An important concept of retirement saving is diversification, or having your investment spread across many types of investments so the failure of one does not have a material effect on your standard of living. An investor can do this himself or leave it to the pros. One of the best ways is to use a family of mutual funds to spread investments across numerous companies and asset classes.

Waddell & Reed Financial Inc. (NYSE: WDR) is one of the nation's oldest mutual fund management companies. It was founded in 1937 and has been offering mutual funds since 1940. As of December 2015, Waddell & Reed manages over $125 billion in a family of 20 funds. The following is a four-fund selection perfect for retirement savings in an IRA or outside of retirement plans.

Stability is a key part of any retirement portfolio. The WRA Accumulative Fund was founded in 1940 and has had an average annual return of 10.33% over the last 75 years and 13.22% over the last five years. Its returns are not flashy but very consistent. The fund's focus is on large-cap stocks, blending a value approach with growth potential while emphasizing sectors on the upswing. It primarily invests in U.S. stocks and may invest in foreign stocks that make up about 7% of the portfolio in 2015.

One of the challenges in the current interest rate environment is how to invest in bonds. Rising interest rates cause bond values to fall. The best way to manage bonds is to let a professional make the decisions while keeping most of the funds in stocks. This is exactly what WRA Continental Income Fund does for you. Its goal is to realize growth while providing current income. The fund invests two-thirds in U.S. stocks and one-third in fixed-income securities. Fund managers protect investors from a falling bond market by keeping the average maturity of the instruments they hold to under four years. As interest rates rise, the fund's holdings naturally mature, with the full capital getting reinvested in corporate bonds at the new higher interest rates. This is a great way to get consistent returns and have capital stability. The fund's average annual return over the last five years has been 10.22%.

Though interest rates are starting to rise, returns to savers are still at near-record lows. The best way to earn income is to invest in stocks with solid dividends, which this fund does for you. The WRA Dividend Opportunities Fund seeks to invest in large-cap stocks that pay stable dividends and look to increase the dividend payout over the next five years. Increasing dividends are good for retirement income and for raising share prices. The fund has a five-year annualized return of 10.03%.

Like the WRA Accumulative Fund, the WRA Core Investment Fund has been open since 1940. Its lifetime annualized return is 10.85%, with a five-year annualized return of 13.6%. It is solid, stable and steady just like the WRA Accumulative Fund.

The difference between the two funds is the WRA Core Investment Fund is all about value. Managers look for underappreciated stocks that have strong positioning in their sector. The WRA Core Investment Fund also has a larger portion of assets invested overseas, though some of this is attributable to mergers that resulted in a couple of companies' headquarters being relocated overseas.

Any one of these funds provides good diversification to a retirement portfolio. However, spreading investments equally across all four funds provides greater safety and diversification, as each fund has slightly different holdings and objectives and is poised to take advantage of different types of market changes while having similar long-term returns.

It is important to note these funds all make annual distributions of gains and income. When funds are held outside a retirement plan, these distributions are fully taxable. The best returns are obtained by investing inside an IRA or other tax-sheltered vehicle. The greatest after-tax returns are available to Roth IRA investors who are able to withdraw all earnings without having to pay income taxes.