(4) The investments my people want to own in retirement have never done that, and by definition ("fixed income") probably never will. The investments they need to own have always done so, and probably always will. As always, the things they want to own and the things they need to own are antithetical. Having been programmed from earliest life to denominate risk and safety only as principal, the children of the children (and the young adults) of the Depression will always want to own bonds and CDs. But a purely fixed-income investment strategy in 30 years of a rising-cost life is suicide. Only a rising-income investment strategy will answer the case. And historically, the most reliable source of rising income has been the constantly rising dividends of the Great Companies in America and the World. From 1935 through 2009, the Consumer Price Index compounded at 3%. The dividend of the S&P stock index compounded at about 5.5%. Rising living costs are the problem; rising dividends are the solution. My people want to own bonds, and need to own portfolios of the Great Companies. Only the determined primitive can make them accept this. Indeed, I believe it is why we were sent into the world when we were.

(5) Accepting these first four epiphanies, my people can be induced to buy equities. Reason, logic, basic psychology and history all tell us that my people will not be able to hold equities. I am well over 40 years in the financial advisory profession; my education, training and experience are essentially in investments. If I ever thought about it-which I manifestly did not-I would have said that I would never see a day when Americans would fear equities so terribly that they would be holding more cash (in money market funds and day-to-day savings accounts, not even counting CDs) than the total market capitalization of the Wilshire 5000 stock index. In the event-on either side of the bottom of The Great Panic of 2008-09-I saw about 90 such days, for such was the depth and universality of the panic response. 

This fifth and final great truth-which the determined primitive must cause my people not just to accept intellectually but to strategize right now, at the outset of retirement-is the reality of equity volatility. The broad equity market has declined an average of 30% one year in five since the end of World War II (that is, in my people's lifetimes). I see no reason to hope that it will ever do otherwise, and every reason to believe that it will continue to cycle as it always has. The cold intellectual fact that the first of these declines started in 1946 at 19.3 on the S&P, and that-13 ends of the world later-we're around 1100, should be regarded as effectively meaningless. Indeed, it should be scorned as a fool's errand: the attempt to reason with fear.

I know of only two ways of coping with equity volatility-and with the cacophony of journalistic negativity which always accompanies it, assuring all who will listen that "this time it's different," that this really is The Big One that their parents warned them about.

One method is by an abiding faith: in the historical record, in the greatness of free-market democratic capitalism, in America, and in ourselves. And the other method-the only other practical method of which I'm aware-is what the variable annuity industry is pleased to call "living benefits." Every other method (including "asset allocation," the bizarre and historically indefensible notion that stocks and bonds can't crash simultaneously) has been conclusively proven not to work. Advisors who have elected to spend the rest of their careers in the real world-to be the determined primitives my people so desperately need us to be-have, I believe, only this binary choice.

I strongly recommend faith. It's perfectly efficient, has no cost, and has historically been proven 100% effective: those who bought equities and did not panic out of them over 30-year periods have always triumphed over the rising cost of living. (The past 30 years are a splendid example: The cost of living nearly tripled, interest available from bonds and CDs much more than halved, the dividend of the S&P 500 just about quadrupled, and the index itself is up ninefold.)

In the next breath, I acknowledge-nay, advocate for-the truth that my people, by and large, will not be able to sustain that faith. For them, we must consider the other choice: the latest generation of insurances available with variable annuities, whose essential effect is to create some kind of a floor under, but not an absolute ceiling over, 30 years of a retiring couple's equity experience. I confess that I do not regard these insurances as financial devices so much as psychological devices. I consider them a form of behavioral medication, whose effect is the all-important one of suppressing the panic response.

I am all too keenly and even painfully aware of the drawbacks to this solution, among which are (under current law) the taxation of the annuity's earnings withdrawals at ordinary income rates and the cost, which is not insignificant. (That said, to count the cost of the insurance and not the benefit is the pure essence of the Suze Orman Fallacy.) These are by no means petty cavils. But on behalf of determined primitives everywhere, I must ask: What is the alternative?

I sincerely hope the need for these insurances will, in the fullness of time, wither away. My firstborn granddaughter just turned 10; when she's my age, I hope everyone will have 1% body fat and 99% equity portfolios, and will cheerfully experience all bear markets as big sales. But I will not live to see this, and neither will my people.

So if your reading of your sixtyish prospects is that they will never survive 30 years of inflation without equities, but that they will not be able to sustain the requisite faith to hold equities, then for all its costs and limitations, you may honorably (and accurately) consider the one practical alternative to faith of which I know.