I bonds
How they work: I bonds are designed to keep pace with rising prices by paying a composite interest rate that's made up of two parts: an underlying fixed rate and an inflation-adjusted variable rate. The variable interest portion is tied to the CPI rate and rises and falls during the life of the bond to keep pace with prices. The fixed rate portion remains unchanged for the life of the I bond. This rate changes semiannually, on May 1 and Nov. 1, for newly issued bonds. Currently, I bonds are paying a composite rate of 5.64 percent. On Nov. 1, the underlying fixed rate was set at 0.70 percent, and the semiannual inflation rate was set at 4.92 percent. These rates will change again on May 1.

Who they're good for: Retirees who already have a hefty nest egg and therefore don't need as much growth should look to I bonds.

Cost: I bonds can be purchased electronically in amounts of $25 or more, or for a minimum $50 for paper versions, from Uncle Sam at www.treasurydirect.gov.

Liquidity: Not good. You cannot redeem I bonds for 12 months, and if you sell before five years you'll forfeit interest from the three most recent months. To avoid penalties, you must wait five years to cash out.

Pros: Safety and inflation protection. Generally, bonds won't pay you the handsome returns of stocks, but the principal is guaranteed. They're also exempt from state and local taxes, and investors can defer what they owe in federal taxes until they cash them in.

Cons: Limited growth. Even though you beat inflation, I bonds generally won't have the kind of growth as riskier investments. Lack of liquidity is also a negative.

Dividend-rich stocks
How they work: As a rule, public companies either reinvest earnings or pass them along to shareholders as dividends. For beating inflation, the second variety is hard to beat: Dividend-rich stocks provide income, but unlike fixed-income investments, they have the potential for capital growth as well. Large, established stocks, such as those in the Standard & Poor's 500, have a greater likelihood of offering dividends. Those paying the highest dividends are generally found in such sectors as industrials, utilities, financial services, pharmaceuticals and consumer staples.

Who they're good for: Most retirees need the potential growth of equities, whether they pay dividends or not. But as seniors leave the work force, the added bonus of dividends is a smart choice for individuals who will need assets that provide both growth and income.

Cost: Share prices vary depending on the company and market conditions. A commission is involved with the purchase of stocks, whether you purchase through a full-service brokerage firm or you're a self-directed investor. Costs will be lower for the latter type of firm. If you buy a diversified mutual fund that focuses on dividend-rich stocks, you'll pay an expense ratio.