"There's a lot of savings sitting on the sidelines, and at today's interest rates, those savings are not going to last until retirement," Kapito said, noting that "there's a cost to cash."
BlackRock , which manages $3.5 trillion, has been an advocate of finding income even in today's volatile markets. The firm is advising clients to search for income in three places — high-yield bonds, dividend paying stocks and municipal bonds. Kapito also said that clients are interested in emerging markets again.
Kapito is particularly bullish on high-yield debt. "We like high-yield because companies have been the beneficiaries of low interest rates," he said. "Their balance sheets look really good, and they're offering good yields."
(Read More: Gen X Now Worries Most About Retirement.)
He also said you can get 90 percent of the returns with 60 percent of the risk of equity markets and a 5 percent return in high-yield bonds.
The BlackRock executive suggests either buying a diversified portfolio of high-yield bonds or the iShares iBoxx High-Yield Corporate Bond ETF. BlackRock owns the iShares ETF business.
Kapito also likes large-cap companies with good products that are paying good dividends and buying back stock. He pointed to telecoms Verizon and AT&T that have dividend yields of 4 percent to 5 percent. (Read More: Pimco's Bill Gross Makes the Case for Dividends, Gold.)
Finally, Kapito likes municipal debt, particularly in infrastructure or transportation.
"There are really good opportunities to come out of that cash where you're not earning any yield whatsoever and at least get some of that money working and get you toward your retirement plan," Kapito said.