Q: We are a semiretired couple. Husband works part-time in sales — mainly to keep busy and occupied after selling his own small business. I am a happy and busy retired office worker. Our ages are 75 and 74. Our very large house is for sale and when it sells, we will probably clear somewhere in the vicinity of $500,000. At that point, our plan is to rent an apartment as we feel we have both had enough of the upkeep of a house. Our plan is to monthly draw out of the $500,000 toward the rent of the apartment. What is the best place to "park" this money?

Harriet & Stan

A: I called several financial planners to get their input. Intriguingly, we all coalesced around the same "safety first" idea: A "bucket" strategy.

I tend to favor a two-bucket strategy, mainly to keep finances as simple as possible. Bucket No. 1 holds two to three years of rent and other necessary expenses, everything from food expenditures to utility bills. The money goes into ultraconservative accounts, such as a savings account or short-term certificate of deposit. These safe investments pay little interest, but the money will be there when you need it, even if the stock and bond markets are plummeting in value. Bucket No. 2 is a well-diversified mix of high-quality, fixed-income securities and equities, depending on how you want to allocate those assets. These assets should earn you a higher rate of return, after adjusting for inflation.

In other words, bucket No. 1 meets your needs, No. 2 covers your desires, like travel and giving goals. Ted Contag, a certified financial planner at the Colonnade Group, Thrivent Financial, suggested the first conservatively invested bucket could hold five years rent. An "intermediate bucket" would cover the next few years, with the money invested in slightly riskier assets, maybe a short-term bond fund. The final "what if I live too long" bucket is made up of no-load low-cost mutual funds.

As another planner I talked to put it: "The goal is to always have three to five years of 'apartment costs' set aside in a very conservative safe account firewalled from the potential volatility of the market, while still participating in the potential growth of the markets and to stay ahead of inflation. The buckets can feed into each other as time rolls forward." Hopefully, these broad suggestions will give a range of options to tailor to your particular needs and desires.

Chris Farrell is economics editor for "Marketplace Money." His e-mail address is cfarrell@mpr.org.