Some people ask me how they should handle their investments when most of the main vehicles people use are expensive right now. What exactly does that mean?

Let’s look at stocks. There is no question that stocks are currently very expensive. If you look at the Robert Schiller model of examining P/E ratios, we’re near 28 or 29-to-1 on P/E ratios. There is no way I can look at that price of the U.S. stock market and forecast a 10-year boom.

Let’s look at bonds. Once again, bonds are very expensive as well. Interest rates are very, very low as you know, which means bonds are basically expensive. As we move forward and as interest rates go up, bonds are going to go down.

Since the first 10 years of retirement are likely going to determine approximately 80 percent of your eventual outcome in retirement, is it possible that you could run out of money? Can you live the lifestyle you want and still have a nice legacy to leave behind for your family and loved ones or whatever is most important to you?

It’s a challenge, so I’ve outlined a few things to consider.

Make sure you have reasonable expectations. When it comes to your financial plan, don’t build in unreasonable expectations. In many cases, don’t take risks that are unnecessary. Ask yourself how much risk you can take to meet your goals, as well as how much risk you must take to meet your goals. Do not take excessive risks unless you want to. Ask yourself how to balance risk and reward. It’s a constant balancing act in the investment world for our entire lives, particularly during retirement when you transition from a saving phase to a spending phase.

In my opinion the traditional models you see, which include 60-40, 70-30 stocks-to-bonds ratios, may require a much more robust investment plan. How do you create a plan to give you reasonable, stable growth when stocks and U.S. bonds are expensive? We’ve never seen a market like this. The only time we’ve seen bonds this expensive is in the early 1940s, and even then, stocks were cheap.

Creating a successful retirement income plan can be tricky. However, if you structure income properly, are more diverse with your investments and build in secure income along the way, most people can achieve financial success in retirement.