NEW YORK (CNN/Money) - I'm a 63-year-old retiree and have $150,000 in an IRA. My wife and I will need this money within five years. Where is the best place to put it where it will be liquid, safe and earn a high yield. I don't want stocks.

-- Frank Chang, Rancho Palos Verdes, Calif.

So basically you're telling me you want your money to be safe, but you also want a high return. Hmmm, low risk, high return -- now what in the world could be wrong with an appealing combination like that?

Only one thing: It's impossible, Frank! The combination doesn't exist. If you want a decent reward, then you've got to take some risks to get it. And that's true not just in the investing world; it's true in all other spheres of life as well.

You want a lucrative career? Well, you've got to risk putting some time and effort into education, or risk some of your money in starting a business. You want a good relationship? Then you've got to take the risk of asking someone out and getting shot down.

And when it comes to investing, if you want to earn a return that's high enough to give your $150,000 a decent chance of seeing you through retirement, then you've got to take a risk with that money. Not a crazy "bet it all on one roll of the dice" risk. But a prudent risk, like keeping at least a portion of that money in stocks.

When you say that you and your wife "need" this money within five years, I assume you're not talking about spending the whole hundred and fifty grand at once. In other words, I take it that you plan to begin drawing on your $150,000 nest egg to provide income throughout your retirement to supplement your Social Security and any other pension you may draw.

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What that means, though, is that your investing horizon isn't five years, but more like 20 to 30 years. A 65-year-old man has a 50 percent or so chance of living to age 85 and about a 13 percent chance of living to age 95. The chances that either you or your wife will be alive at age 85 or 90 are even higher. All of which to say is that you need to be investing your $150,000 as if it's going to be lasting you at least 20 years and perhaps much longer.

The other thing you need to remember is that, unless we're about to go through an unprecedented 20-to-30-year stretch where prices don't rise, inflation will push up the costs of the goods and services you and your wife will buy during retirement. That means that, ideally, you want at least some of your money to be earning a return that keeps your money growing faster than inflation.

If you put all your money in very liquid, very safe stashes like money-market funds or short-term bonds, the return you will likely earn over the long term won't exceed inflation by much of a margin. And that margin will get even thinner, if it doesn't disappear entirely, after you pay taxes on your withdrawals. Stocks, on the other hand, have a proven track record of generating returns that beat inflation by a wide margin; indeed, enough of a margin so that you actually have a return even after accounting for inflation and taxes.

Of course, stocks don't do this year in and year out. As the past three horrible years have shown, there are times when stocks can lose money big time. That's a risk you've definitely got to take into account, especially when you're retired and you're making withdrawals from your portfolio even as it's being pummeled by stock-market losses.

But you don't avoid the risk of investing in stocks completely. Rather, you hedge that risk by limiting the amount of money you put in stocks. In short, you build a portfolio of different asset classes -- stocks, bonds and cash -- so you have the possibility of participating in stocks' long-term inflation-beating gains while also keeping some of your money sheltered from the stock market.

The exact combination of stocks, bonds and cash you need depends on such factors as your tolerance for short-term swings in the value of your portfolio and how much money you plan to take from your portfolio on a regular basis once you start making withdrawals. But unless you plan on making very, very small withdrawals -- or unless you don't mind running through your $150,000 early on in retirement -- you are going to have to put some of your money in stocks.

Here's what I suggest you do. Go to the Retirement Income calculator at the T. Rowe Price Web site. Plug in the monthly amount you eventually plan to withdraw from your portfolio, choose the length of time you want that money to last, and then choose from one of the seven portfolio mixes of stocks, bonds and cash the calculator offers and hit the Calculate button.

Using sophisticated simulations based on historical returns for stocks, bonds and cash, the calculator will instantly tell you what the odds are that your portfolio will last as long as you want if you make the withdrawals you've specified. I think you'll find that if you expect your portfolio to provide income for any appreciable period of time, you're going to have to invest some of your IRA in stocks or, more likely, stock funds.

Yes, that does mean you'll be taking a risk on the market with that portion of our money. But if you don't want your portfolio to expire before you do, the risk of excluding stocks altogether is even higher.

Walter Updegrave is a senior editor at MONEY Magazine and is the author of "Investing for the Financially Challenged." He can be seen regularly Monday mornings at 7:40 am on CNNfn.