The Philadelphia Inquirer Web Wealth column [The Philadelphia Inquirer]

Sept. 29--Don't outlive your money. A carefully planned retirement means choosing options, way in advance, that are most likely to see you through with a minimum of financial worries.

Living longer than you expect -- a likely scenario -- is just one factor that could erode your retirement assets, says this post at Investopedia.com. Inflation and medical expenses are among the other real threats to financial security in later life. But, this article says, "knowledge is power, and if you are aware of these factors, you can take steps to ensure that they do not affect you." But how? Stocks (especially dividend-paying equities) and bonds, or funds that invest in them, continue to be the long-term road to growing your assets. And don't overlook options such as fixed annuities, from an insurance company, that could provide you a relatively safe and regular paycheck in retirement.

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Rates of return for safe investments are lower these days than many people near retirement would have expected when they started saving. Michael P. Jacobs, an investment adviser writing at USNews.com, offers tips for dealing with the new reality. First, he says, get used to the idea that, in general, "your income during retirement is lower today" than it might have been in the past. Then, he says, start maximizing what you have by paying down debt and getting fixed interest rates on debts you cannot eliminate. Don't be over-insured. Understand tax laws. And "don't chase yield" by over-investing in bonds such as high-grade municipals that "may be susceptible to a major correction."

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Scary-sounding guidelines noted by AARP.org contributor Jane Bryant Quinn say that you should aim for retirement savings "worth 20 or 25 times the amount of your annual living expenses that aren't covered by Social Security or a pension." If you are fortunate to get near such a number, start moving money out of stocks and "build up your safety-first investments," says Quinn, crediting portfolio manager and author William Bernstein.

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After retirement, where should your money be? Meghan E. Smith's post at HowStuffWorks.com says start by setting aside a three-month emergency fund that's easy to get to whenever you might need it. In addition, you may have an IRA account that you can begin to access after age 591/2. Look for safety in Treasury bonds, CDs, or annuities. You can put a lump sum into an annuity that pays a fixed amount, or if you live more wildly, buy into a variable annuity, "where you pick and choose how your money will be invested, and the rate of your return is dependent on the performance of those investments."

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rkanaley@phillynews.com

215-854-5114

@ReidKan

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