Buttress a Nest Egg With a Cash Stash

As you enter retirement and start tapping your savings, most financial advisers recommend that you keep anywhere from one to three years' income in cash--safe, easily liquid investments, such as money-market mutual funds, bank money-market accounts or certificates of deposit. Your longer-term investments, such as bonds for income and stocks for long-term gains, should be held in separate buckets.

You'll need the cash bucket in case your riskier accounts, such as stocks or bonds, are in a bear market. If the stock market falls 12% in a year and you're withdrawing 5% a year, your account will be down 17%.

If you take your money from your cash bucket, you'll give your stock account time to recover--and avoid