Another recommendation is to start cashing out of positions in their tax-deferred plans as they approach retirement, between two years and a year before leaving. "Put it in a guaranteed income or guaranteed interest account," says Garrett. "Don't worry about possible lost returns in that last year. ... It's not worth the chance that investments in a 401(k) will take a huge dive about the time you get ready to retire. I've seen this firsthand, when people come in and they've had employer stock-when that happened in 2000, I saw people who came in during April, May or June holding 50% of their assets in 401(k) in employer stock. They didn't have the choice to diversify. That was the company's match. And there was the bear market staring them in the face, and the stock dropped from $53 to as low as $17 over the next three years."

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