"The big unknown is the effect on equity markets," " said Zorast Wadia, principal and consulting actuary for Milliman Inc., "A loss could offset gains in liabilities."

Many measures of corporate pension funds have them more than 90 percent funded as 2013 drew to a close.

On the other hand, individual retirees need to keep their eye on exactly where their money is invested.

"I look at the world in three pockets," said Tim McCarthy, author of "The Safe Investor," which will be published in January. "There's the savings pocket, the investments pocket and the trading pocket."

The savings and investment pockets allow an investor to take advantage of the opportunities in equities.

"If you are a retiree," Lucey said, "make sure you have a reliable source of income for the next five years that's not exposed to the markets."

He added that retirees must assess their risk capacity, risk tolerance and risk requirements. The first is how much a retiree can afford to lose, the second is the emotional toll of dealing with investment losses and the third is an assessment of how much return on investment is needed.

"I don't like to take a risk with money I need for income," Lucey said.

As far as bonds go, both Lucey and McCarthy advocate staying away from long-term instruments because interest rates are still at historical lows. Bond durations of five year or less were worth any "opportunity cost" if rates were to rise, McCarthy said.

"There's a lot of room to grow," Lucey said, referring to the days of 5 percent return on 10-year Treasury bonds.

In the equity pocket, the record levels seen in the U.S. markets concerned both advisors, although they offered different strategies.

Lucey, who said he "wouldn't be surprised" by a market correction of 20 percent, advocated staying the course. Any drop is overdue, he said, because "statistically, it's been a long time since we've had a major correction."

McCarthy sees the U.S. markets a little differently.

First, retirees need to make sure their portfolios are not out of balance because of the rise in equities and low bond prices. That might be the case because growth in equity investments relative to other instruments could leave a higher percentage than desired in that pocket.

Then there's the matter of the markets themselves.

"What concerns a lot of us right now," McCarthy said, "is that until we got to 16,000 [in the Dow], it was driven by fundamentals. Now, you have to wonder if it's driven because interest rates are so bad."

For that reason, McCarthy sees opportunities elsewhere that might leave investors better off.

"It might not be a bad time to invest in foreign markets," he said. "American investors have too often missed opportunities."

Part of the reason, he said, is an emotional reaction investors have when he names the countries he sees as good places to invest. China, Mexico and South Korea are all worth looking at, he said.

Lucey concurred, adding Australia and Canada to the list.

Apportioning assets among the three pockets depends a lot on individual circumstances such as the value of all assets and the income needed to support a desired lifestyle.

"I'm telling retirees they should have 40 percent to 60 percent in fixed income instruments," Lucey said.

On the equity side, McCarthy said retirees should have 15 percent of their portfolios in them but 20 percent would work, depending on the investors' wealth.

For retirees, and all investors, a key variable is the health of the U.S. economy.

McCarthy was more worried about the future than Lucey, mentioning the deflationary period Japan has weathered.

"We've never lived in a era where such a large percentage of the population is so old," McCarthy said. "Older people don't spend. They think they do, but the studies show they don't."

What Japan experienced, he added, was related to a similar phenomenon driving interest rates to historic lows for a decade.

Lucey is more optimistic.

"I believe the fundamentals of the economy are strong," he said, mentioning falling unemployment and low interest rates. The easing of the tensions in Congress, and the fact that tax laws are more settled this year than last, are also good signs for markets, he said.

In the end, the Fed's announcement on its bond-buying program might have been more bark than bite.

"It was probably a lot more controlled than people had feared," Lucey said.