February 15, 1998

Q. I am 64 and expect to retire in the next 12 to 15 months. I have approximately $56,000 in Fidelity Growth and Income and also make a $500 monthly contribution to a 401(k) program. Upon retirement I expect a $1,000 monthly Social Security check. What do you suggest I do with my money now that I am approaching retirement? I know the market can be very volatile, and I don't want to take a chance of losing what I have finally saved up.

T.F., Los Angeles

A. Most people begin moving their retirement savings into more conservative vehicles about five years before their anticipated retirement date, so it's certainly time for you to make some changes.

A typical retirement portfolio is dictated by several factors -- income needs, level of savings, and appetite for risk. If a person has sufficient retirement assets so that they can put half of their savings in fixed-income securities and live comfortably on the income stream thus provided, and if that person is comfortable with the risk, they might leave the balance of their savings in a conservative stock-oriented portfolio -- perhaps a few growth funds, but with a heavier emphasis on balanced funds and growth and income funds. But if the person is in a more typical situation, they will find that two-thirds or more of their savings will be required in fixed-income funds to provide them with funds to meet the monthly nut, thus leaving only one-third or less for future growth.

I suggest that for your analysis, you combine the assets in your 401(k) with the current Fidelity holdings, and work out a potential budget for retirement. Then determine how much of the combined assets need to be in fixed-income funds to meet your regular needs. The rest might be invested in a stock fund portfolio. If you were doing this through Fidelity, you might have the lion's share of your retirement savings in vehicles such as Spartan GNMA and Intermediate Bond, while the stock end of the portfolio might go into funds such as Puritan, Equity-Income, or Equity-Income II.