At Yahoo Finance’s All Markets Summit, Roger Ferguson, CEO of TIAA and former vice chairman of the Board of Governors of the Federal Reserve, discussed America’s growing wealth and income gap and urged caution during the current bull market, one of the longest in history.

“We know at some point this will slow down. We don’t know when. … Let’s think about your risk appetite. If there’s a 10% correction, how will that make you feel? … If you think something like that might distress you, then pull back a little bit,” said Ferguson.

He recommends investors diversify their portfolios based on their risk appetites in case of a recession.

“Equities, fixed income, think about your own home — How much cash do you have for an emergency? So, have a plan … You have to be mindful of preparing for those rainy days without giving up the upside that comes from having equities,” said Ferguson.

Living — and working — longer

With advances in medicine, Americans in their early 60s can now expect a 20- to 40-year retirement. Ferguson says the U.S. may be headed toward a retirement crisis if people haven’t factored longevity into their savings.

“For individuals save more, [there’s] no such thing as saving less … which means think about a budget and plan for having to pay for some of your retirement yourself. Secondly, if you are working, make sure you signed up for your employer’s retirement plan and max it out so that you can get the match. The third … as you’re thinking about your retirement money, recognize it’s gotta last for 20 or 30 years, so you do want to be diversified,” advises Ferguson.

“Those policies which my company specializes in are called annuities. Think about sharing the risk of a potentially long life with an insurance company by purchasing an annuity,” he said.

Ferguson also supports Social Security reform, acknowledging that Americans may simply have to delay their retirements to help manage the shortfall. “Working a little longer may be part of the Social Security answer,” Ferguson said.

Sibile Marcellus is an on-air reporter covering the day’s top stories in business for Yahoo Finance’s three daily live shows. Follow her on Twitter @chasingsibile

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