In spite of the risk for getting criticism from the do-it-yourselfers, I offer you my own direct experience wih an I.R.A. . I worked almost 40 years for a major auto firm, saved quite a bit of money in a savings account, bought a house to fix up, sold it and moved to a large acreage farm out in the country. I always maxed out my IRA contributions and expected a decent pension from the Company. Well, they nearly went bankrupt, they offered me an early out and I took it at age 62. I also signed up for Social Security right away, in spite of holding out for longer would have gotten me more per month. When they transferred out of their own pension plan to a Prudential run 'pension' type payment, I took the lump-sum option instead, in spite of the fact that my parents lived into their mid 90s and the company said 79 1/2 was more likely the case for me.
What has saved my health, welfare and well-being and peace of mind was direct management of my IRA and other accounts thru a Morgan Stanley Smith Barney account manager. 5 years before my leaving the company, they reviewd my situation, I had them take control and my account bloomed (as in doubled). When the lump sum came along, they had anticipated its offering and had bought a few S.P.I.A.s at 5% to 8% interest with just a thousand or so in each one. Then they added the portions of the lump sum to them when the check came and they are fueling my happy retirement. Even though I am drawing off 4% or so per mounth on the average, I am making quite a bit more per month because the SPIAs are doing better than 4% and my other stock, bond, annuity and long term care accounts accounts are still doing even better than that. The only danger I am in is cracking into a higher tax bracket.
My point is that I came from a simple family who saved money only in a bank account. Stocks, bonds, and other financial weapons were a foreign language to me. When, on a whim, I accepted their free review, I got professional help with: reallocation of money at various risk levels that I chose, made a will via a Living Trust, invested inheritance, got relief from the retirement blues, and experienced a seamless transition into retirement. My bank account accepts the money they have triggered, I gave myself a raise, can get cash at any time via checks on the account, have a checking account with a level control on it ( I set a level, when I withdraw or transfer to lower the level, it automatically refills), and I just don't go to work anymore but get paid the same. Also, in retirement, you don't need the same amount of money coming in every month. Its only when property taxes are due, insurance payments are due, you go to an auction and buy a vintage antique something, get onto eBay or Craigslist and buy something cool, or pay the monthly Costco AMEX card account, do you need money.
If I was stupid enough to buy a new car, I can get the cash wired the next day via a sell-off that 'they' handle for me. You know, I don't care whether they make a little money from me for this service, all my needs are taken care off, I live inexpensively, buy clothes from Salvation Army, eat healthy, put some hay up for sale every year, and pay my taxes on April 14th.
For those who are afraid of making mistakes on your own, I recommend getting a professional money manager. Yes the 'market' took a dip and my account fell 30%, but 1 1/2 years later its all made back up and about 20% ahead as of today. I didn't mention my divorce, this was also aid by my Fund manager. To prevent my ex-from eating up my IRA for her special needs mental health care, they set up and managed her separate account for us so that when she turns 65, her care will be just as good and Medicare will assiste her.
OK, now tell me what I've done wrong or coulda/shoulda done instead...
