Fix your portfolio

Problem: Retirement is close at hand, and the pounding you took in 2008 proved you can't stomach the risks you once could. (Before the downturn, 40% of 401(k) investors ages 56 to 65 had 80% of their money in equities, according to the Employee Benefit Research Institute.) But you worry that if you cut back on stocks, your nest egg won't recover or provide the growth you'll need in retirement.

Losses last year: 18% to 35%

Goal now: You want to reduce risk without giving up on growth entirely. And you need a steady stream of income.

How to get there: Reduce your equity stake. The hideous market may have already done the work for you: If you had a 60% stock allocation a year ago, it is probably more like 50% now. Consider the asset mix at right. It will kick off more income than you may think. That's because as prices for high-quality bonds and stocks have tanked, yields have climbed. Dividend-paying stock funds, for example, are yielding 2.5% to 4%. Add it all up and a mix of 45% stocks, 5% REITs and 50% bonds might give you a yield of 4.5%.

As you get older, make sure you've added some cash to this mix - you'll get a better cushion against market downturns. Mari Adam, a financial adviser in Boca Raton, Fla., suggests a one-year CD: Some are paying 3.5% or more.



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