Retiree's who need income right now face a real dilemma-interest rates are extremely low!  Using CD's and bond funds in your retirement portfolio should always be a starting point.  Income annuities can be another key.  The Wall Street Journal has two strategies that will help:

One strategy is to put money into immediate annuities in several lumps over time, rather than all at once. That would allow an investor to get the annuity guarantees on some portion of the money while, hopefully, capturing the better returns whenever interest rates rise in the future. The remaining money can be held in cash or, depending on the time frame, placed in an investment that will hopefully grow at a higher rate of return than can be earned in the annuity

Use annuities that have inflation adjustments.  Some annuities will raise the payout based on changes in the CPI while others offer contracts where the payout is increased by a fixed amount -- such as 2% or 3% -- every year for life. Some companies offer both options.

There are other variations as well. New York Life, for example, offers an option on its Lifetime Income Annuity that will increase its payout should interest rates rise by more than two percentage points when the policy hits its fifth anniversary.