Q. I have three target 2020 retirement funds, one each at Vanguard, Fidelity and Schwab. Each is worth about $300,000. I am 64 years old and would like to retire in a few years. A wise thing to do might be to "ladder" these funds, converting one to a 2015 fund, the next to a 2025 fund, and the last to a 2035 fund. The plan would be to withdraw, say, $30,000 a year from the earliest fund until it is depleted and then move on to the next fund. What do you think? How risky is this? —D.Z. by email

A. I don't think this is a meaningful set of actions. The fundamental question is how much will you be spending from the total portfolio? And is that a reasonable rate? Your withdrawal rate of $30,000 from a total portfolio of about $900,000 is only 3.3 percent. This is quite conservative.

A second fundamental question is: What is the asset allocation of your total portfolio? Building a ladder of target funds or having baskets of assets is an arrangement that may not change your basic asset allocation. If, for instance, you put equal amounts in a 2015 fund, with relative high equities; a 2025 fund; and a 2035 fund with relatively low equities, your actual asset allocation would be similar to having all the money in the 2025 fund because the three funds would average about 2025. Another matter to consider is that different fund firms have different asset allocations for the same target retirement date.

Q. What is your opinion on a variable universal life (VUL) policy? I am about to turn 30. I have had a 403(b) since I started teaching 5 years ago. My financial guy now wants me to start a VUL with his company on top of TRS (Teacher Retirement System). I already have a whole life insurance policy of $200,000 through my insurance company. What should someone like me do: a Roth IRA or this VUL policy? I get the cost of insurance back with the VUL. I would like to do one or the other because both are tax-free when I start drawing money out and I like that. —G.S., Garland, TX

A. Variable Universal Life policies vary a great deal in their expenses and commission burden so it's dangerous to generalize. You or your salesman, however, may have put the cart before the horse. The most important starting question when considering life insurance is this:

Do you need life insurance and, if so, how much do you need and how long will you need it?

For most people the need for life insurance is temporary. It is greatest when you are young and have unfulfilled commitments to a spouse and children. That can be done with a term life policy. It will provide coverage while you need it at very low cost. If your "financial guy" is offering a life policy primarily as an investment vehicle the best I can say is that his judgment is clouded by dreams of a commission.

Many people jump at the "tax-free" aspect of making withdrawals or borrowing from a cash value life policy. But they are failing to ask whether the cost of the policy is greater than any tax rate they may ever face.

Let me give you an example. Suppose the insurance costs related to a policy are 1.5 percent a year of cash value. Then your cash value would have to earn at a gross yield of 10 percent of cash value before the cost burden would be only 15 percent. In effect, you would be paying the insurance company what you might otherwise pay in taxes if you were investing in a taxable account. If the gross return were 6 percent, you'd have an effective tax rate of 25 percent, which most teachers don't have.

If you examine the projection of values for the policy you will find that the insurance costs of the policy as a percent of cash value are much larger than 1.5 percent a year. You don’t get the cost of the insurance back; you get a lower return on your cash value than you otherwise might have had.

Bottom line: go for greater flexibility. Look for a low-cost vehicle for a Roth IRA. While most of the certified providers on the Teacher Retirement System of Texas list are high cost burden insurance companies you'll also find Fidelity and Vanguard on the list. Sadly, they are not available in all school districts.