An investing earthquake is underway and it’s threatening to end traditional money management as we know it.

Investors are pouring their money into so-called passive index funds that blindly track market indexes using computers.

It’s a shift that is coming at the expense of funds that are run by mere mortals, aka invesment managers, who try to pick stocks that will outperform the market.

The trend is especially pronounced in the United States, where 28% of the industry’s $17 trillion in assets are currently invested in passive funds, up from just 13% in 2008, according to data from market research firm Morningstar.

American investors have plowed a total of $671 billion into passive funds since the start of 2015, while pulling $257 billion out of so-called active funds run by managers over the same period.

Prominent BlackRock (BLK) CEO Larry Fink predicted this week that regulatory changes in the industry will encourage even more money to flow into these funds.

“We are likely to see a historical shift on how assets are being managed,” he said. “[Investors] will use [passive funds] more and more at the center of their portfolios.”

BlackRock’s (BLK) popular iShares business, which offers investors passive exchange-traded funds (aka ETFs), saw $51 billion in net inflows over the past quarter while the firm’s active funds brought in less than one-tenth that amount.

While it’s tempting to invest with top investment managers who promise to outperform the market, research has shown that this strategy often results in smaller returns.

“Actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons,” said Morningstar researchers in a recent paper.

The reason for the lackluster performance of active funds typically comes back to investment fees — which are much higher at active funds. (Computer algorithms don’t have kids to feed back at home!)

Related: How should I invest a $250,000 windfall?

But some market strategists warn that passive investing is becoming a crowded trade, with too many people hopping onto the bandwagon.

“Indexing and ETFs offer tremendous value as part of the market, but they should not become the market. If this is an investor’s singular approach to the markets, it represents a pursuit of mediocrity,” said Mike O’Rourke, chief market strategist at JonesTrading.

CNNMoney (London) First published October 20, 2016: 6:36 AM ET

On the surface, annuities may seem like an incredibly enticing “investment” to consider as part of your retirement plan. Insurance companies dangle promises of market-like returns on the upside with no risk of loss during your accumulation years and guaranteed income during your distribution years to get you to sign up for them.

When you dig beneath that surface, you often find that the promises offered by annuities in their marketing wind up severely limited by things like caps, participation rates, and internal fund costs.

Over time, those limits mean that you’ll very likely wind up better off investing directly in the market via index funds than investing via an annuity. As a result, while you’re accumulating money for retirement, annuities generally don’t belong in your retirement plan.

Still, despite the fact that annuities usually make lousy investing vehicles, they can provide reasonable insurance benefits in the form of guaranteed income during retirement. Simple, straightforward single premium immediate annuities from strong insurance companies can provide people with the peace of mind of knowing they won’t run out of money in retirement.

Simple annuities like that can work out for retirees who aren’t comfortable managing their own money. After all, the risks of a poor withdrawal strategy from an investment portfolio could leave a retiree without income at a time when that retiree has no realistic way of earning a living through work.

Still, even the best of annuities have drawbacks that you should recognize before you commit to using them at all.

First, any annuity is only as good as the financial strength of its issuer. If the insurance company offering your annuity were to declare bankruptcy, you would be dependent on the limits and funding sufficiency of your state’s insurance backstop program to provide you any income.

In addition, any option offered by the annuity company beyond the basics of a simple income stream for either a guaranteed time period or for your life will likely come at a substantial cost. Want inflation protection? That will cost you. Want to assure your heirs will get something after you pass? You’re likely better off leaving that something outside your annuity than asking the insurance company to handle it for you.

In addition, if you work in the United States, chances are that you already have access to a retirement plan that acts very much like an annuity that offers you an inflation-protected income for life. It’s called Social Security, and even in the worst case scenario where nothing gets done to shore up the program, it’s expected to cover around three-quarters of its promised benefits for retirees.

The typical retiree or retired couple receives enough from Social Security to keep out of abject poverty. While Social Security alone won’t let you live a lifestyle of the rich and famous, it’s fair to ask how much guaranteed income you really need above Social Security. Other than health-related costs, most retirees find that their expenses actually go down when they’re retired. If you don’t need additional guaranteed income, you might be better off with the greater flexibility that you get outside of annuities.

