Saving Your Nest Egg in Tough Financial Times

Here's what three financial experts suggest to help you survive uncertain times.

Michael Mussio, portfolio manager of FBB Capital Partners in Bethesda, Md., recommends a balanced approach between bonds and dividend-paying stocks, to provide an income stream. The stocks that tend to hold up better in a downturn, he says, are consumer staples, health care and utilities.

50/50, if you're 50

"A good place to start, if you're 50, is to be 50/50 in stocks and bonds, or if you're 60, then it's a 60/40 mix, with 60 percent in bonds," he says. "Bonds are not yielding what they had been historically, so if you'll need more income from your portfolio in retirement, you'll have to rely on equities to get you there."

But Pamela Yellen, an author and founder of BankOnYourselfNation.com, a website dedicated to helping people achieve financial security, says older investors own far too much stock. She calls that "gambling."

"Conventional wisdom about how to save and invest for retirement is not working," she says. "Is the answer to keep doing what we've been doing? I don't think so."

In Yellen's view, Wall Street has been "brainwashing Americans that we have to risk our money in order to grow it."

Whole life, indexed annuities

She suggests that investors ages 50 to 65 buy a dividend-paying whole life insurance policy with riders or options that "supercharge" the growth of the cash value in the policy, especially during the early years of the policy. She says the growth in these policies is guaranteed and predictable with no market volatility.

Yellen also recommends indexed annuities that are tied to the market but with caps for losses and gains.

If the market goes down, she explains, you have no capital loss. If the market increases, say by 10 percent, investor gains may be capped at 7 percent. Some annuities offer a rider that provides a guaranteed lifetime income benefit.

Equities at all ages

Kevin Cook, a senior stock strategist at Zacks Investment Research in Chicago, says he believes in equities to boost portfolios. Older investors, he says, should consider their time horizon to retirement before making any decisions.

If someone has 10 years left in the market, it's a "no-brainer" to be putting money to work in stocks — there are lots of big buying opportunities to take advantage of right now, he says.

And if you have five years left? "There are still stocks and sectors that one should be nibbling on at these levels," he says.

As for those who need their money in the next two years, he says, "it's a good time to just sit back and see how this unfolds."

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Carole Fleck is a senior editor at the AARP Bulletin.