By Denise Trowbridge

The recession that ended in 2009 wiped out about $16.5 trillion in wealth, thanks to a precipitous drop in both home values and stock prices, and left a lasting sting in Americans pocketbooks. It also challenged, and in some cases changed, the tried and true rules Americans need to follow to retire comfortably.

The new rules? Save more, much more. Do more with less money. Work longer, and hold riskier investments in retirement in order to maintain a nest egg. Everyone, regardless of age, will also need to diversify, likely into investments beyond plain vanilla U.S. stocks and bonds.

The hope is the last recession will get people motivated to save, because the new reality is more, says Brad Huffman, a financial planner with Future Finances in Worthington. We used to say you needed to save 5 to 10 percent of your gross income (to retire), but that model is garbage. That wont do it. Everyone needs to be saving 15 to 25 percent.

Everyone needs to save more for several reasons. First, the pre-recession rule that investors could bank on 8- to 10-percent returns year after year to grow their nest eggreturns that made up for lax savingsare out the window. Economists and planners are realizing returns are likely to be more modest, and low returns are likely to last for decades.

The significant lesson of the recession was that our expectations were not realistic, said Paul Gydosh, managing director of Kensington Wealth Partners in Columbus. At best, investors can expect 5- to 6-percent returns, and then only with a savvy investment strategy. Lower returns mean individuals have to save more money, and have a larger nest egg, to maintain the same level of comfort in retirement.

While lower returns are one piece of the pie, the recession isnt totally to blame for the shakiness of retirement. Systemic changes in the workplace have been sawing at the foundation of the sacred three-legged stool of retirement securitysavings, Social Security and pensionfor decades.

Its hard to save when wages have stagnated since the 1970s, and even fell by 12.4 percent for working families between 2000 and 2011, according to the non-profit Center for Budget and Policy Priorities. The age at which workers can fully retire and claim Social Security benefits is rising, from 65 for those born before 1942, to 67 for those born after 1960.

The Center for Retirement Research estimates 53 percent of Americans wont be able to maintain their standard of living in retirement, even if they annuitized all of their assets and took out a reverse mortgage. Thats up from 44 percent in pre-recession 2007. The numbers are worse now, in part, because recent gains in stock prices have benefitted only about 30 percent of U.S. households, gains in house values have been modest, and Social Securitys full retirement age is rising.

Then, there are the disappearing pensions. Most of us will never have a pension. If we go even one generation back, people knew they could count on a monthly (pension check) and even if they only had a little saved on top of that, they could live fairly well, Gydosh says.

Those days are gone. In 1979, 28 percent of private-sector workers had an employer pension. In 2011, only 3 percent did, according to the Employee Benefit Research Institute.

People want to retire in the way their parents and grandparents did, but without a pension, its not going to happen, Huffman says. People dont understand the gravity of the shift.

Saving moremuch moreis the only way to make up for that missing steady check, and hold on white-knuckled to the potential for a comfortable dotage. Saving, not just investing, is what will get you there, Gydosh says. No matter what, you have to find a way to capture the money and save it. No matter how old you are, you have to do the heavy lifting, which is saving the money.

Unfortunately, it isnt easy to save, and most Americans are falling dreadfully short. While planners agree Americans should be socking away at least 20 percent of their income, households only saved about 3.8 percent of their income in March, the most recent data available, according to the Bureau of Economic Analysis.

The low savings rate is in part due to the immense financial pressures on todays workers, who are expected to do and save more, but have stagnant wages and rising debts. Gen Y and X are likely to be struggling with commitments such as huge student loan debts, while also paying a mortgage, taking care of young children, and possibly taking care of elderly parents. Boomers might have had their children move back in with them or might be shouldering some of the bills for their grandchildrens college. Costs for basics such as healthcare, college educations, and childcare have risen significantly, at a much greater pace than wages and inflation. Retirement also comes with higher costs, such as the price of long term care, healthcare and insurance.

Were facing amazing financial pressures. Things we couldnt have planned for 20 or 30 years ago, Gydosh says. But at the same time, theres been a massive shift in lifestyle in our country. We drive much nicer cars and live in much nicer homes than our parents did at the same age, but we dont realize were living an inflated lifestyle, because everyone around us is living the same way.

If that life means you arent saving enough, it might be time to reevaluate and make a lifestyle decision to save by cutting back, he says.

The recession indeed might have opened a few eyes to the big picture, says Andy Livingston, executive vice president of private banking at Huntington. His clients, at least, have been looking at their whole financial picture, looking for ways to improve cash flow to augment savings and meet longer term goals.

Huntington saw a wave of post-recession mortgage refinances, and Livingston suspects people were refinancing to free up more money for other needs. People were looking for ways to take the savings and put it into retirement and whatever else they were saving for. People arent getting huge raises at work, so theyve had to look at everything and figure out how to make the most of it.

But once the money is saved and in the bank or the 401(k) account, it has to be invested. In some ways, even that has changed since the recession. Diversification has always been an investment buzzword, but post-recession, that means spreading dollars across more categories of investments.

The traditional mix of U.S. stocks and bonds alone are not likely to protect people from future downturns. Diversification now means adding in other types of investments, such as international holdings, institutional real estate, and commodities, Gydosh says. For most people, that can be as simple as a low-cost target-date mutual fund which contains those types of assets alongside stocks and bonds.

Clever diversification can mitigate extreme losses when part or all of the market goes belly up. The recession reminded everyone that the economy is still capable of giant upheavels, and that it can be painful.

The recession was a shock to the system, Livingston says. A lot of people found out they werent as diversified as they thought they were, and their asset allocation wasnt what it should be. They didnt pay attention to what they were holding in their plans, they just saw they had X amount in the account.

If it was too stock-heavy, that account balance likely cratered during the recession.

The current advice is to diversify with an eye on carefully controlling the downside risk in the portfolio, Gydosh says, meaning minimizing personal losses when the next big doozy tanks the stock market. You have to be mathematical, and in the next big reversal calculate how much loss you will likely take and are comfortable taking: 100 percent, zero percent or somewhere in between.

Most would love to lose nothing, but the reality since the recession is safe doesnt pay, because of the exceedingly low interest rate environment, says Victoria Hayward, financial advisor and senior vice president of Morgan Stanley Wealth Management in Dublin.

CDs, savings accounts and bonds that were paying close to 5 percent in 2007 now pay next to nothing. Once you add inflation, youre getting negative rate of return, she says.

Savers have lost hundreds of billions in interest because instruments they own dont yield what they used to, Huffman says. The cost to savers has been tremendous.

That half-percent interest rate on savings accounts and CDs has blown up the traditional retirement advice to shift from risky investments such as stocks, to more stable ones such as CDs and bonds as retirement draws nearer. You cant do that anymore. There isnt anything out there that is safe and provides consistent income, Huffman says. To get a modest rate of return of 4 to 6 percent, you have to take on more risk, and the safety of that money is more questionable.

Low rates have forced retirees, who are the people least able to sustain risk, into being more risky with their money, Hayward says.

Its a shift that makes Hayward nervous, especially when other big-picture trends are factored in.

Americans dont have nearly enough money saved not just for retirement, but for any rainy day, and those who have saved have much riskier investments in their portfolios. Its the perfect storm, and it might mean the next downturn could be worsemuch worse.

There is no doubt there will be another downturn, and the next one could be worse if rates stay this low, because its forced people to be more aggressive (with investments), Huffman says. If more people have taken on more risk, that will only make the next downturn much more unpleasant, because a wider flock of individuals will feel the pain.

Denise Trowbridge is a freelance writer.