Here a good recap on some of the new mutual funds offered to help with income.  Fortune looks at "income replacement" and "managed payout" funds.

Fidelity is offering 14 of what it calls Income Replacement funds. Unlike most mutual funds, they are designed to liquidate at specific dates: every two years from 2016 to 2042. The idea is for your money, plus investment gains, to be returned to you in monthly installments over the life of the fund. The portfolios invest in 15 other Fidelity funds, including 100 Index, International Discovery, and Total Bond. Early on, the funds will be managed for growth with a greater emphasis on stocks. The asset allocation will become more conservative as the fund nears its end date.

While the prospect of monthly income is appealing, you can't be sure how big those payments will be. The dollar amount will be set each year, based on a target rate and the fund's performance during the previous 12 months. If the fund has notched big investment gains, the payment may be larger. If it has a bad year, the payment may be smaller.

Vanguard is taking a different tack with its Managed Payout funds, launched last month, which are modeled on university endowments. Like endowments, these funds aim to leave the principal intact; they have no end dates and look to broader asset allocation to boost returns. Investors can choose from three portfolios: Growth Focus seeks to increase investors' principal while providing a modest payout; Distribution aims to preserve principal while maximizing the payout; and Growth and Distribution will try to strike a balance between the two.

As consumers use more of their income to fill up their gas tanks, they'll have less to spend on discretionary items like new bathing suits to wear to the beach and jewelry to accessorize.

Instead of visiting theme parks and ballgames, they'll be more inclined to find fun things to do at home--"stay-cation" has quickly embedded itself in the American lexicon--and will cook burgers and hotdogs on the grill before heading out to a fancy restaurant.

Many readers have e-mailed me and mentioned they are mortgage-free.  Sounds like they have been great savers.  I envy those folks, it really is peace of mind.    However, many baby boomers and retirees do have mortgages and as we've mentioned in the last couple of weeks our long-term interest rates have been going up despite the fed cutting rates lately.   Michele Singletary of the Washington Post has two words we may want to remember if we have a large mortgage in retirement:

For those seniors, wealthy or not, who are inclined to believe it's a good financial move to drag a mortgage into their old age, I've got two words for you: Ed McMahon.

McMahon, Johnny Carson's sidekick on "The Tonight Show" for three decades, is trying to save his multimillion-dollar Mediterranean-style mansion from foreclosure. The Beverly Hills estate has a $4.8 million mortgage and, according to a default notice, McMahon, 85, is more than $644,000 in arrears.

The changes will affect more than 25,000 of Gannett's 46,000 employees. The company publishes USA Today and 84 other daily papers in the United States.

Freezing the pension plan will save about $90 million in 2009, said Gannett spokeswoman Tara Connell, but that will be partially offset by $60 million in costs associated with the enhanced 401 (k) plan.

Consuelo Mack recently interviewed financial professionals on the topic of " Maximizing Retirement Income."  The discussion revolved around annuities and the new "income replacement" funds offered through several mutual fund companies.   Here's the WealthTrack transcript:

CONSUELO MACK: This week on WealthTrack, the challenge of investing during retirement to make sure your money doesn't run out, with award-winning financial planner Lou Stanasolovich, Kiplinger's nest egg expander Mary Beth Franklin, and MassMutual's lifetime income guarantor Steve Deschenes. Next on Consuelo Mack WealthTrack.
 Hello, and welcome to this edition of WealthTrack. I'm Consuelo Mack. The vanguard of the record 78 million strong baby boom generation turned 62 this year, and are eligible for social security benefits. When the first boomer drew a benefit check in February, the Social Security Administration described it as the start of America's silver tsunami. This surge and the financial challenges it presents are on the minds of an increasing number of Americans, as well as the financial services industry, which is trying the come up with new and flexible ways to meet retirees income needs.

An improved tool from Uncle Sam is one of the best resources available to help calculate your retirement finances.

Most people have the same first question about retirement: How big a nest egg will I need? Two years ago, the Employee Benefits Security Administration, part of the Department of Labor, published "Taking the Mystery Out of Retirement Planning." This smart, 62-page guide helps answer that question in a detailed, but easy-to-understand, manner.

And now it's even better.

The original booklet contained eight worksheets -- involving assets, income and expenses -- to help calculate Your Particular Number. Now, these worksheets have been moved online and you can let the Labor Department's computers do the math.

 
This online version of Taking The Mystery Out Of Retirement Planning includes interactive worksheets that you complete as you read each chapter. You can download the fully illustrated 62-page Adobe PDF narrative or call toll free 1.866.444.EBSA (3272) to order copies.

Courtesy of Sunday Wall Street Journal 

Department of Labor website. 

But it's hard to see a compelling reason to lock yourself into a CD for more than a few months. You can earn 3.4% or so in a three-month CD, and that will leave you free to take advantage of higher rates if those come along.

Yes, it's always possible rates will head much lower, but it has to be unlikely. The markets are slowly waking up to inflation fears, and those will put upward pressure on all interest rates.

WSJ.com looks at current CD rates. 

Drivers are now paying an average of $3.99 for a gallon of regular gas nationwide, according to AAA and the Oil Price Information Service; in many parts of the country, consumers are already paying well over $4. Retail diesel slipped a penny overnight to $4.76.

Housing prices are having a huge impact on city budgets in California.   But generous pensions for municipal workers also spell trouble in Vallejo, California.  The city just declared bankruptcy.  CNN.com explains that fat paycheck's spell doom for many cities:

But the real nail in Vallejo's coffin was the city's labor costs. Under the current labor agreement, the average police officer walking the beat in Vallejo will be paid $122,000 this year before overtime, according to city documents. An average sergeant will make $151,000; a captain, $231,000. The average firefighter, meanwhile, will bring in $130,000 before overtime.

That's just the salaries, though. The final budget-crusher was the city's pension plan. Thanks to retroactive benefit enhancements approved by the city council in 2000, police officers and firefighters can now retire at age 50 and receive an annual pension equal to 90% of their final pay (assuming 30 years on the job), an amount that gets increased every year to help keep pace with inflation. The old plan had given the workers a pension equal to 60% of their final pay at age 50.