Q: You have often cautioned against withdrawing more than 5 percent a year from retirement funds. Would you modify this rule of thumb for someone who retires later, such as age 75 or 80?

In the case of required minimum distributions from IRAs, a person deferring retirement could take the RMD and invest it outside of the IRA rather than spending it until he finally needed the money at age 75 or 80.

Also, even if the person retired at 65 and had the means to avoid using his rollover IRA to live on, inflation might eventually catch up, and he would need to begin spending his retirement funds at age 75 or 80. -- A.T., Cedar Hill, Texas

A: The older you are, the more liberal you can be with distributions from your nest egg. The reason for this is simple: The shorter your life expectancy, the larger the distributions you can make without danger of running out of money.

But don't start to party yet.

While most of the research says you can safely start with a withdrawal rate of 4 percent to 5 percent a year, a newer school of thought believes the safe withdrawal rate depends on how stocks are priced at the time you start making withdrawals.

If stocks were cheap and selling around eight times trailing earnings and offering high dividend yields, for instance, history shows that you could easily withdraw more than 5 percent a year. That would have made 1980 or 1981 good years to retire.

But if stocks were expensive and selling at a high multiple of earnings and offering low dividend yields, history shows that a higher withdrawal rate can be fatal to your nest egg. That would have made 2000 or 2001 bad years to retire.

One of the best ways to deal with this uncertainty is to turn a portion of your portfolio into a life annuity each year. You'll lose the principal, but your income will increase. You'll be able to continue with a 4 percent to 5 percent withdrawal rate on your nest egg but can enjoy the higher income from your life annuity.

According to http://www.immediateannuities.com/, for instance, a 65-year-old man can buy a lifetime income of $852 a year with $10,000. But the same amount will buy a lifetime income of $948 at 70 and $1,148 at 75. As you would expect, all of these amounts are substantially higher than the 4 percent or 5 percent safe withdrawal guideline.

But don't expect miracles. Annuitizing will do nice things, but it won't do wonders.

Q: I have always heard negative things about annuities, and my financial adviser is advising me to put all my money in one. It is called Allianz Life MasterDex 10 fixed index annuity. Please help me understand if this is a good decision or not. I am 48 and hope to retire at 59 1/2. -- G.R., by e-mail

A: The first thing you need to understand is that you are not dealing with a "financial adviser." You are dealing with a salesperson who carries a card that says he is a financial adviser, consultant, whatever. The rude fact is that 100 percent of your salesperson's income comes from sales commissions, and the product being sold carries a commission that is better than most -- for him.

Your salesperson wants to make a sale, collect a commission, and move on to his next prospect. He or she may be a devoted mother, a doting father, and an active member of your church or social group, but you are just red meat in the prospect book. I suggest that you read, very carefully, what you will lose if don't hold this product for a long time.

One of the best rules of thumb in personal finance is that when someone wants to sell you the one product that will solve all your financial ills, you need to hold onto your wallet or purse and leave the room as quickly as possible.