Remember, too, that even Social Security’s promises are expensive to provide. The combined employee and employer tax rate is 12.4% of your income up to $128,400 of income, and it takes 35 years of those taxes on your earnings to qualify for your full expected benefit. Guarantees, are not cheap, no matter whether they come from the government or from an insurance company. The typical recipient of those guarantees will ultimately be the one paying for that guarantee.

If you consider them only for the portion of your finances that really needs the guaranteed income they promise, annuities may make some sense as part of your retirement plan. Just be sure to treat them as the insurance plans that they are, and understand that just like with life insurance, the act of mixing investing and insurance in the same annuity plan is rarely a good idea for you.

Related links:

• Motley Fool Issues Rare Triple-Buy Alert

• This Stock Could Be Like Buying Amazon in 1997

• 7 of 8 People Are Clueless About This Trillion-Dollar Market

With those limits and those constraints, simple single premium immediate annuities can play a role in providing you guaranteed income for life as part of your retirement plan. Remember that the more complicated the annuity, the more costly it will be for the benefits you get from it, and you’ll improve your chances of finding a truly reasonable annuity to consider.

CNNMoney (New York) First published May 17, 2018: 10:17 AM ET

What you’ll pay for a life insurance policy can vary dramatically; men pay higher premiums than women, older policyholders pay more than younger ones and smokers pay more than non-smokers.

But just how much does your age, gender or smoking habit cost you? InsuranceQuotes.com evaluated life insurance premiums for the top 25 carriers in the nation to find out.

Men pay an average of 38% more than women for the same coverage.

Here’s one area where women have a financial edge. Men are at a greater risk of cardiovascular disease, various cancers and accidental injuries and that makes them more risky to insurers. The average life expectancy of an American man is also five years younger than a woman’s, meaning an insurer is more likely to pay out on a man’s policy than a woman’s.

Smokers pay more than three times as much as non-smokers for the same policy.

Insurers can charge smokers three times as much as non-smokers, insuranceQuotes.com found.

Related: Stressful jobs that pay badly

A non-smoking 45-year-old woman, for example, pays $45 a month for a $500,000 term life policy. If she smokes, however, the premium shoots up to $167 a month. That’s $1,462 more a year.

If you can kick the habit, however, you can save big. Tell your insurer that you’ve been smoke-free for two years and they will usually lower your premium to the rate for non-smokers, said Laura Adams, an analyst for insuranceQuotes.com.

“That’s pretty generous,” said Adams. “It’s almost like you never smoked.”

Related: Why you don’t need to buy extra rental car insurance

But don’t tell your insurer that if it’s not true. If you do die of a smoking-related cause and your insurer finds out you never quit, they can deny the benefit entirely.

Get coverage young and save — but only if you need it

Most people don’t feel the need to buy life insurance until they have a child. And in general, that’s a pretty good rule of thumb.

If you have children in your 20s or early 30s you could save significantly on premiums by opening a policy while you’re young.

Premiums for 35 year olds cost about 27% more than those for a 25 year old.

“Term life [policies are] popular because they’re relatively inexpensive and people don’t need policies for their entire life,” said Adams. Many parents buy 20-year term policies to see their children through their college years.

CNNMoney (New York) First published July 24, 2014: 7:58 PM ET

Joining a growing number of luxury auto makers, Audi unveiled a new all-electric SUV. Called the E-Tron, the SUV will be available in Europe later this year and in the United States next spring.

Audi said it is taking refundable $1,000 deposits for the E-Tron starting now. Prices will start at about $75,000 or $86,700 for well-equipped “First Edition” models.

It’s the first of three new electric vehicles Audi will introduce over the next few years. The German luxury automaker, which is part of the Volkswagen Group (VLKPF), also announced it is partnering with Amazon to handle installation of home charging stations for E-Tron buyers.

The E-Tron was revealed at an event on the San Francisco waterfront. Hundreds of drones formed Audi’s four ring logo over a former Ford factory turned event space.

The SUV was unveiled here because the E-Tron was designed with the US market especially on mind, Audi executives said.

