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By Jason Stipp | 06-29-2010 04:37 PM

Solutions to the Retirement Income Dilemma

Morningstar's Christine Benz outlines both agreed-upon and hotly debated strategies for sustainable income generation in retirement.

Jason Stipp: I am Jason Stipp for Morningstar. Building a sufficient and sustainable retirement income stream is a critical issue in any environment, but it's especially difficult in today's tough environment for retirees. Here with me to talk about some agreed-upon solutions and also some open questions in the retirement income arena is Morningstar's Christine Benz. She is director of personal finance. Thanks for joining me Christine.

Christine Benz: Jason, nice to be here.

Stipp: So at the Morningstar Conference recently you hosted a panel about retirement income, some of the issues around it and some of the possible solutions. A good place that I'd like to start is just why is today's environment so difficult for folks who want to retire and get that income stream going?

Benz: Well, the raw materials are really challenging, Jason, so you've got a very low interest rate environment. You've got still-depressed portfolio values following the bear market. You've also got a lot of retirees who have not saved enough. In fact, there are some data showing that the typical retiree blows through his or her 401(k) plan in less than five years. And you've also got retirees who want to spend more than they have. So all of this adds up to a very challenging environment for retirees and pre-retirees.

And one other thing is that the economic downturn has hit the pre-retirees, the post-55 set, harder than the younger populations, and that has made it more difficult for them to put in place that right footing for retirement.

Stipp: So some of these issues have been around for a little while. Some of them are very newer depending on the economic environment. But a lot of folks have been thinking about what are some things that we can do, what are some solutions that retirees can take, and there are some agreed-upon solutions. So what are the things that a lot of folks are sort of coming to the same conclusion about?

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