'Coupon-Clipper' Funds Emerge

The bear market has been particularly cruel for people who just retired and immediately saw their nest eggs chopped nearly in half. The losses may not even be recovered in 10 or 20 years.

The damage highlights a key question most investors face: How much can you afford to withdraw annually from retirement savings? Financial advisers agree that there is no easy answer. Investors who take big withdrawals during a downturn can exhaust savings quickly. Those who delay withdrawals may be belt-tightening needlessly.

Some of the most intriguing approaches to withdrawals have been devised by Vanguard Group and Charles Schwab(SCHW Quote) for their managed payout funds. Introduced in the past year, the funds are designed to provide retirees with monthly checks. ...