Many investors have traditionally turned to Government Gilts, Corporate Bonds and Equities to provide an income from their investment portfolio.
In the past this has worked well because the balance of these three asset types provides not only a mix of income sources but also a mix of risk types. Bonds and Gilts have traditionally been seen a less risky assets that can balance out the risk of shares.
By risk we are generally talking about the possibility of loss. These two asset types have traditionally provided relatively stable and good returns.
However, with the financial troubles of the past few years and the implications of these, Gilts and Bonds actually rose in price quite significantly. Though that has been great for those invested, what it does mean is that these assets have inadvertantly become volatile. Volatility works both ways, it is measured by how much the price moves regardless of whether that is up or down.
So now that you have a volatile asset on your hands that has risen in price significantly beyond what it is normally expected to, you can see why so many commentators paint such a bleak picture of future returns from Gilts and Bonds at best, and continually predict a fall in prices at worst.
But if it is an important part of your income source then what do you do? Moving over to equities would increase the risk of your investments, so blindly seeking income is not really the answer. Equities can provide excellent income but are also riskier than Bonds and Gilts (traditionally).
Property might be an option. Though not for everyone, even a buy-to-let if you have the resources and inclination could be an answer, though a fairly drastic one.
Otherwise a sensible balancing act of the assets within your portfolio, to include all of the above and more can work very well if monitored well on an ongoing basis.