WASHINGTON, D.C. -- Baby boomers are retiring at the rate of 10,000 a day. And the typical target-date fund as well as allocation of assets typically involves moving to what Charles Schwab Investment Management President Marie Chandoha calls “income-based strategies’’ as individuals move closer to retirement.

Enter problem. Returns on bonds and other fixed-income products have been near zero for the last four years. And, yet, when rates turn back up the value of existing bonds drop.

To make any headway, investors need better than the 1.66% return now available on a 10-year Treasury note.

This is what Alan Reid, president and CEO of boutique asset manager Forward, called “the 5% problem,” at the 2013 General Membership Meeting of the Investment Company Institute. Finding something, anything, or any combination of investments that can generate an annual return of 5% on assets.

“It’s really the challenge people have,’’ Reid said. “It used to be not that big a problem.”

But it is now, going into the fifth year of a weak recovery from the 2008 credit cris.

Now, the question is, “how does one find income without enduring too much risk?,’’ Reid said.

Forward has backed away from investing in fixed-income products, Reid said. One motivator: When Forward found it had an income fund with no income. So its asset managers went back to the board and asked for permission to start filling in with equity investments.

It’s not easy. Sure, the Standard & Poor’s 500 is at 1,597.55, a record level. But it was 1,545.79 in November 2007.

The challenge, according to Elizabeth Corley, Global CEO, Allianz Global Investors, is ‘”you can’t just go for pure return. You have to look for risk.’’

One approach taken by State Street Global Advisors is to create a short duration high-yield fund, said Scott Powers, president and CEO, State Street Global Advisors.

It’s also created an actively managed exchange-traded fund that can move tactically in or out of a variety of income-producing ETFs that invest in real estate or high-dividend stocks or high-yield funds. An exchange-traded fund of funds.

It’s no small matter. "People are now more worried about their income running out before they die, than they are about dying," Corley said.

The 401(k) plan is a "very shaping piece of market development" that is being watched closely by other parts of the world, Corley said.

But those plans do not guaranteed adequate assets at retirement, like a pension plan might. That’s because individuals typically are not putting enough money into accounts, early enough or long enough. Automatic enrollment helps but only about 50% of plans have automatic features, Chandoha said. And most Americans put less than 5% of their income into retirement savings, Powers said.

“The real challenge of this process is education, education, education," said Powers. Getting sufficient money invested up front to have enough money in place for the "decumulation phase” of life.

Only 50% of Americans under 34, Chandoha, are putting money into 401(k) plans.

And that makes “behavioral finance’ critical. Corley recommends interactive teaching of 12- to 15-year-olds. Reid recommends more financial education in high schools, where students not are “not taught to balance a check book, much less how to invest.’’

Powers, jokingly, calls for software developers to come up with the “financial equivalent of ‘Call of Duty’ “ for videogame players.

More seriously, Powers said the United States might want to take a cue from Australia, which mandates its citizens put 9% of their income into retirement plans.

That, he says, would prime the pump.

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