Diversify investments to get through retirement years

For example, Sheila Robertson's plan for a comfortable retirement was upset when her aunt left a considerable fortune to the International League for the Protection of Horses.

Close to retirement, Robertson has had to take stock of her funds, saved from a lifetime of working. She took a course in investing and has begun to ease her savings from the bank by investing in stock mutual funds.

Financial planning for retirement requires long-term thinking as well as adjusting for the day-to-day spending needs.

Greg Cable, spokesman for the Charles Schwab Corp., discount broker and mutual fund company, asks people considering retirement financial planning, "Do you have both the capital and income to fulfill your retirement ambitions?"

First, review your financial situation. Write down everything — bank accounts, mutual funds, insurance bonds, annuities, 401(k) plan funds, IRAs and other pension-type accounts.

Second, determine the percentages in each category: cash, bonds, stocks and other.

From these percentages, you can allocate where you wish to place your funds.

You can see the end of your working life. You've visited a financial planner — finally. You need to get yourself in a position to enjoy gains in the stock market and reduce low-interest deposits. Now is the time for taking calculated risks.

A typical portfolio for a couple in their mid-50s would include only about one-fifth in low-yielding money market or bank deposits. Fifty percent of your available assets should be in a stock mutual fund offering a balance of growth and income. Growth shares tend to offer little income — which you won't need at this stage, but with the potential for capital gains. Income shares are not as risky and offer a higher income at the expense of lower capital gains.

A widely held growth-and-income fund is the Vanguard Index Trust stock mutual fund. This fund invests in the largest 500 shares in the economy, including all the blue chips. Further, it is one of the cheapest mutual funds in the country, charging only 0.2 percent per year in annual charges with no front- or back-end charges.

The remaining 30 percent of your portfolio could be invested in a fund with a higher potential for growth, perhaps a smaller company mutual fund. Don't invest only in a single company's shares.

Many shy away from the stock market because of its continuing record highs and sharp dips. Investing an equal amount month after month in a mutual fund greatly reduces potential damage from stock market falls. Erratic on a daily basis, the stock market always outpaces inflation, taxes and bank deposits over five years. Over a longer period, investing in the stock market is actually safer than keeping money in the bank.

If you have an IRA and a company 401(k), consider investing in an annuity. These products wrap around investments, such as insurance company bonds or mutual funds, and allow for tax-deferred growth. Usually, you can withdraw up to 10 percent of the value of the fund without paying taxes after you reach a certain age. Annuities offer income until you die — useful for providing for long-term care.