Jane Bryant Quinn, a personal finance expert who also writes for AARP Bulletin, joined Carrie Schwab-Pomerantz, a vice president of brokerage firm Charles Schwab, for a live chat about financial security in retirement on Feb. 1, 2011.

Here is a transcript of the chat:

Carrie Schwab-Pomerantz: Hi, I am Carrie Schwab-Pomerantz and I have been servicing family financial needs since I've been working for my father's company since I have been 16 years old. I understand today we have so many financial priorities to juggle and I am excited to be a part of this chat.

Jane Bryant Quinn: I'm Jane Bryant Quinn. You've read me in Newsweek and The Washington Post over the years. And now I'm thrilled to be your monthly columnist in the AARP Bulletin. As you know, I have a new book out, Making the Most of Your Money NOW, which has a lot about saving and debt, and especially planning for retirement. I'm looking forward to talking to you about it.       

Question from Tom Balchunas: My wife and I are 60 years old. Our retirement funds are in fixed income funds, money funds and bank CDs for safety. Our bond funds continue to lose money. Where do we go for some sort of growth plus safety?

CSP: I would say that you never know how the markets are going to move. Some days bonds are in favor and other days stocks are in favor. We believe to minimize risk, you should always maintain an asset allocation made up of a diversified portfolio of bonds, stocks and cash, percentages based on your time frame of when you need the money and risk tolerance. Sticking to a diversified portfolio and an asset allocation is the best way to minimize risk and maximize returns.      

JBQ: Great points, Carrie. [These investors are] clearly very conservative and have been afraid of the stock market. You have to consider this when making your future plans.

If you don't have a capacity for taking risks, I don't think you should allocate a lot of money to the stock market, even though the long-term numbers suggest that you should. I think you should probably try putting a small percentage of your money into a stock-owning mutual fund, not individual stocks. I'm a fan of stock index funds that follow the market as a whole.

Another point about bond funds: When interest rates go up, the manager of your bonds is buying bonds that pay higher interest, so the income from your bond fund increases. If you use that income to reinvest in your bond fund, you're buying shares at a lower price. So, you own more shares.

In the future when interest rates go down again, your share values will go up. People often forget about these points.

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