Q. You discussed the Federal Thrift Savings Plan in a recent column (“If you are in the Thrift Savings Plan, stay in it” 12/3/14). Now both 70, my wife and I will be taking payments this year from our limited IRAs and investments. We hope you can guide us on how to adjust our investments in our IRAs.

We own a small home worth about $200,000. We have one car. We are debt-free and we have medical insurance. I am retired from the federal government and my federal retirement pension is $55,000 a year.  I also have Social Security income of $2,000 a year. My wife has Social Security income of $6,000 a year. So we have a total annual family income of $63,000.   Our assets include $20,000 in money market funds, $50,000 in our Thrift Savings Plans, and $65,000 in IRAs at Fidelity Investments in various mutual funds. We are aware that the TSP program has very low administrative fees, which is a big plus.

 How do we best allocate funds our funds in the Thrift Savings Plan (stock fund, bond funds, and Treasury notes), as well as in the Fidelity funds? Currently we have a 70 percent stock, 20 percent bond, and 10 percent Treasury allocation in the TSP. We have IRAs in these Fidelity Funds: Puritan Fund, Balanced Fund, Capital & Income Bond, GNMA Bond, New Markets Income Bond and Spartan Treasury).  These generate about a 7 percent total income or return, I think. How should this money be invested? —J.F., San Antonio, TX

A. Before getting into fund or asset allocation choices, lets look at the potential role your savings have for your retirement. We can do that by comparing your total financial assets to your annual guaranteed income from pension and Social Security.

Your total financial assets are $135,000. That’s a little more than two years of your guaranteed income. This means your savings are more important as an emergency fund than as a source of additional income. Figuring a 4 percent withdrawal rate, for instance, you might spend about $5,400 a year out of this money, increasing your total income by 8.6 percent.

That’s material, but not life-changing. As you age, you’ll be required to spend more from these accounts.

So you really need to keep your annual spending (including income taxes) within your guaranteed pension and Social Security income. If you do that, you can use your financial assets for two things.

First, as an emergency fund. Second, as a special spending fund, something you access only when you have a special need that can’t otherwise be fulfilled. This money is your margin of safety. If you find yourself with a long list of pressing special needs, you should redefine what is important or your savings will disappear.

Here’s how you can simplify your investing life substantially, while having a good mix of security and potential return.

First, focus your Thrift Savings Plan investment in the “G” Fund. The reason to do this is that the G Fund has a unique advantage over other fixed income investments. It invests in a special, non-marketable security that provides an annual return equal to the average return of all Treasury securities with a maturity of 4 years or more. The average maturity of this group is a bit over 11 years. But the interest rate on this special security is reset monthly, so you don’t have the exposure to principal loss due to rising interest rates.

This fund is the second great benefit, after low fees, of the TSP. Not everyone appreciates it, but you will not find it elsewhere.

Second, consolidate your Fidelity funds into Fidelity Puritan, a balanced fund that is typically 60 percent stocks, 40 percent bonds.

Finally, use the money market funds, with their $20,000, as your first line of defense and the TSP G Fund holding as your second line of defense. Hope to hold on to your Puritan Fund for as long as possible. This arrangement will mean your total commitment to stocks is a bit less than 30 percent of your $135,000 in savings, but that is appropriate for the use of this money.