by Jerald Cogswell

Created on: November 21, 2010   Last Updated: November 29, 2010

You can generate more income in your IRA than you have been led to believe if you are willing to actively manage your portfolio. The strategies presented here are primarily for experienced investors and those willing to actively manage a portfolio. If you're a little shy of active money management but want to learn, you can try these strategies on a part of your retirement funds and put the remainder of your funds on autopilot.

When you retire, roll all or most of your 401-K to a self-directed IRA. You may be encouraged by your employer and your financial advisers to purchase an annuity. Resist this advice unless you totally understand and accept the terms and risks of the annuity contract. Annuities are beyond the scope of this article and you might refer to Suze Orman's website for more discussion on annuities. Look before you leap into an annuity because they can be a bad investment for most people who get sold on them by their financial advisers. Unlike other investments, they don't allow you to change your mind about investment strategy without incurring severe penalties. You must consider life expectancy and your heirs if you enter such a contract. And remember that nothing is “guaranteed.” For example, in 1997 Corinthian Life failed and was absorbed by Pacific Life. Annuitants were offered about thirty cents on the dollar to cash out their policy or the option to wait seven years for a reasonable chance at gaining back their principal with no return on investment. Those already in retirement would have suffered most.

So let's roll up our sleeves. Here are ways to grow your IRA in value and income when you retire:

  Withdraw from inherited IRAs first.

  Buy discreet corporate bonds and hold them to maturity.

  Buy dividend-paying stocks.

  Sell covered calls on your stocks.

  Buy reverse convertibles when the market is going up.

  Trade stocks based upon ex-dividend dates.

Here are the details:

1. Withdraw from inherited IRAs first

If you inherited and IRA from a parent and your parent had already started withdrawals, you are required to withdraw a minimal amount each year, even if you are not yet 59 ½ years of age. The amount of the required withdrawal is based upon your life expectancy. If you are not yet retired, make only the minimum required withdrawal. If you are retired you should live out of this inherited IRA first and draw it down to zero balance before you touch your own IRA. Since you have to

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