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By Carla Fried, Money Magazine contributing writer

PLOT TWIST: So you've recalculated and figure working just a few more years will put retirement in the bag. But someone forgot to tell your boss.

Unfortunately, when you hit your fifties and sixties, you can't count on job security. Munnell and colleague Steven Sass calculate that only 44% of men working between the ages of 58 and 62 are with the same company that employed them at age 50, compared with 70% two decades ago. While some of those job changes are voluntary, many are the result of employers in a tough economy trying to push out older, highly paid workers with early-retirement offers.

Just ask software engineer Brian Campbell, 51, of Glendale, Ariz., who had spent his entire 28-year career with the same company until he was laid off earlier this year. He and his wife Merna, 50, an accountant who earns $40,000 a year, have more than $600,000 saved for retirement, and Brian received a generous exit package. But he knows that's not nearly enough to support them comfortably for the next 40 or more years, and he worries about what will happen if he can't find work soon. "We're going to have to really downsize our standard of living to get by on my wife's salary," he says.

Everyone in the 10- to 15-year stretch before traditional retirement age needs to realize they could be let go at any time and prepare in advance, advises John Challenger, CEO of the outplacement firm Challenger Gray & Christmas. He suggests devoting the equivalent of 10% of your work time to activities outside your current job that will help you find your next one. Join an industry trade group. Attend conferences. Connect with colleagues outside your firm as well as inside; your next job could be one division away. Get your profile up on professional networking sites like LinkedIn.

Next: Polish your skills. Your résumé should look as au courant as a recent college grad's in terms of your knowledge of the latest technology and industry practices. "You hear so much about diversifying your retirement portfolio to ensure success, but it's just as important to diversify your career portfolio to make sure you stay relevant," says Mitchell.

If you do find yourself back in the job market after eons at the same company, make peace with the fact that you may have to accept a lower salary, Challenger says.

"Often people who've been at a firm a long time are paid above market because they have a specific knowledge of how that firm works or a specific skill that was highly valued at that firm," he says. "New employers aren't necessarily going to care." Instead, he urges, think of yourself as a house that needs to sell in a soft market: Set your price too high and you won't get offers.

PLOT TWIST: You check your 401(k) and see stocks have been in The Big Sleep for a decade. You want to put all your dough back in the mattress.

When former IBM vice president Gil Saenz, 58, retired two years ago, he didn't anticipate the market's recent swoon, which has reduced his 401(k) balance from $450,000 to $350,000. Saenz and his wife Sherry, 55, a retired criminal defense attorney, still have another $350,000 in a taxable investment account, bringing their total assets to a not-too-shabby $700,000. The $100,000 in losses (on paper, at least) made Saenz question his commitment to stocks, though. "In hindsight I should have cashed out," he says.

Plenty of near and recent retirees share Saenz's discomfort with stocks. But while it's understandable that the mantra "time is on my side" doesn't resonate as convincingly now as it did when you were in your thirties and forties, that's only because you're focused on the wrong finish line.

"The issue is not when you retire but how long you then expect to need income from your retirement savings," says Christopher Jones, chief investment officer at Financial Engines and author of The Intelligent Portfolio. "With that longer perspective - 30 years or more - keeping some of your money in stocks is the only way you'll get the growth you need to beat inflation."

A recent study by T. Rowe Price demonstrates how keeping a substantial portion of your savings in stocks boosts the odds that your money will outlast you. The firm ran 100,000 market and asset-allocation scenarios to gauge the effects on financial security over a 30-year retirement, assuming a $500,000 starting portfolio, an initial 4% withdrawal rate and 3% annual raises in that withdrawal to account for inflation. A portfolio 60% in stocks and 40% in bonds got the best results: It had an 87% shot at generating the income needed, with a median $395,000 left at the end of the 30 years should you need it. Dial the stock stake down to 20% and you'd be just as likely to get the income you need, but you'd be left with a cushion of only $180,000.

In fact, many financial advisers recommend that after the sharp decline in stocks over the past year, you should boost the percentage of your retirement account that's invested in stocks, not reduce it.

"It may go against your instincts, but rebalancing is important now to keep your stock allocation in place," says Christine Fahlund, a senior financial planner at T. Rowe Price. "You might even want to raise your stock allocation by 5% or so, since you can buy shares these days at much lower prices."

To dampen the risks of owning stocks in the short run, however, make sure you've spread your money among different kinds of shares - big and small company stocks, for instance, with at least 20% in foreign markets and no more than 5% to 10% of the total in shares of your own employer. It seems that many people have trouble with that last part: Financial Engines reports that 43% of 401(k) participants over the age of 60 have at least double that amount in unrestricted company stock. (For help with the right mix, check out the Asset Allocation tool.)

THE SURPRISE ENDING: You finally have the money to make a clean exit. Then, as soon as you stop working, the bottom falls out of the stock market.

Stocks held for the long term can be counted on to bounce back eventually. But if you need to sell shares just as they're dropping in value - exactly the scenario many newly minted retirees have faced over the past year - you run a sharply higher risk that your money will someday run out.

That's because when the market does recover, you'll have less money invested to benefit from renewed growth. Fortunately, there's a minor tweak that can dramatically cut your risk: Instead of following the recommended regimen of withdrawing 4% from your savings in the first year of retirement, then boosting your payouts by 3% each year to compensate for inflation, give up the inflation adjustment until stocks recover. A study by T. Rowe Price concludes that this simple step cuts the odds of running out of money over a 30- year period in half, from 22% to 11%, on a sample portfolio invested 55% in stocks and 45% in bonds.

Worried that forgoing your inflation raise will bust your budget? Pull a Brett Favre and go back to work part time to make up the "lost" income. You probably won't need to put in more than a few hours a week - a 3% increase on a $75,000 annual withdrawal equals only $200 a month.

You can also buy yourself some extra protection for those later years of retirement with a longevity annuity. Unlike an immediate annuity, which starts feeding you income as soon as you make the purchase - typically in your sixties - a longevity annuity makes payments only once you reach 85 or so. And it costs a lot less: Financial Engines estimates that you'll spend 8% to 15% of your retirement stash at age 65 to purchase a longevity annuity that starts payments at age 85 vs. 60% to 70% for an immediate annuity that generates the same income but starts payments 20 years earlier.

So if you retire at 65, an annuity that pays you $55,000 a year right away might run about $600,000; sign up to get the same $55,000 a year, only with payments not scheduled to start until age 85, and you'll pay about $115,000. Adding this guaranteed income source later in life might also enable you to leave more in your estate - a bonus if you're starting to worry about the best way to leave money to your heirs.

Happy ending. You just made it through the dangerous passage. Better yet: You've helped your kids handle the sequel.  To top of page

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