While it might not generate the excitement of a Tesla unveiling — that company received hundreds of thousands of dollars in deposits for its Model 3 within hours of that car’s debut — the E-Tron increases the competitive pressure.

The E-Tron follows Jaguar’s I-Pace electric SUV. Mercedes and BMW also recently unveiled electric SUVs that will go on sale within the next couple of years.

These offerings are all SUVs mostly because the market, in general, has shifted heavily in that direction.

“We wanted to be in the SUV space because we saw the growth and we wanted to be in the sweet spot of the market,” said Filip Brabec, Audi’s vice president for product development.

Car shoppers considering an electric car today are no longer interested in their vehicle looking radically different from anything else on the road, said Brabec.

The E-Tron looks, quite clearly, like an Audi SUV. It even has Audi’s famous trapezoidal grill, a key branding feature, despite not needing a radiator. The grill allows air to pass through under the battery to provide some additional cooling.

There are some unique attributes, though. The E-Tron stands a little wider than Audi’s other SUVs. Slats running across the rear bumper draw attention to the car’s lack of tailpipes, while there are lights in the front that are designed to look like the bars of a charge status indicator.

In Europe, the E-Tron won’t have traditional side mirrors. Instead, it will have a camera on each side where mirrors would ordinarily be. The views from those cameras will be displayed on screens inside the vehicle.

That system will not be available in the United States because safety regulations here don’t allow for it. Audi executives said they are working with the National Highway Traffic Safety Administration to bring this feature to the American market.

With two electric motors, the all-wheel-drive SUV can accelerate from zero to 60 miles an hour in 5.5 seconds and it has a top speed of 124 miles an hour. It will be able to tow as much as 4,000 pounds. Audi has not yet announced what its driving range will be on a full charge.

When the E-Tron is cruising, rather than accelerating, it is driven mostly by the rear motor. Engineers put a heavy emphasis on recuperating as much energy as possible while driving. That’s generally done as a vehicle brakes or slows by allowing the wheels to push the electric motors, which then act as generators.

In the E-Tron, the driver will be able to select how aggressively the car uses this system, allowing for “one pedal” driving in which taking pressure off the accelerator pedal will slow the car to a full stop using only the motors.

As with other Audi vehicles, the driver will also be able to select different driving modes, from comfortable to sporty, that will alter suspension stiffness, steering responsiveness and how aggressively the SUV accelerates. The SUVs ground clearance is also adjustable by as much as three inches.

Buyers will be able to purchase a home charging system and have it installed by Amazon Home Services. The installation can be ordered online. Pricing will vary depending on each homeowner’s needs.

Audi plans to release two more electric vehicles in the next two years and a total of 12 by 2025.

CNNMoney (San Francisco) First published September 18, 2018: 12:08 AM ET

Quick! Name the chief operating officer of Tesla.

You can’t. Because that was a trick question. Tesla (TSLA) has no COO. And some financial experts think that’s a big problem, especially since there are so many questions about the company’s future.

Tesla may or may not be going private. Tesla CEO Elon Musk has forced the issue on his board because he tweeted, perhaps impulsively, that he had “funding secured” for a deal.

The stock surged at first but has since fallen back to around the level it was at before the now infamous tweet. But would Musk have written it in the first place if he had a COO to rein him in? Perhaps not.

Tesla lists only a chief technical officer and chief financial officer, along with Musk, as its top executives. Musk is also the company’s product architect.

“I look at Tesla and I see a genius in Elon Musk. But who’s the general?” said Mariann Montagne, senior portfolio manager at Gradient Investments.

Having another high-profile leader that Wall Street respects, like Sheryl Sandberg at Facebook (FB) for example, could give Musk the freedom to innovate and take risks. Meanwhile, the COO could run the company’s operations, letting investors breathe easy.

Another senior leader may be needed now that Tesla is worth about $60 billion– more than GM (GM) and Ford (F) and making Tesla the most valuable US auto company.

“A strong COO for Tesla would probably be a positive step since, as in CEO Elon Musk’s own words, it is finally ‘a real car company,'” said Craig Birk, chief investment officer of Personal Capital.

Tesla did not respond to requests for comment about why it does not have a COO.

Others also wondered why Musk didn’t have a COO or other prominent executive to help him out.

