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More and more over the years, working people in this country have found that the laws have been actively shifting responsibility for American workers'retirement survival away from the companies that employ them, onto the workers themselves. Apparently, the fact of the change hasn't really sunk in yet, because there are far too many people who are still providing inadequately for a retirement income, come the day they need to step out of the workforce. It's as if they still think that they have a comfortable pension to look forward to. My father, in the middle of the cratering of the stock market two years ago, was just 60, and freshly retired. He had no pension, and his Social Security benefits were still years away. He had nothing to go on but his savings. He wanted to exercise the option of cashing out his stocks, but he was worried about how he would then have nothing to turn to if he lived to be 90.

When all these newly-retired people all around who had just been set free of a life of hard work watched their entire life's work disappear as the stock market went up in smoke, the general advice they got back then, what my father got too, was to withdraw less each month to preserve their capital, and then to go work at Wal-Mart. Now my father did not want to do that; and his reasons were novel. He felt that he would only need to see his investments differently in his mind. He visualized having two sets of investments one was cash and bonds that could see him through the first half of his retired life; the other part was the stocks he held that had taken a beating in the recession. He thought he would leave his stock funds untouched, and believe that they would bounce back one day so that they could fund the latter part of his retirement.

Believe it or not, this plan that my father has picked for himself is exactly the thing that experts recommend these days; in fact, it's been bandied about for about two decades now. As long as you had a stock market that's treating you well in retirement, the 4% rule, the undisputed benchmark in retirement planning, applied. The rule says that as long as things are going well, you're supposed to invest your retirement nest egg about 60% in stocks and 40% in bonds. You can start out withdrawing 4% a year, and go up on a sliding scale from there to keep up with inflation. They said that you had a 90% chance of staying solvent up until your last day this way. The rule however, does not really hold together in severely difficult times such as these.

The main spanner in the works in finding a way to fund retirement income is inflation. If it weren't for it, you would just need to invest in bonds to be set for life. But with inflation, you need to invest in something that will grow your fund because even with very low inflation, in 20 years, your dollar will buy you just half of what it does now. A great way to guarantee a decent retirement income would be to divide into five-year periods the time you have after your retirement, and adopt a different strategy for each five-year period. In the first phase, as soon as you retire in a time like this when interest you get approaches zero, you put your money in an immediate payout annuity for a five-year period. Once this is done with, you'll need to find a deferred annuity or a bond ladder to generate your retirement income. The idea is that each phase of your retirement asks for a slightly more risky investment strategy to make up for your falling capital, and for rising inflation.

Of course there are some who say that this kind of measured response will do nothing through a difficult financial period such as this. They say, invest in mutual funds as aggressively as you can, because trusting in the markets is your best chance.

The author has been writing articles online for 4 years now. Come visit his latest site www.pollsandreviews.com that discussesby Pawan Agrawal.

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