Investing in the stock market has always had its inherent risks, with investment returns rising and falling like surfers at Waikiki. While we have been hit by some pretty challenging stock market “corrections,” the worst is still predicted to come. Some experts are forecasting that the most severe stock market crashes in history are awaiting us within the next 10-15 years. While we typically look to blame economic growth or international concerns for market fluctuations, a more severe shift could result from the U.S. law that created the individual retirement account (IRA).

The Employee Retirement Income Security Act (ERISA) was enacted in 1974 to address concerns that private pension plan funds were being mismanaged and abused. The responsibility for retirement savings was transferred at that time from the businesses that employed workers to the workers themselves. This act created what we know today as IRAs.

One of the provisions of the ERISA law dictates that, when IRA holders reach the age of 70, they must begin taking mandatory distributions from their IRAs. This is based on a life-expectancy table that had the goal of having the average retiree deplete their retirement savings completely by the time they die.

This provision has caused significant concern among many stock market and financial analysts. Every year almost 4 million Baby Boomers are moving closer to the mandatory distribution age of 70. This population is the largest segment of the American population. As those Baby Boomers reach 70 and are forced to begin drawing from their retirement funds, more and more money will be leaving the stock market. Many fear that this is what could trigger the biggest crash in history.

While seemingly unavoidable, there are steps which can be taken to protect our finances. Daniel Kadlec, a financial columnist, suggests a solution: “The first step toward fixing the problem is to recognize how dramatically things have changed. People need to downscale their expectations and recognize that the phenomenal returns of the 1990s were the aberration.” Kadlec points out that the best strategy is to begin saving earlier. Others suggest diversifying one’s retirement portfolio to include businesses and real estate.

Whether or not there is another stock market crash looming in the near future, it is always a good idea to diversify your investment portfolio. Real estate, hard money lending, tax liens and even private businesses can all be invested in by using a self-directed IRA – thereby avoiding the danger of putting all your eggs in one basket!

Guidant has already helped thousands of investors utilize their IRA and 401(k) funds to truly diversify their investment portfolios and regain direct control over the investments they make. And, as more investors become sensitive to the potential effect the Boomer population may have on the market, more are choosing to go the self-directed route.

No one can know for sure whether a major market crash is in our future or not. But by utilizing a self-directed IRA with checkbook control, you can remain nimble enough to move throughout investment arenas – both in and out of the stock market.