“Does every company need a COO specifically? Not necessarily. But they need to have someone to tell the CEO when they are messing up,” said John Wilson, head of research and corporate governance at Cornerstone Capital Group.

“Is there any check on the CEO? Musk’s behavior demonstrates that there doesn’t appear to be,” Wilson added.

The lack of a COO is even more concerning to some since Musk is, to put it mildly, a very busy guy.

“Musk has a lot of different irons in the fire,” said Tom Plumb, CEO of Plumb Funds, referring to the two other companies he runs — SpaceX and The Boring Company — and the many other things on his plate.

Having a COO also can reassure investors that there is a succession plan in place in case Musk decides to step down to focus more on these other initiatives.

Other successful founder-led companies have cultivated deep management benches. Google, now known as Alphabet, brought in tech veteran Eric Schmidt to be CEO before its IPO, for example. Microsoft’s Bill Gates had Steve Ballmer and then Satya Nadella take over.

Having a trusted COO also could be helpful in case Musk ever runs into health problems.

Apple (AAPL) CEO Tim Cook had been COO for several years under Steve Jobs. That meant that there was a clear succession plan once Jobs, who passed away in 2011, was no longer able to serve as CEO.

What’s more, Jobs had been CEO of animated studio Pixar until it was bought by Disney (DIS) while also serving as CEO of Apple. If Jobs did not have Cook at his side, Wall Street might have been more concerned about a leadership void at Apple.

Kind of like how Tesla investors are now worried that Musk may be spreading himself too thin and that there’s nobody else to step in and lead the company.

CNNMoney (New York) First published August 16, 2018: 1:25 PM ET

Wall Street banks prefer clients with millions — if not billions — to invest. Soldiers, nurses and construction workers typically aren’t anywhere near that wealthy.

That’s why a growing number of average Joes are turning to an app called Stash instead. On Stash, you can start investing with just $5. The company’s motto is “investing for real people.”

“Lots of our users start investing with less than $100. For us, that’s great because they’ve taken that first step. They’re learning,” says Brandon Krieg, co-founder and CEO of Stash.

Stash launched last fall. It already has over 150,000 users. About 10% of those are active-duty military, says Krieg. It’s a high percentage considering less than half a percent of the U.S. population overall currently serves in the armed forces.

“Stash is the solution for millions of Americans traditionally ignored or taken advantage of by big investing firms,” says Krieg. “Almost all of our customers are first-time investors.”

Related: 10 best investing apps

In addition to military personnel, the app is also popular with people who are self-employed, including Uber drivers.

Stash makes investing incredibly simple. There are only 33 investment options, which is much easier than navigating the universe of thousands of stocks and funds.

The app helps steer you in the right direction, but you still get to make the final decision. That’s different than the so-called “roboadvisor” apps like Wealthfront and Betterment, where a computer decides how to invest your money.

The co-founders of Stash wanted people to learn how to invest, not just hand over their money.

“Financial literacy in this country is a huge problem,” Krieg told CNNMoney. The Stash app is about to unveil a new feature called “learn” to help educate users even more.

Related: My job nearly drove me to commit suicide

To get going, the Stash app asks a few basic questions to determine if someone is comfortable with low, medium or high-risk investing. As you might expect, most people fall in the middle.

Stash encourages most people to put at least some of their money into the “Moderate Mix” fund. Think of it like vanilla ice cream: A very solid option that still satisfies a person’s desire to grow their money for retirement or sending a kid to college.

Users can also choose from other funds like “Internet Titans,” “Defending America,” and “Clean & Green.” These are stock funds, but the names have been translated from Wall Street jargon into normal people speak.

Stash gets high marks from users for making investing easy and accessible, but pay attention to the fees. Stash charges $1 a month. That doesn’t sound like a lot, but a user really needs to invest at least $250 or more for that level of fees to not eat up returns.

Expect even more new features and growth from Stash this fall. This week the company announced $9.25 million in a Series A funding round led by Goodwater Capital.

CNNMoney (New York) First published August 19, 2016: 1:31 PM ET

A prominent short seller who is suing Tesla and Elon Musk for manipulating its stock price says the company would be better off without Musk as the CEO.

