One of my good friends sold her house last year in California.

The 69-year old plans to fund her retirement with the proceeds. After paying off her mortgage, she had about $500,000.

In April last year, we sat on the patio of her rented home overlooking Lake Chapala. She’s one of thousands of Americans living in a popular cluster of lakeside villages, just south of Guadalajara. The weather is perfect. The cost of living is low. But like so many other retirees, no matter where they live, she worries about her money. “How should I invest this?” she asked. “I need income. But I want to make sure the money lasts as long as I will.”

I suggested a diversified portfolio of low-cost index funds: about 60 percent in stocks and 40 percent in bonds. It would allow her to withdraw an inflation-adjusted 4 percent per year. That means she could withdraw more money every year. No matter how the market performs, her money should last at least 30 years.

Image by Pixabay

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