But many people enjoy the prospect of moving into a smaller home, possibly in a new area and with modern energy-saving and green amenities. Others like to have a property they can rent out, using the rental income to pay all or most of the mortgage.

Variable annuity

As you approach and reach the retirement phase of life, the value of insurance becomes ever clearer. While the traditional whole-life policy has not been completely wiped out of the marketplace, it competes with newer products, such as the variable annuity, which allows investors to hold what is essentially an insurance policy with the option of investing cash balances in stocks and bonds.

This provides the opportunity for gains on the cash balances above inflation, a key component to keeping the value of your insurance over time. It's best to be stingy when selecting a variable annuity, however, as fees vary widely. Be sure to understand all costs, including annual fees, underlying investment fees and both front- and back-end sales fees.

Most financial planners feel that variable annuities are best suited to people who have some concern about themselves or their beneficiaries outliving their savings. With a variable annuity, you relinquish some potential investment gains for the safety of insurance.

Individual retirement accounts

Individual retirement accounts are the cornerstone of the modern retirement portfolio. If you've been investing for many years, chances are high that you've already got a well-funded IRA.

All of your 401k assets should end up in either a traditional or a Roth IRA shortly after you head out the door of your last job. And if you're over 50, you can add to your account over and above the standard annual contribution limits. IRAs eliminate capital-gains taxes and can help reduce future tax bills.

When transferring assets to a Roth IRA, you'll have to take a short-term hit by paying income taxes, but you'll gain the huge advantage of receiving tax-free income for every penny of it down the road.

When planning moves to and from IRA accounts, it is crucial either to know all the rules or to consult a tax pro. You may find it easier to move chunks of money over several years to spread out your tax bill. But if you hope to be drawing down on your IRA for 20 years or more, the tax savings in the future make the Roth the best option.

Assets in your IRA should reflect your overall asset allocation. For many people, the IRA already represents the bulk of their net worth, so proper allocation is all-important. Most standard securities, like stocks, bonds and funds, can be bought inside an IRA account, and the IRA itself can be maintained for minimal fees at numerous financial institutions.

Finally, IRA assets can be passed on through your estate so that your heirs can continue to benefit from the power of compounding.

The wild card

Good investment ideas often involve being creative and knowing what you love to do. Anything you enjoy can potentially become a good investment opportunity, such as:

  • Paintings and fine arts.
  • Classic cars.
  • Sports memorabilia.
  • Coins and collectibles.
  • Starting a business.

If you have an interest (preferably combined with a fair amount of knowledge) in a particular area, you should feel empowered to take it as far as you like. After all, we live in an increasingly age-defying world, where passions and energies aren't just for the under-40 crowd.

Any of these, and many others, could make for a fine investment, though it's probably best to dedicate a small percentage (5% to 10%) of your net worth to such alternatives and to understand their limits on liquidity and other potential liabilities.