Annuities are invariably the investment most commonly recommended to folks over 50. However, many annuities lock up your funds and commit you to a single investment program—not always a good idea when things are changing so quickly. In these uncertain times, I believe the key to your success will be flexibility. Our financial markets are so volatile and fragile, it's almost impossible to imagine a world without big surprises that could upset our best-laid investment plans.

Take inflation and interest rates, for example. Almost every tax-advantaged financial product you buy today makes assumptions about these two key factors, usually assuming they'll remain pretty much where they are now for the life of the plan.

But the reality is that no one knows what inflation and interest rates will be 10 or 20 years from now. We could have a return to double-digit inflation, or we could even have chronic deflation. Some interest rates could decline even further or they could spike higher than anyone dreams possible. In either scenario, the dangers—and opportunities—could be enormous.

In this environment, you must keep a substantial portion of your money liquid; you must avoid, as much as possible, precisely the investments or programs that salespeople like to promote the most—the ones that lock you in. Try to:

  • Steer clear of annuities and insurance policies that involve large start-up commissions or large surrender charges (cancellation fees).

  • Avoid esoteric ...

Get The Ultimate Money Guide for Bubbles, Busts, Recession, and Depression now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.