We need a portfolio that generates regular income. But we also need assets that let us keep up with increases in the cost of living.

At the same time, we tend to feel less comfortable about risk, with more of a focus on preserving capital.

It can all be a bit confusing. One piece of advice I can offer is not to follow the lead of previous generations; namely, putting all or most of your assets into term deposits in the early part of your retirement.

This can seem like a quick fix, and it may have been a sensible strategy for past generations where a 65-year-old had a five-year life expectancy.

But for today's 60-year-old with a life expectancy of about 20 years or more, maintaining a diverse portfolio makes a lot of sense.

You need your capital to grow in value to keep pace with inflation and your income needs.

In fact, longer life spans and rising lifestyle expectations, make exposure to growth assets such as shares, essential.

Yes, this can lead to the value of your capital fallling in bad years. And I realise this can be confronting if you're heading towards, or already in, retirement.

But it's all about finding the mix that's right for you.

The good news is that portfolios can be blended in a variety of ways.

If you're a 60-something like me, chances are that your ideal portfolio is more conservative than it would have been in your 30s, 40s or even 50s.

A greater proportion of low risk, low return assets like cash and fixed interest becomes more attractive as we get older.

These investments help to generate regular income and preserve our capital.

A typical defensive portfolio can see around 60-70 per cent of your capital invested in these assets.

The remainder of your portfolio could be comprised of a blend of shares - Australian and international, with some property and infrastructure assets making up the mix.

This sort of defensive portfolio has historically generated long-term returns in the range of 4-5 per cent annually.

That's a lot more than you'll earn with term deposits, and it can still provide the benefits of long-term capital growth though with much less impact from sharemarket volatility.

The key takeout is that maintaining a diversified portfolio can help you make the most of your money as you age. We have seen that in spades during COVID when returns on cash have been at historic lows, and sharemarkets recorded unprecedented falls backed by record recoveries.

It's an uncertain time, and diversifying across a defensive portfolio can deliver the best of both worlds - regular income plus ongoing capital growth.