Dear Karen: We both recently retired at age 65. My husband is thrilled about the change. I’m ready too, but I’m anxious. Three of our four parents are still alive, so it’s safe to say we could be retired for a long time. We agree that we want to make sure our funds last, but disagree on the method. I want to keep our investments mostly in cash to make sure we don’t lose them; he wants to be almost 100% invested so the pot keeps growing. Who’s right?

A: The answer is somewhere in the middle: not as a compromise, but as a strategy. To see why, let’s look first at the all-cash strategy. It turns out there is another thing that’s certain besides death and taxes, and it’s the fact that cash loses spending value in the long run. We’ve been in a low- inflation environment for quite a while, but in the 30-plus-year retirement for which you need to plan, inflation will likely average 3.4% annually. That’s the 100-year average. So let’s say you’ve determined you can get by spending $70,000 per year now. In 30 years, you will need to spend over $138,000 to buy that same amount of goods, given average inflation.

On the other hand, let’s say you’re totally invested in the stock market. Even if you have some sort of small pensions plus Social Security, there’s likely some contribution to your monthly budget required from your savings. Moreover, you may have some unexpected emergency or a great anniversary holiday for which you’ll need or want to dip into your investments. If you have no cash cushion, you risk having to sell at an inconvenient time. It’s always good to have some money – say three to six months’ expenses – in an emergency cash fund. That provides liquidity so your investment decisions can be somewhat separate from your cash flow decisions.

Investments (generally stocks and bonds) are the best place for funds that you don’t need over the next business cycle – an average of seven years or so. Since you will likely live several more business cycle, the bulk of your money should be invested.

The allocation between stocks, bond, and cash depends on how much money you have, how much you need to live on, your joint risk aversions, and whether you’d like to leave an inheritance. If you run the numbers with a fee-only financial advisor, she or he will help you determine how much you need to be invested for your situation.

Dear Karen: My wife and I have been married for 25 years. Before that, she was widowed with a 10-year old daughter. We combined our assets from the beginning. Despite this, my stepdaughter seems to think she’s going to get everything in our house when we die. Could some of our “stuff” really be hers? I don’t want to ask my wife and pick a fight.

A: It sounds like this already touches on a sensitive subject, so let’s remember first that it is, as you call it, just “stuff.” Be guided by kindness and generosity as you think about who “should” get heirlooms or personal keepsakes that were in their family before you came along.

Legally, who owns what depends on your wife’s first husband’s will, the state in which they resided, and how all items are currently titled. If he died without a will or living trust in a community property state, she would typically inherit items acquired during their marriage plus a share of any separately held assets. In other states, barring a will or trust, she would inherit half the assets, with the rest divided among their children. There are lots of exceptions and special rules, so there aren’t many generalizations that can be made beyond this.

It is important that you and your wife have wills, and possibly a trust or trusts. An estate-planning attorney will help you prepare these documents. In the process of organizing your estates, issues such as these will be sorted out in the context in which they belong. When you and your wife have a common set of facts and have made the necessary decisions, it would be a good idea to discuss it jointly with her daughter. This will reduce the chances for misunderstandings. It also would help to avoid a possible will contest, which could increase family animosity and enrich the lawyers more than it would benefit anyone.

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