Social Security’s 2027 Raise Looks Like 3.8%. Here’s How Income Investors Give Themselves a Bigger One

The Amplify CWP Enhanced Dividend Income ETF (NYSEARCA:DIVO) has become a default holding for retirees seeking more monthly cash than the S&P 500 pays. DIVO owns roughly 20 to 25 blue-chip dividend stocks and writes tactical covered calls on positions the manager thinks are stretched. The Senior Citizens League now projects a 3.8% Social Security cost-of-living adjustment for 2027, up from the 2.8% COLA that took effect in 2026. For income investors who want their monthly deposits to grow faster than that, DIVO does part of the job. Two newer NEOS funds do more of it.

Why DIVO Draws Retirees, and Where the Math Gets Tight

The problem is the payout. DIVO’s latest monthly distribution was $0.1882 (as of July 30, 2026), and its annualized forward distribution is about $2.26 per share. On a share price near $47, that works out to a distribution rate of around 4.20%. Better than the S&P, but only modestly ahead of the projected 3.8% COLA. Most of DIVO’s income arrives as qualified dividends and short-term option premiums, taxed as ordinary income, meaning the after-tax yield is lower than the sticker price.

SPYI: Same Index, Roughly Triple the Distribution

The NEOS S&P 500 High Income ETF (CBOE:SPYI) holds the S&P 500 directly and writes call spreads on the SPX index rather than on individual stocks. That structural choice matters for two reasons.

First, the distribution. SPYI’s trailing 12-month distributions totaled $6.309, with an annualized forward figure of $6.36. At $54.14 per share, that is a distribution rate in the high-11 % range, paid monthly. The July 22, 2026 distribution was $0.53 per share, part of a steady 2026 pattern ranging from $0.51 to $0.54.

Second, taxes. SPX options are Section 1256 contracts, so realized gains are treated as 60% long-term and 40% short-term, regardless of holding period. NEOS also classifies a meaningful share of distributions as a return of capital, which defers tax and lowers the cost basis instead of being reported on a 1099-DIV as ordinary income. For a retiree in a taxable account, that structural edge is significant. The tradeoff: a 0.68% expense ratio and capped upside during sharp rallies. SPY still returned 10.36% year-to-date and 19.8% over one year through August 4, 2026, on top of distributions.

QQQI: The Growth-Tilted Version of the Same Idea

The NEOS Nasdaq-100 High Income ETF (NASDAQ:QQQI) applies the same call-spread and Section 1256 playbook to the Nasdaq-100. Higher index volatility means higher option premium: trailing 12-month distributions of $7.62 and an annualized forward of $7.6152 on a $55.15 share price, roughly a 13.81% distribution rate. Top holdings are NVIDIA, Apple, and Microsoft, so the exposure is concentrated in mega-cap technology. QQQI returned 11.17% year to date alongside those distributions, but a retiree comfortable with tech-heavy volatility can turn the Nasdaq-100 into a monthly income stream that laps the projected COLA more than three times over.

The Tradeoffs Worth Noting

Covered-call income comes from selling upside. In a strong bull market, SPYI and QQQI will lag their underlying indexes on total return. Distributions can fluctuate with volatility, and the return-of-capital portion, while tax-efficient today, chips away at the cost basis over time. DIVO’s tactical approach results in fewer calls, keeping more equity upside intact at the cost of a lower headline yield.

Making the Swap Without Creating a Tax Bill

In an IRA or 401(k), swapping DIVO for SPYI or splitting the position between SPYI and QQQI is a clean trade with no tax consequences. In a taxable account, check the embedded gain on the DIVO lot first. A partial rotation, keeping DIVO for its lower expense ratio and blue-chip equity core while adding SPYI or QQQI for the higher distribution and Section 1256 treatment, is one approach investors weigh against a full sale.

What This Means for the 2027 Income Plan

If the goal is a self-funded raise that outpaces a 3.8% COLA with monthly cash flow, DIVO alone leaves yield on the table. SPYI offers roughly triple the distribution relative to the same S&P 500 exposure, with a friendlier tax profile. QQQI does the same on the Nasdaq-100 with more volatility attached. The right choice depends on account type, risk tolerance, and whether upside participation or income maximization matters more, but the incumbent is no longer the obvious answer.

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