If you'd like to know where to invest your retirement money, there are virtually thousands of asset allocation calculators that will tell you. Go to the web site on any mutual fund company or brokerage firm for the free use of their asset allocation program. You simply answer a few questions about risk preference, give your age and presto they'll tell you where to invest your retirement money. There's only one problem: the results you get are rigged to give answers that create sales for the host company and their brokers. Invariably the recommendations will be stocks and bonds -- no bank CDs, annuities or other non-brokerage options. I call this "broker-channel bias" because the advertising might of the large investment firms put other alternatives at a disadvantage. Far too many retirees are listening to the loudest voice when it comes to investment choices. My advice is to re-balance your mindset about retirement choices before you re-balance your retirement portfolio. Let me illustrate my point.

Many of you are in the red zone right before retirement, or you've already retired. No doubt your number one fear is running out of money in retirement. You're part of a very large and growing demographic force: 35 million over age 65, 50 million drawing Social Security and 78 million baby boomers now turning 62. This means the future demand for everything used by the "retirement set" will increase, and "retirement prices" will rise dramatically. Many of you may have accumulated a retirement nest egg in a pension account, will draw a company pension and/or have other savings and investments earmarked for retirement. Where should you keep your retirement money?

If you're keeping up with economic and financial developments, here's what you're seeing: sub-prime credit meltdown that has destroyed housing and is now spilling over into automobile debt and credit cards; highly volatile stock and bond markets; a weak dollar fueling higher prices for oil and other goods; more unemployment and rising inflation; retail sales, consumer confidence and new jobs creation in sharp decline; drastic interest rate cuts by the Federal Reserve to avoid a recession; a money giveaway stimulus package from Washington to prop up the lagging economy; widespread talk of recession and stagflation. These all add up to troubled economic times which should prompt you to review where you have your retirement money.

You're told the stock market is the best long term, but "long term" has a different meaning in retirement. Didn't the dot.com stock market meltdown in 2000-2002 send many retirees back to work and prevent others from retiring? Aren't the current inflation-adjusted stock market indexes below their previous peaks? Regardless, the loud voices of Wall Street and investment companies are advising you to buy now at bargain prices. Are the markets headed higher or is their advice self-serving? Who can forecast the economy or the stock market?

If the stock market craters as it did in 2000-02 and 1973-74, and you lose some of your retirement money, how will you replace it? Since there will be no second chance, I encourage you to think carefully before you commit your money. If you've been told that you'll do just fine over the longer run (generally meaning ten years), make sure you can wait this long for a market rebound. Also remember that a rebound is not certain!

What about fixed rate places like government bonds, bank CDs and money market accounts? These are rock-solid safe unless your greatest fear is outliving your money. Since current fixed rates are lower than inflation, you'll be losing purchasing power with these choices. The potential loss of purchasing power will only add to the risk of outliving your money. What about real estate, collectibles and non-market investments? These are not only risky but generally illiquid. Before committing your retirement money, ask yourself this question: "How will I handle the worse case outcome?"

There is one savings place that offers an "opportunity" to make an above-market rate of return without the risk of loss if held to term. It is guaranteed by some of the world's oldest, strongest and largest financial companies. The rate of return is determined by stock/bond market indexes with owners sharing in the upside potential but avoiding downside losses. The worse case outcome is a guaranteed positive rate of return. The earned interest is income tax deferred until actually withdrawn and there is no mandatory age when the money must be used. Additionally, it can be turned into a guaranteed lifetime income that can be started, stopped and stored. What's more, it offers penalty-free partial liquidity for emergencies and bypasses probate if the owner names a beneficiary. It can be opened for a small or a large amount, and sometimes more money can be added later. There is no law which limits the amount of money that can be placed in it. It is truly a safe place to keep retirement money.

It is maligned by Wall Street and bankers because it competes with their products. The financial press doesn't like it either - primarily because they are uninformed, misinformed or just plain biased. I'm talking about fixed index-linked annuities that are offered by insurance companies: the same companies that insure your home, live, health, business and other valuable assets. The worse case outcome is a positive, albeit small, rate of return if held to maturity, but there is an opportunity to do much better. Fixed index-linked annuities are not for everyone, but you need to consider them as one of your safe options for retirement money. Where are you keeping your retirement money in today's uncertain and troubled economic climate? If in risky places, now is a great time to review your options.

Shelby J. Smith, Ph.D.

of TheRetirementPros.com

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