CNNMoney.com provides more ideas on generating retirement income from your 401k or IRA.

Here's how the strategy works: You put a portion of your 401(k) balance into an immediate annuity and then invest the rest in a diversified portfolio of stocks and bonds (or, more likely, stock funds and bond funds). The annuity gives you payments that won't run out and that, combined with Social Security, can fund much of your day-to-day needs.

In that case, you would turn over your 401(k) balance to an insurer that would promise you monthly checks for life (or, as long as either you or your spouse is alive, if you choose the joint-and-survivor payment option). Today, for example, a 65-year-old man buying a $250,000 immediate annuity would receive lifetime fixed payments of roughly $1,700 a month.