Remember to factor in required minimum withdrawals

Robert Reed, Personal Financial Advisors, Covington, La.
"At 70.5 years, the required minimum distributions [RMDs] start. So, one could set up a portfolio of laddered CDs and U.S. government and agency bonds to approximate the RMD. This would as much as guarantee the assets and provide for income via the RMD. This strategy would work even if one didn't tie the asset maturities to RMD," Reed says. He suggests working with an adviser since "there may be opportunities to enhance the income over time, depending on interest-rate fluctuations."

Use stock dividends to provide income

Dennis Stearns, Stearns Financial Group, Greensboro, N.C.
"Given that dividend payout ratios for high-quality dividend-growing stocks are at a multi-decade low, and that these stocks would provide over 3 percent cash flow growing at an average of 5 percent to 10 percent or more per year, we would put half the money in this area. It's the safest time in decades to own high-quality stocks if you're focused on cash flow," Stearns says. He cited AT&T and Verizon as examples. Then there's mutual funds: "Put the other half in opportunistic bond managers like Loomis Sayles Bond, Pimco All Asset and Total Return [funds], Osterweis Strategic Income and Pioneer Strategic Income. The yield would be over 4 percent with a good ability to adjust to future bond conditions as interest rates begin to rise," he says.

Use annuities and short-term bonds as an anchor

Rand Spero, Street Smart Financial, Lexington, Mass.

"Choosing an immediate annuity plus short-term bonds can be an option to explore now for the $250,000 investment. One can consider diversifying the short-term bond funds to include a small portion of emerging market bonds that have higher yields and some growth possibility over the next 20-plus years. Overall, I would be cautious now given the current low interest-rate environment to get locked into anything long-term."

Consider annuities with inflation protection

Chris Long, Long Financial Planning, Chicago
"This will provide a guaranteed income with inflation protection. It will also provide higher income than [individual investors] could withdraw if they managed the money themselves. I ran a quick quote for immediate annuities through Income Solutions [an annuities advisory] for a 65-year-old man beginning May 1, 2013. I received quotes of $994-$1002 per month with a 3 percent increase each year. This represents a withdrawal rate of about 4.8 percent a year."

Tips for retirement

With 10,000 baby boomers hitting retirement age every day, financial planners are hearing a lot of questions about how to convert savings into income while interest rates are at rock-bottom lows.
We asked eight advisers the same simple question: What would you advise someone who wants to turn $250,000 from their retirement savings into a steady income stream today? Assume this retiree has other assets in a diversified portfolio and this is the amount set aside purely to generate income.
Why the quarter-million number? Because U.S. Census Bureau data shows that the average net worth of a 65-year-old with some college education is $500,000. That person can put half of his or her overall net worth toward income generation and still have Social Security and other assets to draw on to maintain a diverse portfolio and a source of emergency funds.

Pay off your house

Paying off your mortgage eliminates one of your biggest monthly bills and allows you to use your savings for other expenses besides housing. The equity in your home could also be tapped for extreme emergencies, via a second mortgage or reverse mortgage. "If you pay off your house, that's a guaranteed return of 3 to 4 percent," says Stephen Curley, a certified financial planner and director at Water Oak Advisors in Winter Park, Fla. "If you go into retirement debt-free and owning your house outright and you are able to take out 4 percent of your portfolio along with Social Security and meet your retirement needs, that is the best-case scenario. And if you can't stand the capital market, you should maybe buy a fixed immediate annuity."

Systematic withdrawals

Disciplined investors may be able to gradually draw down their savings in such a way that it is likely to last as long as they live. Many financial advisers recommend withdrawing no more than about 3 or 4 percent of your retirement savings, perhaps adjusted for inflation, each year. This strategy carries the risks that your investments could perform poorly, that you will live longer than expected, or that you will simply fail to stick to the plan and spend more than you should. However, that money will be available to you to use for emergencies, such as medical bills or home repairs. And if you end up dying sooner than expected, your heirs will get the money. If you are an especially gifted investor, you'll also get to keep your investment gains. "With a systematic withdrawal scheme, if you live a long time or have a poor investment experience, you might run out of money or you might pass away before you run out of money and have a lot of money left to leave to your heirs or charity," says Vernon. "Looking forward, we may not have the interest rates to support the 4 percent rule. We're moving toward 3.5 or 3 percent as a safer withdrawal rate."

An annuity

Immediate annuities allow you to hand over a chunk of your retirement savings to an insurance company in exchange for guaranteed monthly payments for the rest of your life. The costs and fees of some annuities can be high, and you generally won't be able to pass the money you use to purchase an annuity on to heirs. But you gain a predictable monthly income, even if you live past age 100 or the stock market takes another dive, as long as the insurance company stays in business. "With the insurance company annuity, the insurance company guarantees that the money will last the rest of your life no matter how long you live," says Steve Vernon, a fellow of the Society of Actuaries and author of "Money for Life: Turn Your IRA and 401(k) into a Lifetime Retirement Paycheck." "If you want that lifetime guarantee, you are going to have to trade off access to your money. With most annuities, once you give your money over to the insurance company, you can't get it back other than the monthly paycheck."

A pension

Workers fortunate enough to get a traditional pension through their jobs generally have a second guaranteed source of monthly retirement income. Most private-sector pension plans are insured by the PBGC, which guarantees pension benefits up to certain annual limits and will pay out benefits if your former employer goes out of business. However, workers with traditional pensions are increasingly being offered lump-sum pension payouts, which do not come with the same protections. If you don't manage a lump sum prudently or you live longer than you expected, you could end up spending that money too quickly.

Social Security

Social Security is your first line of defense against outliving your savings because these payments will continue for the rest of your life and are adjusted for inflation each year. Anyone who qualifies for Social Security will never completely run out of money, but could have to cut their standard of living to survive on their Social Security payment if they exhaust all other sources of income. Since this is the only guaranteed source of income most retirees have, it's a good idea to try to increase the amount you will get. Common strategies for boosting your Social Security payments include making sure you have at least 35 years of covered earnings, claiming spousal payments, and delaying claiming up until age 70. "Get your [online] Social Security statement from the Social Security Administration and then go through that information and use it to decide when to claim Social Security," advises Troy Von Haefen, a certified financial planner for Von Haefen Financial Management in Nashville.