SF Signal has a bunch of answers from various people around the industry revolving around the question "Is the short fiction market in trouble?"
A brief commentary I'd like to make is that living here in the Philippines where the cost of basic commodities is low (that's basic mind you... if you want a new-fangled iPod, Tivo [they don't exist here!], or steampunk earrings, you're better off staying in the US), the short fiction rates are actually lucrative. (So how low is the cost of living here? Well I haven't gone to the market as of late but a "value meal" from any fast food joint, which includes McDonalds, is somewhere between $1.25 - $2.50. The daily minimum wage is around $8.00 a day.)
For example, at $0.05 a word, a 5,000-word story usually pays more than an entry-level job in an office that's not a call center or a big, multi-national corporation. Selling two 5,000-word stories (or a mammoth 10,000-word story) is currently more than what I'd earn as an editorial assistant. Of course this advice is actually best targeted at Filipinos because hey, writing fiction can actually be lucrative if you submit to foreign markets!
Having said that, when a US-based author does intend to retire, I do suggest the Philippines. A $1,000 pension for example gets you a lot of mileage and will pay for a decent condo and your basic expenses for the month. We also have beaches if that's your thing, as well as a few places to golf...