The answer to this question is a loud and clear yes. Putting your money under a pillow may save you from financial calamity for now, but it doesn’t take into account how you will live, how long you will live and how many emergencies you will encounter during your retirement. You want to give yourself the best chance at optimism that more money will be coming in even after the paychecks stop. But there is an enormous difference between investing while that paycheck is always a week or two away and when it stops showing up altogether. While you’re working, you can absorb an investment hiccup every now and then. After you retire, you could choke on too many hiccups.

Like just about every other financial decision you’ve had to make in your life, how and where to invest in the shadow of an impending retirement depends to a great extent on your situation. How much have you saved? Where is it invested? How long would it last if your life proceeded without any crises and if you lived 10, 20, 30 years or longer?

It’s safe to say that the wise retiree-to-be will at the very least modify investments in an effort to present less risk of losing money — the one thing you can’t afford to let happen once regular income gives way to Social Security and, with luck, a company pension and 401(k).

The first thing to do when preparing your retirement portfolio is to set aside an emergency fund, never to be touched except for an emergency. Put into a safe account — a regular savings account, for example — an amount of money equal to three months’ living expenses. Make sure the account is easily and quickly accessible. A savings account in your credit union would answer those needs.

Next, you and your investment adviser should examine your existing investment portfolio to determine which, if any, are high-risk assets. When you are working, you can tolerate some risk because those assets may offer the most return potential when they are going well. But, upon retirement, you’ll no longer be able to afford a sudden plunge in value. You’ll want to trade in some risk for some stability.

Treasury bonds are safe, for example, and have a fixed rate of interest, which means they guarantee a specific amount of growth over the life of the bond. That growth won’t match the most-successful stock, but it should outpace the worst, and with no loss of sleep on your part.

Certificates of deposit are another safe bet. There is one caveat with CDs*, however, that being that they come with a penalty for early withdrawal. If you’re sure you can leave them where they are for the term of investment, however, they’ll pay more than a standard savings account and guarantee a specific return.

Another option is an annuity*, which is actually an insurance contract. It comes in a variety of forms. The idea of an annuity is that you commit money to it, either in a lump sum or over time. These investments are generally made before retirement when you can afford them. You may choose a fixed annuity, with a fixed interest rate; a variable annuity, which relies on market investments; or an indexed annuity, which is typically invested in the S&P, for example, which consists of 500 of the biggest companies in the stock market.

Some financial counselors tend to advise increasing — not decreasing — the volatility of investments with retirement around the corner in the belief that it’s the last chance to score big before turning conservative. Remember, though, that such a strategy could backfire and leave you no time to recover. Staying conservative is not as daring but is far more comforting and secure. This is not the time of life to turn your investments over to a casino dealer.

The hope at this point in your life is that you had put enough into stocks when you were younger to build wealth. Sage investment strategy would also have ordained that you hand over some of your assets to less volatile but more secure investments that would help protect you from serious loss.

Now, it’s time to disencumber yourself from financial peril. Take some comfort in the fact that your investments should be a supplement to your lifestyle goals. Social Security and any pension you may have should cover the basic necessities.

Your investments provide you the peace of mind of knowing you can handle some adversity and the joy of knowing you can buy and spend, to some extent, anyway, the way you became accustomed to when you were working.

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* There are distinct differences between fixed annuities and Certificates or CDs. Most CDs are considered a short term investment. An annuity is considered a long term investment. The investment in a CD or Certificate is insured by the federal government, either through FDIC or NCUA. The investment in a fixed annuity is guaranteed by an insurance company. Like CDs and Certificates, annuities have a penalty for early surrender, and withdrawals taken before the age of 59 1/2 from an annuity may subject to a 10% federal tax penalty.

** Indexes are unmanaged and do not reflect the payment of advisory fees and other expenses associated with an investment in such securities. If such fees are expenses were taken into account, the performance would be lower. Investors cannot invest directly in an index. The holdings of the securities in your portfolio may differ significantly from the securities that comprise the relevant index. As a result, the composition and characteristics of the relevant index may differ materially for that of the securities in your portfolio.

Article created by John Kho Consulting. The views and opinions expressed in this article are those of the author, are for general education purposes only and should not be constructed as investment advice or an investment recommendation. For a discussion of your specific needs and circumstances, please contact your financial advisor.

Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. FR-3304763.1-1020-1122