Andrew Left, the founder of Citron Research, told CNN’s Julia Chatterley on “First Move” Tuesday morning that it might make sense for Musk to have a more strategic or visionary role at Tesla (TSLA). He said the company could bring in someone else to run the day to day operations.

Left said it would have seemed like “death to the company” a few months ago to think Tesla might need someone else to run it. But Musk has courted controversy as of late. Recently Musk has smoked marijuana during a video interview and accused a caver in the Thai rescue of a stranded soccer team of being a pedophile.

Last week, Left filed a class action lawsuit that accuses Musk of securities fraud after he tweeted in August that he had “funding secured” for a plan to take Tesla private at $420 a share. Musk has since abandoned the plan.

Left argued that the tweet was an attempt to “burn” short sellers who are betting against the company.

“Musk has a long-standing public feud with short-sellers and often uses his personal Twitter account to taunt and confront skeptics of his company,” Left noted in the lawsuit.

On Tuesday, Left conceded that his short position on Tesla has been wrong so far. The stock, despite recent volatility, has soared over the past few years.

“Rumors of their death have been greatly exaggerated and talked about many times,” Left said,

But Left told Chatterley he thinks that at the end of the day, Tesla is going to need more cash and it will probably have to sell more stock to raise funding.

That would be bad news for existing shareholders. Shares fell 2% Tuesday and are now down more than 20% in the past month.

CNNMoney (New York) First published September 11, 2018: 11:54 AM ET

How do people feel about GOP tax bill? It depends on who you ask.

Some business, advocacy and trade groups have major concerns with it. Others say the tax plan will be boost the economy.

The plan isn’t law yet. Another round of votes is due in the coming days. Republican leaders on Capitol Hill have vowed to get it to President Trump for his signature by Christmas.

Here’s a breakdown of some responses, pro and con. The statements have been condensed in some cases for brevity.

The bill rolls back a key provision of Obamacare known as the individual mandate. The nonpartisan Congressional Budget Office has forecast that 13 million fewer people would have health insurance coverage by 2027, and premiums would rise by about 10% in most years.

Families USA: “Republican leadership in the House and Senate have come up with a deal that will increase health insurance premiums, making millions of people — including those with pre-existing conditions like cancer or diabetes — pay more for their coverage, while causing millions more to lose their health coverage altogether. All of that to fund permanent tax cuts for their wealthy donors and corporations.” — Families USA Executive Director Frederick Isasi

Families USA is a left-leaning advocacy group that works on behalf of health care consumers.

The bill slices the corporate rate to 21% from 35% and lowers the tax burden for pass-through businesses, such as LLCs and partnerships.

Business Roundtable: “Business leaders applaud the conference committee for coming to an agreement that will promote U.S. competitiveness and spur economic growth.” –Business Roundtable statement

Business Roundtable is an association of CEOs from some of America’s largest corporations.

American Bankers Association: “ABA believes the significant reforms included in this legislation will help grow the economy and create jobs. We particularly applaud the provisions that significantly lower tax rates for all types of businesses beginning in 2018. Banks currently have one of the highest effective tax rates of any industry, and these important changes will allow our members to better serve their customers and the broader economy.” –ABA president and CEO Rob Nichols

ABA represents small, midsize, regional and large banks.

Americans for Prosperity: “This final tax reform plan delivers relief to the working class while unleashing opportunity and growth for America’s small business owners and job creators. … Although not perfect, the House and the Senate should be commended for their diligent work to significantly improve our broken system, and the Trump White House deserves credit for its relentless focus on getting tax reform done this year. –AFP President Tim Phillips.

AFP is a conservative advocacy group.

Financial Services Roundtable: “Tax reform will help deliver expanded opportunity for individuals and American businesses of all sizes. Congress should quickly move tax reform over the finish line and enable America to go on economic offense.” –Financial Services Roundtable CEO Tim Pawlenty

Financial Services Roundtable is an advocacy group that represents banks and credit card companies.

The bill lowers the cap on mortgage interest deduction from $1 million to $750,000, and it eliminates the deduction for interest on home equity loans. Homeowners who already have a mortgage would be unaffected by the change.

