Reaching the age of retirement doesn't mean you should stop investing. As you walk away from the job and stop by the social security office, you still have to think about how you are going to continue building your nest egg. In a stricken economy, it has never been more difficult to keep your money safe or to save, but it is necessary to continue squirreling away dollars as best you can.

One reason you must invest is that terrible enemy, known as inflation. It is always hovering. The price of bread today may double in ten years. The other reason to invest is longevity. If you retire at 65, you could still live another 20 or 25 years, and you could outlive your nest egg. It's a dilemma, to say the least. So how do you invest when you have retired?

Assuming that you will have money to invest, through part-time work, a new career, or an inheritance, a good rule to follow is to be conservative. Sadly, the current economic debacle has shown us how easy it is to lose money in the stock market. Therefore, safety and risk avoidance should be a top priority to preserve your principal.

No matter what you invest your money in, whether it's stocks, bonds, or gold, there are always going to be some risks. To minimize the risk and strive for returns, many people look for stocks that pay dividends or they invest in bonds with low volatility. If you really want to sleep at night, put your money in bank accounts and certificates of deposit, insured by the federal government, up to certain amounts.

As for dividend paying stocks, look at companies with solid brand names. Some of the highest yielding stocks on the Dow Jones index are AT&T, Verizon, Merck, DuPont and Kraft. Over the course of 10 to 20 years, dividends can add up to a nice chunk of change, especially if they are reinvested. When you are totally retired and need more income, you can request that the dividend checks be sent to you.

Here are some other relatively safe ways to invest for income:

- Tax Exempt Money Market Funds - offered by many investment firms, including Fidelity, Vanguard, and Schwab.

- US Government Bond Funds

- Investment Grade Corporate Bond Funds - a favorite is Pimco Total Return.

- Treasury Inflation-Protected Securities, or TIPS - bonds issued by the federal government guaranteed to keep pace with increases in the government-calculated consumer price index. TIPS should be held in an IRA type account, for tax purposes.

In addition, some funds, including closed-end funds, pay monthly income. There are some utility and commodities funds that pay .07 cents to 0.14 cents per share. If you accumulate 10,000 shares in a fund that pays .07 cents per share, you will receive a check for $700 a month. Before investing in anything, do your homework by reading as much as you can on the Web. Talk to a Certified Financial Planner (CFP) who is not making commissions on the investments you purchase.

In conclusion, retirement does not mean the end of the investing game. Three steps to follow are these: (1) Supplement your social security and retirement savings with some work; (2) Stay in touch with what's happening in the financial markets and periodically fine tune your portfolio; and (3) Be conservative in spending and investing. Lastly, live life to the fullest. Remember that "the best things in life are free."

Learn more about this author, Arlene Hauben.
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