As a first step, divide your nest egg into three
; Money you’ll need within four or five years.
Keep it in a bank or a money market fund—any
account that is readily accessible when the
; Money you won’t have to touch for 15 years
or more. Keep it in well-diversified stock index
funds, which track the market as a whole rather
than trying to pick individual companies. Low-
cost stock index funds are offered by Vanguard
and Fidelity Investments. T. Rowe Price has in-
dex funds, too, but they cost a little more.
; In-between money. Keep it in bond mutual
funds. When interest rates rise (as most people
expect to happen in coming years), the value
of bond fund shares will fall. But managers
will be snapping up those new, higher-interest
bonds, so the income from your fund will rise.
When rates fall again, in the next recession,
the value of your shares will go back up. If you
reinvested your dividends, you’ll have more
shares working for you, too.
Keep your job, if possible.
Or get one, if you’ve already retired. Every extra year
of work improves your Social Security benefit,
increases your savings (assuming you save) and
reduces the number of years that your nest egg
has to last. It might bring you health insurance,
too. Public schools, hospitals and government
agencies offer benefits. Some private compa-
nies—including Costco, Home Depot and Wal-
Mart—give benefits even to part-timers (usually
with a waiting period).
Do whatever you can to keep health insurance.
If your company offers re-
tiree coverage, don’t even think of moving to
another city or state until you find out if you
can take your coverage with you. Most plans
won’t follow you or will charge you more at a
If you need individual coverage, check with
local health insurance agents who can round
up plans suitable for you (you can find an agent
through the National Association of Health
Underwriters, www.nahu.org). For the lowest
premium, pick a policy with a high deduct-
ible. You may pay more out of pocket if you be-
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