California Association of Realtors: “The final tax reform bill released punishes homeowners and weakens homeownership. … Congress is touting this as a tax cut for middle-class families, but the reality is that thousands of California middle-class homeowners will be the first ones to face tax increases.” –CAR President Steve White

CAR is a trade group that represents 190,000 California brokers and other real estate professionals.

The bill will preserve the state and local tax deductions for anyone who itemizes, but it will cap the amount at $10,000.

National League of Cities: “Congress can’t pay for tax reform by stripping the tools that help build stronger, healthier and more economically vibrant communities. [The bill] preserves many key credits and partially protects the deduction for state and local taxes (SALT). Unfortunately, the final bill falls short on its promise to protect American families and the cities and towns in which they live.” –NLC President Mark Stodola, mayor of Little Rock, Arkansas

NLC is an advocacy group that works on behalf of 19,000 American cities and towns.

The tax bill roughly doubles the standard deduction. Taxpayers can only claim deductions for their charitable donations if they itemize. Nonprofits argue the higher standard deduction will abolish a key giving incentive.

National Council of Nonprofits: “The deal … will prove disastrous to the work of charitable nonprofits in communities across America. … If enacted, the bill would, among other things: damage charitable giving by $13 billion or more annually; destroy more than 220,000 nonprofit jobs; and impair the ability of nonprofits to address community needs. … Simplifying the tax code could have been a noble exercise, but this bill would do much more harm than good.” –National Council of Nonprofits President and CEO Tim Delaney

National Council of Nonprofits is an advocacy group that works on behalf of charitable nonprofits in the United States.

The bill establishes new rules for businesses that file taxes on their individual returns, known as pass-throughs.

Businesses for Responsible Tax Reform: “The proposals also do little to simplify the code, and actually make it more complex for the more than 90% of small businesses that organize their firms as pass-through entities. This means [small business] owners will continue to sink time and money into complying with a byzantine and bewildering tax code, further tilting the playing field in favor of large corporations that can afford armies of accountants to search out every loophole and advantage. … A ballooning deficit is bad for business because it drives interest rates higher. –Letter to Congress from Businesses for Responsible Tax Reform, signed by nearly 2,000 entrepreneurs

Businesses for Responsible Tax Reform is an advocacy coalition that works on behalf of small business owners.

The bill, while lowering corporate taxes, would increase deficits by an estimated $1.46 trillion over a decade, according to the nonpartisan Joint Committee on Taxation.

American Enterprise Institute: “The bill features a long overdue reduction in the corporate tax rate that will draw investment to the United States, boosting workers’ productivity and wages. However, the bill will also increase government debt, threatening to drive up interest rates and counteract the increase in investment. A plan to address the long-run fiscal imbalance has become even more imperative.” –AEI Resident Scholar Alan D. Viard

AEI is a Washington, D.C.-based think tank that advocates for libertarian and free-enterprise causes.

CNNMoney (New York) First published December 17, 2017: 3:57 PM ET

I plan to invest half of my savings in a Standard & Poor’s 500 index fund, half in a total bond market index fund, withdraw 3.5% the first year of retirement and then adjust that amount annually for inflation. Is this a low-risk way to ensure my money will last throughout a long retirement?—J.R.

I can’t guarantee that you won’t outlive your money if you follow your plan. But I do think that if you embark on retirement with your strategy and are willing to make some adjustments along the way, there’s a good chance that your nest egg will be able to sustain you throughout a post-career life of 30 or more years.

The most important thing is that you’re starting with a reasonable initial withdrawal amount. As you probably know, the 4% rule, or withdrawing 4% of the value of your savings initially and then adjusting that dollar amount annually for inflation, has long been considered the go-to strategy if you want to ensure your savings will last at least 30 years.

But with many investment pros projecting lower investment returns in the years ahead, a number of retirement experts (although not all) believe that 4% might be too ambitious, and thus some recommend starting with an initial withdrawal of around 3% or so. Your 3.5% is a bit higher than that, but it’s hardy what I’d consider profligate or imprudent.

Related: 4 tips for investing a big windfall in today’s market

As for your retirement portfolio, I don’t see anything that would raise red flags there either. A 50-50 mix of stocks and bonds should be able to generate enough growth to maintain your purchasing power while also providing a decent level of protection during market corrections and bear markets.

