Many Americans are understandably worried about the future of Social Security. Under current projections, the program’s trust fund could become depleted around 2033, after which incoming payroll taxes alone would likely cover only a portion of scheduled benefits unless Congress acts. I think the easiest long-term solution would be to allow the trust fund to invest in a broader range of growth assets rather than primarily government securities, but that’s ultimately a policy decision.
For now, retirement planning falls on individuals. The closer you are to claiming Social Security, the more important your portfolio allocation becomes. Someone retiring at 62 but delaying benefits until age 67, for example, has a five-year income gap to bridge. During that period, dependable income and tax efficiency often deserve greater emphasis than maximizing long-term growth. Once Social Security begins, the portfolio can shoulder less of the monthly spending burden and focus more on preserving and growing wealth.
My philosophy has always been to avoid unnecessary complexity. Rather than chasing exotic derivatives or high-yield products, prioritize low fees, broad diversification, and tax efficiency. Above all, remember that total return matters far more than headline yield over a retirement that could last 20 or 30 years. Here are three Vanguard ETFs that could work.
Vanguard High Dividend Yield ETF (VYM)
The Vanguard High Dividend Yield ETF (VYM) tracks the FTSE High Dividend Yield Index. The index excludes REITs, removes companies that have not paid a regular dividend over the past 12 months or are not expected to pay one over the coming year, then ranks the remaining companies by forward dividend yield before weighting them by market capitalization.
The result is essentially a broadly diversified value ETF with roughly 600 holdings. Compared with the S&P 500, the portfolio trades at more attractive valuations while maintaining exposure across virtually every major sector.
After its tiny 0.04% expense ratio, VYM currently offers a 2.25% 30-day SEC yield. Importantly, 100% of its 2025 distributions qualified for favorable qualified dividend tax treatment, thanks largely to its focus on U.S. corporations and exclusion of REITs.
For many retirees, allocating roughly one-third of a portfolio to VYM provides a solid foundation of dividend income while still leaving meaningful room for long-term capital appreciation.
Vanguard Dividend Appreciation ETF (VIG)
The Vanguard Dividend Appreciation ETF (VIG) takes a different approach. Rather than targeting today’s highest yields, it tracks the S&P U.S. Dividend Growers Index, which requires companies to have increased their dividends for at least 10 consecutive years.
The index also incorporates a quality screen by excluding the top 25% of the highest-yielding companies, helping avoid potential dividend traps where unusually high yields may reflect deteriorating business fundamentals rather than attractive opportunities.
Like VYM, the fund excludes REITs and uses a market-cap weighted methodology with a 4% cap on any individual holding to improve diversification. During 2025, 100% of its distributions also qualified as qualified dividends.
The current 30-day SEC yield is a modest 1.52%, but VIG is designed less for current income than for steadily growing income through dividend increases and capital appreciation. Combined with an expense ratio of just 0.04%, it remains one of the cheapest dividend growth ETFs available.
A one-third allocation complements VYM by emphasizing dividend growth rather than simply current yield, which can help your retirement portfolio mitigate inflation long-term.
Vanguard Tax-Exempt Bond ETF (VTEB)
The final third of the portfolio can be allocated to the Vanguard Tax-Exempt Bond ETF (VTEB), which focuses exclusively on investment-grade municipal bonds through the Standard & Poor’s National AMT-Free Municipal Bond Index.
The ETF currently offers a 3.49% 30-day SEC yield while charging just a 0.03% expense ratio. More importantly for retirees investing in taxable accounts, most of its income is exempt from federal income tax as well as the Alternative Minimum Tax (AMT).
That combination of high credit quality, attractive after-tax income, and relatively low costs makes VTEB an appealing ballast alongside an equity-heavy retirement portfolio. While municipal bonds generally produce lower pre-tax yields than taxable bonds, the tax savings can leave many retirees ahead on an after-tax basis.
Allocating the final one-third of your retirement income portfolio to VTEB nearly hedges some of the equity risk from VIG and VYM, while delivering higher tax-efficient yield.
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