IRA strategies after cashing out a pension.

Background- So the wife cashed out her pension after leaving city service, for a number of reasons, principally that it wasn't going to pay out all that much upon retirement, and there's a growing risk of the pension fund becoming insolvent.

The scenario- we have >$10k sitting in a vanguard IRA money market account waiting to be invested in a more profitable mutual fund.

The Question- What are some good strategies to invest it? I am hesitant to drop all of that money into one mutual fund only to have the bottom fall out of the market. As a result, I was looking at trying to dollar cost average what we have into an index fund, but over what term? I am looking at VFINX for our investments FWIW.