Just to make sure that your asset allocation jibes with your tolerance for risk, however, I suggest you take a few minutes to complete this risk tolerance-asset allocation questionnaire. If it turns out that even a 50-50 mix represents a little more risk than you’re prepared to handle, you might want to scale back your stock stake a bit. To see how your chances of depleting your nest egg too soon might vary based on different asset allocations and different withdrawal rates, you can check out this retirement income calculator.

I’d also note that, while I have no problem with the two index funds you already have, they don’t give you exposure to small-cap stocks or the international markets. I’m not saying that you’re jeopardizing your retirement if you limit yourself to these two funds. But you might consider broadening your diversification. You can do that pretty easily by adding a small-cap index fund to your portfolio or replacing your S&P 500 index fund with a total US stock market index fund (which includes small stocks) and by investing a portion of your savings in a total international stock index fund and a total international bond index fund.

You should know, however, that a retirement income plan requires more than just setting a withdrawal rate and coming up with an appropriate asset allocation for your savings. Fact is, the financial markets — not to mention your retirement income needs — can change, sometimes dramatically. So you have to be ready to make adjustments as you go along.

For example, even with the relatively modest withdrawal rate you’re contemplating, it’s possible that a meltdown in the market, especially if it occurs early in retirement, combined with withdrawals from savings could so deplete your nest egg’s value that it might have trouble recovering even after the markets rebound. The result could be that you run out of money more quickly than projected.

Conversely, if the financial markets thrive, sticking to your inflation-adjusted 3.5% withdrawal strategy could leave you with a sizable nest egg late in life, possibly even one larger than you started with. That may not seem like much of a problem, and may not be if you’d planned to leave a large legacy to your heirs. But ending up with a big pot of savings in your dotage could also mean that you could have spent more freely and enjoyed life more earlier in retirement.

Related: How should I invest my nest egg for maximum retirement Income?

So how can you mitigate the risk of running through your money too soon while not stinting unnecessarily on withdrawals and spending?

Flexibility is the key. For example, if your nest egg’s value takes a hit in a given year because the market dropped or because you had to withdraw a larger-than-scheduled amount to meet an emergency, you might forego an inflation increase or even scale back your withdrawal a bit the next year or two to give your portfolio a chance to recover. Conversely, if your nest egg’s value starts to swell because of strong investment performance, you could use that growth as an opportunity to boost spending, perhaps take an extra trip or otherwise indulge yourself.

You can get a sense of what size adjustments, if any, may be in order by periodically revisiting the retirement income calculator I mentioned above and, depending on whether the chances of your money running out are rising or falling, reduce or increase withdrawals. Alternatively, you could employ a “dynamic” approach to retirement spending like the one outlined in this Vanguard paper, which lays out a “ceiling and floor” system of boosting or paring back withdrawals within specific limits based on the prior year’s spending and your portfolio’s performance.

Or, for a different perspective on drawing down your nest egg, you could try the new LifePath Spending tool that asset manager BlackRock has recently made publicly available on its website. Unlike other tools that attempt to answer the likelihood that a given level of spending will last a specified number of years, the BlackRock tool asks your age and how much you have saved and then estimates how much you can spend year by year throughout retirement based on longevity assumptions and the firm’s forecast for market returns.

Of course, no withdrawal system can guarantee your money will last a lifetime (although, granted, if the amount you pull out each year is so small relative to the size of your nest egg, your chances of running out could be infinitesimal). But if you want to be sure that you can count on at least some guaranteed lifetime income in addition to Social Security, you can always devote a portion of your nest egg to an immediate annuity or longevity annuity, and then rely on a combination of annuity payments and withdrawals from your investment portfolio for your spending cash. If this idea appeals to you, you’ll want to make sure you know how to choose an annuity before you commit to one.

The main point, though, is that you want your nest egg to last and you want to enjoy retirement as much as possible given the resources you have, you can’t just set a withdrawal rate and put it on autopilot. You’ve got to be prepared to make adjustments in response to the shifts and changes that are a normal part of the financial markets and life.

CNNMoney (New York) First published June 6, 2018: 10:28 AM ET