' average losses ranged from 7.2 percent to 11.2 percent in the first nine months of 2008, according to an Employee Benefit Research Institute analysis of 2.2 million participants. How can boomers cope? Pulling money out of the stock market isn't the answer if you want to have enough cash to finance 30 years of retirement. "The goal should always be to have a balanced portfolio that reflects the time horizon and taste for risk of the household," Mauricio Soto, a research associate at the Urban Institute tells US News. The Urban Institute found the typical retirement account for a worker age 50 or older has 50 percent of its assets in stocks.

Falling home prices — Boomers and older adults were major contributors of the housing boom. US News reports between 1998 and 2006, the inflation-adjusted median home equity for adults ages 55 and older increased by 42 percent. How can boomers cope? Tap their home equity to finance retirement. If at age 62, homeowners took out reverse annuity mortgages and chose a lifetime annuity option, their median annual retirement income would increase by 18 percent based on 2006 home values, according to recent Urban Institute calculations.