At the same time, to assure they will have money if they live to a ripe old age, they should buy longevity insurance, a new study by Brandes Institute said.

This alternative, counter-intuitive investment strategy can help keep retirees from running out of money before they die, the study said.

The rule of thumb is to convert investments to safer categories such as bonds as the person ages, but 60% of post-retirement disbursements from defined contribution plans come from investment results after retirement, Brandes said. It can be especially limiting when bond prices are low, as they are now.

"The goal should be to maximize post-retirement investment returns while reducing both the risk and the consequences of" running out of money before you die, the study said.

One way to help assure that is to buy longevity insurance at retirement that begins paying benefits only when the holder reaches a certain age, such as 80 or 85. The insurance is bought with a single premium and the policy pays an annual benefit for life once the person reaches a certain age. If the person dies before that age, the entire premium is sacrificed.

"While losing the entire premium sounds extreme, the trade-off is that the income is substantial once the vesting age is reached," said the study.

An investment of $100,000 by a male at age 60 would produce an income of more than $75,000 a year until death from age 85 on. This is the opposite of the vast majority of annuities sold now that start paying at retirement age or soon after. This can tie up substantial amounts of a portfolio and, once deductions are made from the principal of the investments, the person risks running out of money if he lives for a long time, according to the study.

A 65-year-old male in good health has a one in four chance of reaching 94 and a one in ten chance of reaching 99, the study said. Brandes Institute is part of Brandes Investment Partners, a global investment advisory firm based in San Diego with $32 billion in assets under management.

—Karen DeMasters