Medicare Part B Went Up 9.7% This Year. Your Social Security Raise Was 2.8%. These 3 ETFs Close the Gap
Medicare premiums are rising nearly four times faster than Social Security checks, and the gap is widening every year. Three ETFs attack that shortfall from completely different angles, and most retirees are only using one of them.
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The 2026 retirement math is brutal. Your Social Security check went up 2.8%. Your Medicare Part B premium climbed to $202.90 a month, an increase of $17.90 from $185.00 in 2025, roughly 9.7% higher. That is the third straight year Medicare has taken a bigger bite than the raise the government sent to feed it, and the 2027 COLA is currently tracking around 3.1%, which will not fix the trend. If your income is fixed, the offset has to come from your portfolio. Three ETFs are built for exactly that job: Vanguard Dividend Appreciation ETF (NYSEARCA:VIG), Invesco S&P 500 High Dividend Low Volatility ETF (NYSEARCA:SPHD), and iShares Preferred and Income Securities ETF (NASDAQ:PFF). Each closes the gap from a different angle: rising dividends, high monthly cash flow, and preferred-stock income.
Why the Gap Keeps Widening
Social Security’s cost-of-living adjustment is tied to CPI-W, the inflation index that weights wage-earner spending. Medicare Part B premiums are set separately, based on projected physician spending and utilization. When healthcare inflation runs hotter than general inflation, retirees get squeezed, and the Part B line is only one of several surcharges that quietly widen the gap (we mapped IRMAA and the other Medicare traps in a free guide here: Medicare’s Hidden Bills). You cannot vote your way out of that math this year, but you can rebuild your income stack so the raise you actually keep is bigger.
VIG: Income That Grows Faster Than Your Premiums
VIG tracks large U.S. companies with a long history of raising their dividends. It is the cheapest way to own dividend growth in the market. The expense ratio is 0.04%, meaning about $999.60 of every $1,000 you invest stays working for you. The forward yield is modest at roughly 1.6%, based on an annualized forward distribution of $3.9952 against a current price near $244.39. The payoff is the growth curve. The most recent quarterly distribution was $0.9988, versus $0.7692 in March 2024 and $0.288 a decade earlier. That is a raise that compounds. VIG has also returned 17.59% over the past year and 246.94% over the past ten, so you are not sacrificing appreciation for the growing paycheck. Distributions are quarterly.
SPHD: High Monthly Income From Defensive Blue Chips
SPHD holds the roughly 50 highest-yielding, lowest-volatility stocks in the S&P 500, tilting toward utilities, consumer staples, and real estate. It pays every month, which lines up nicely with a Medicare premium that hits every month. The latest distribution was $0.21963, with a trailing 12-month total of $2.4435 and an annualized forward distribution of $2.63556. Against a current price near $53.28, that puts the forward yield near 4.95%. The volatility screen has helped in choppy markets. SPHD is up 15.19% year to date and 13.02% over the past year. Think of it as your monthly-paycheck sleeve.
PFF: Preferred-Stock Yield for the Fixed Bills
PFF holds preferred securities from U.S. banks, insurers, and utilities. Preferreds sit between bonds and stocks: higher fixed payouts than common shares, but less price upside. The expense ratio is 0.45%. Distributions arrive monthly and vary; the latest was $0.142313, with an annualized forward distribution of $1.707756. Against a current price around $30.66, the forward yield is roughly 5.6%. That is the richest of the three, and the reason PFF earns a slice of a retiree book.
Trade-Offs You Need to Know
None of these funds are without risk. VIG’s headline yield is small, so if you need cash today, it cannot carry the whole load. SPHD’s utility and staples tilt lags in growth-led rallies, and the individual monthly payouts drift (the latest is $0.21963, versus $0.16181 a year earlier). PFF is the yield workhorse but the price does not grow much: it is up 1.49% year to date and 33.85% over ten years. Preferreds are also rate-sensitive; if long yields spike, PFF’s price drops.
However, owned together, these three do what one fund cannot. VIG grows your future income faster than Medicare grows your premium. SPHD writes you a monthly check today. PFF piles on the yield to cover the shortfall between them. That is how you close a 9.7% gap with a 2.8% raise, without touching principal.
Contact [email protected] for any questions or corrections.
Ryne Mauck is an investment writer specializing in ETFs, retirement investing, and investment strategy.
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 valuation, 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.
