You Finally Saved $1 Million. The 4% Rule Says Live on $40,000. These 4 ETFs Say You Can Do Better
The 4% rule hands every retiree the same $40,000 answer and calls it planning, but a different approach lets your shares stay intact while your portfolio generates income that outpaces that ceiling by a wide margin.
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You crossed the seven-figure line. The financial planning industry hands you a rule of thumb and a calculator: withdraw 4% in year one, adjust for inflation, and hope the math holds for 30 years. That gives you $40,000 to live on, and it requires you to sell shares to generate the cash. Four ETFs offer a different path. JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ), NEOS Nasdaq-100 High Income ETF (NASDAQ:QQQI), iShares Preferred and Income Securities ETF (NASDAQ:PFF), and Vanguard S&P 500 ETF (NYSEARCA:VOO) let you keep the shares and still generate income well above the 4% ceiling, with a growth engine attached to defend your purchasing power over a 25- to 30-year retirement.
The 4% Rule Is a Withdrawal Convention
The 4% rule was designed to keep you from running out of money. Maximizing what your million can pay you is a separate problem. With the 10-year Treasury sitting at 4.70% and core PCE inflation now in the 90.9th percentile of its 12-month range, a fixed $40,000 loses meaningful ground each year you cash the same check. Building a portfolio around distributions instead of share sales flips the problem. You collect income, and the shares stay yours.
JEPQ: The Monthly Income Engine
JEPQ holds a roster of Nasdaq-100 style equities and sells out-of-the-money index call options against them, converting a slice of potential price appreciation into cash. The expense ratio is 0.35%, so roughly $996.50 of every $1,000 stays working for you. Distributions are monthly, and the trailing 12-month payout totals $6.52319 per share against a recent price around $59.68. The forward annualized yield sits at 8.45964%. The August 2026 payout was $0.70497, higher than $0.44377 a year earlier. JEPQ has also returned 20.37% over the past year while paying you every month.
QQQI: Tax-Aware Yield In the Same Neighborhood
QQQI runs a similar concept with a different engine. It owns Nasdaq-100 stocks and layers an SPX-style index options overlay treated as Section 1256 contracts, which can carry a friendlier tax profile. The expense ratio is higher at 0.68%, but the payout is greater. Monthly distributions have ranged from roughly $0.6089 to $0.6589, with a trailing 12-month total of $7.624985 on a share price near $55.86. Total return over the past year came in at 18.4%. Pair QQQI with JEPQ, and you diversify the option-writing methodology while keeping both feet in large-cap tech-tilted equity.
PFF: The Fixed-Income Sleeve
PFF tracks a broad basket of US preferred stocks, heavily weighted to bank and insurance issuers. Preferreds sit between bonds and common stock in the capital stack and pay steady, contract-like distributions. The expense ratio is 0.45%, distributions are monthly, and the trailing 12-month payout of $1.656744 on a share around $30.93 puts the running yield near 6% to 7%. With net assets of $13.3 billion as of March 31, 2026, liquidity is not a concern. PFF gives your income stack a source driven by preferred-stock coupons rather than equity option premiums.
VOO: The Growth Anchor That Keeps Your Dollar a Dollar
VOO is the growth anchor of the portfolio. It tracks the S&P 500 at an expense ratio of 0.03%, meaning $999.70 of every $1,000 stays invested. The quarterly distribution is modest, most recently $1.9622. What VOO delivers is compounding: 21.63% over the past year and 317.68% over the past decade. Over a 30-year retirement, that growth is what keeps $40,000 of spending power from becoming $22,000 in real terms.
The Trade-Off
Option-income ETFs buy yield with upside. When the Nasdaq rips 30% in a year, JEPQ and QQQI capture a portion, not all, of that move, and monthly distributions can fluctuate with volatility. Preferred stocks are rate-sensitive and carry issuer credit risk, which is why PFF returned only 3.58% over the past year against a rising 10-year yield. Distributions from these funds are not contractually guaranteed.
Each of these four funds serves a different role. JEPQ and QQQI provide higher monthly income, PFF diversifies the portfolio beyond covered-call strategies, and VOO provides the long-term growth needed to help preserve purchasing power over a 25-year retirement. Together, they allow a $1 million portfolio to generate meaningful current income while maintaining exposure to assets with long-term growth potential.
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Ryne Mauck is an investment writer covering exchange-traded funds, portfolio strategy, and opportunities across public markets. His investment approach emphasizes fundamental analysis, valuation, and disciplined risk-taking.
Through his work at 24/7 Wall St. and other investment platforms, including Seeking Alpha, he aims to provide readers with clear, research-driven insights into investment fundamentals, portfolio construction, and risk management. His goal is to help investors make more informed decisions while maintaining a disciplined long-term approach to investing.
Ryne holds a B.Sc. in Finance and an M.A. in Political Science.
